Governance in the majority of Africa’s biggest markets for foreign direct investment (FDI) is improving at a faster pace than the continent’s average, according to fDi’s analysis of the latest Ibrahim Index.
The index, which is compiled every two years by the Mo Ibrahim Foundation, assesses governance in all 54 African countries based on 81 indicators spanning security, rule of law, inclusion and economic opportunity.
The 2022 edition, which was released on January 24, found that in the decade to 2021, the continent’s governance score improved just 1.1 points to reach 48.9 on a scale of 100.
“Much of Africa is less safe, secure and democratic than in 2012,” states the report. Factors holding back the continent’s governance levels include a “wave of democratic backsliding”, eight successful coups since 2019, increased armed conflicts and government violence against civilians.
Figures from fDi Markets show that over the same timeframe, nine of the top 15 African countries for FDI posted a greater improvement in governance levels than the continent’s average.
Some of the biggest jumps were in Angola (5.4 points), Morocco (4.9) and Zimbabwe (3.1) — all of which recorded FDI increases over the same period. Other countries to notably improve their Ibrahim Index scores were Côte d’Ivoire and Kenya; however, in line with the global investment slowdown in the wake of the Covid-19 pandemic, both saw FDI volumes decline over the 10-year timeframe.
Ethiopia also managed to improve its governance score by 5.1 points, despite the multi-year civil war in the Tigray region, which has been subject to a fragile peace deal since November 2022.
At the other end of the spectrum are Zambia, Mozambique and Nigeria, which saw both their governance score and FDI inflows decline over the decade to 2021.
Diverging paths for Africa’s hotspots
A notable outlier is Egypt, which has been the continent’s biggest FDI market over the past decade. Its governance score dropped by 1.5 points over that period; however, this has not stopped investors from piling into the country. Annual FDI has grown more than fivefold since 2012, with volumes in recent years boosted by large wind farm projects and green hydrogen commitments.
Additionally, Egypt’s latest Ibrahim Index score of 48.4 is below the African average. Other big FDI markets dragging the continent’s score down are Zimbabwe, Angola, Ethiopia, Mozambique and Nigeria.
A different story is unfolding in the continent’s other FDI heavy-hitter, South Africa. In the decade to 2021 its FDI inflows grew by 52% and its governance score improved marginally to push it to sixth place in the ranking of Africa’s 54 countries.
Taking the continent as a whole, the nations posting the biggest improvements to their governance scores over the decade were Gambia (9.5 points) and Seychelles (9.3 points). Meanwhile the biggest declines were in Libya and the world’s newest nation, South Sudan, which saw their scores slide by 8.5 and 5.7 points, respectively.
South Sudan also sits at the bottom of the Ibrahim Index’s latest ranking of all 54 African countries, while Mauritius comes out on top.