Investment Climate in Financial Services in Africa (Country Attractiveness Indices)

This paper analyses the relative investment climate of financial services in the African continent by studying both the domestic state of affairs in the sector and the macro governance indicators that impact the amenability of the domestic environment to foreign investment. Relative attractiveness indices for each country relative to its region and the African continent as a whole are calculated and rankings of countries within each region are arrived at. This is followed by ranking of regions based on weighted averages of performance indicators of the countries comprising the regions. The Study shows that Southern Africa and North Africa remain the two most attractive regions followed by West Africa, East Africa and Central Africa. The most attractive countries in each of these regions are Mauritius, Tunisia, Cape Verde, Seychelles and Gabon respectively. Mauritius has also been found to be the most attractive for financial services in the continent closely followed by Botswana, Cape Verde and South Africa. The Study also finds that though low income countries generally have low investment attractiveness scores, Madagascar, Gambia and Burkina Faso are outliers with especially good governance indicators. In fact, these countries have much higher investment attractiveness scores as compared to high income countries like Equatorial Guinea, Libya and Angola. The financial parameter and governance parameter indices, thereby, provide indications of government interventions that may be prioritized to increase the investment attractiveness potential of the financial services sector in African countries.