RAND Merchant Bank's (RMB) second edition on 'Where to Invest in Africa' has ranked Tanzania the fifth among the most attractive economies to invest in the continent.
The RMB, a South African investment bank, has classified Tanzania among the best ten African nations with high consumption potential.
The report, looking on key opportunity sectors -finance, resources, infrastructure and consumption -- had analysed 54 countries. Scores given to Tanzania are based on market size, as measured by gross domestic product (GDP) at purchasing power parity;
the market growth rate, as reflected in the International Monetary Fund's forecasts of real GDP growth; and operating environment index that looks at economic freedom, corruption, efficiency and business friendliness.
The report says when consumer-facing multinational companies such as super market chains and mobile phone operators are looking at factors when deciding where their goods should go, they should consider population size, forecast population growth rates, forecast per capita GDP rates as well as urbanization growth rates.
Commenting on the report in Dar es Salaam yesterday, University of Dar es Salaam economist Dr Lenny Kasoga said it was important for the country to continue building structures that would zero down investment bottlenecks.
Mzumbe University economist Prosper Ngowi said Tanzania's growth in operating environment should be coupled with faster growth. In an interview with 'Daily News', Tanzania Investments Centre Public Relations Manager Pendo Gondwe said much of procedures for investing in the country are under one roof, including fast track of environment Impact Assessment through private government certified agencies to assist the investors.
By combining these variables into a single measure, RMB has created a ranking index of the countries with the best outlook for consumer goods. The index has Nigeria at the top, followed by Ethiopia, the DR Congo, Kenya, Tanzania.
The list is completed by Egypt, Sudan, Uganda, Burkina Faso and Mozambique. However, the report notes that although Africa is an important market for consumer goods from a macro-economic perspective, companies need to remember that each country is different.
"Ethiopia, for instance has a large population and a decent market size, but it would probably not offer a concentration of high-income earners for high-end retailers," says the report, adding that there are many other aspects to consider when assessing where the most attractive consumer environment are in Africa.
Data for selected emerging and developed nations have been included against which Africa's performance can be compared, while an assessment is made on how the investment environment has been changing over time - mostly for the better, but sometimes for the worse.
The countries are rated from most to least attractive investment destinations. The report finds Rwanda, Ghana and Zambia to be stand-out countries based on continued improvements via reforms and accelerated growth.