Congo and Kenya Identified as East Africa’s Riskiest Investment Destinations
The Democratic Republic of Congo and Kenya have been marked as the riskiest investment destinations in East Africa, with the DRC receiving a risk score of 7.6 and Kenya a score of 6.06. Rwanda is noted as the safest at 5.11. The report cites political and social instability as key factors contributing to these scores. Kenya’s reward score has decreased due to tenant conflicts over tax policies, while the DRC grapples with escalating violence and humanitarian crises.
The latest report from Control Risks and Oxford Economics Africa has identified the Democratic Republic of Congo (DRC) and Kenya as the most precarious investment locales in East Africa, primarily due to prevalent political, social, and economic threats. In the Africa Risk-Reward Index 2024, released on October 30, the DRC received a substantial risk score of 7.6 out of 10, making it the highest risk market in the region. Kenya followed with a risk score of 6.06. In contrast, Rwanda emerged as the most secure investment destination in East Africa, scoring 5.11 in risk assessment. The assessment evaluates various factors, including political stability and economic growth, on a scale from 1 to 10. The report further indicated a decline in Kenya’s reward score from 5.33 in 2023 to 5.25 by September 2024. Similarly, the DRC’s reward score decreased from 5.88 to 5.65 within the same timeframe. Despite the market volatility, Mauritius was noted as the safest investment option across Africa with a risk score of 3.22, while Zimbabwe ranked as the highest risk country with a score of 7.79. In Kenya, ongoing public dissent stemming from the controversial Finance Bill of 2024 has contributed to the grim outlook. Protests against the bill occurred in June, resulting in its eventual withdrawal, further complicating the government’s fiscal strategy amid rising economic challenges. Meanwhile, the DRC continues to face humanitarian crises exacerbated by increased violence in its eastern regions, with the Congolese army engaged in conflict against the M23 militia, leading to displacement and severe humanitarian needs.
The Africa Risk-Reward Index serves as a critical tool for assessing investment climates across the continent. It takes into account various aspects such as political stability, social factors, and economic growth prospects to provide a comprehensive overview of risks and potential rewards. The report highlights the intricate balance between investment opportunities and the inherent risks, particularly in volatile regions. Recent developments in Kenya, including tax-related protests and subsequent government actions, emphasize the sensitive nature of public sentiment in determining investment attractiveness. The DRC’s ongoing conflict adds another layer of complexity, showcasing the dire necessity for stability to foster economic growth.
In conclusion, the Africa Risk-Reward Index 2024 has identified the DRC and Kenya as the riskiest investment destinations in East Africa, primarily due to political and socio-economic challenges. The shrinking reward scores for both countries indicate a declining attractiveness for investors. In contrast, Rwanda offers a relatively safer investment climate, while Mauritius stands out as the safest investment hub on the continent. The persistent discontent in Kenya and the humanitarian crises in the DRC highlight the significant barriers to investment, necessitating a strategic approach by potential investors.
Original Source: www.theeastafrican.co.ke
