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17 of Africa’s 52 markets do not have a longterm credit risk rating!
For many years, the Middle East and Africa have been classified as high-risk environments. Political instability, civil war, corruption and financial risk has plagued the continent and alienated investors.
With the dawn of the digital age and mobile connectivity, the Middle East and Africa is considered the last frontier. At ABiQ we have built a new Overall Country Risk rating that encapsulates the various areas of risk and ranks markets accordingly
The Overall Country Risk rating is updated quarterly to reflect changing conditions in each of the markets covered.
Our aim is to provide a regular overview of African countries and provide a transparent method to evaluate and rank them. We consider this an opportunity to provide insight into the Middle East and Africa for prospective investors. It also serves as a platform for the Middle East and African countries to benchmark their policies and performance with regards to stability and all that promotes it.
Country Risk update for the Middle East and Africa – Q1 2022
The latest update of ABiQ’s country risk ranking covers the Middle East and Africa. South Africa drops to 14th position.
The first quarter of 2022 saw the invasion of Ukraine by Russia, which sent adverse shocks to various countries around the globe. Some of which affected MEA (the Middle East & African) markets. Particularly the external impact on the food and energy sectors and trade. While several markets such as Congo, Cameroon and Egypt, which have a heavy dependency on wheat imports from Russia, were negatively affected, it is worth noting that oil exporters such as Algeria, Saudi Arabia and the UAE have benefited from the rising price levels (World Bank, AfDB).
Among other current affairs, these events are embedded in the factors affecting investment and business opportunities in the MEA markets, measured by ABiQ’s Overall Country Risk rating. The ABiQ overall risk rating is a composite rating which measures to what extent economic, political, financial, health, security and other factors can affect investing and doing business in a country. Overall risk rating of 0 is the best rating possible, and ten is the worst. We see the top 3 markets, UAE (5.28), Qatar (5.34), and Israel (5.39), being the top performers according to the overall risk ratings. On the other hand, we observe African markets such as South Sudan (8.64) and Somalia (8.50) being the lowest-ranked markets.
Most of the countries’ overall risk ratings have worsened since 2021. Qatar is one exception. Qatar’s overall risk rating improved from 5.51 to 5.34 and is now second in the ABiQ country risk ranking. Although still in the top spot, the UAE saw an increase in its risk rating from 5.06 to 5.28.
South Africa and Morocco dropped out of the top ten markets to the 14th and 16th position, respectively, with South Africa’s risk rating increasing from 5.87 to 6.38 and Morocco from 6.02 to 6.45. These are but a few examples of the worsened overall risk ratings. Nonetheless, ample business and investment opportunities in the MEA region remain present.
For more information about market risk in the Middle East and Africa or to access our risk benchmark reports, please contact us here.
The Middle East-Africa (MEA) market has been struggling with regional tensions in recent years. The investment climate is troubling, as there are difficulties in attracting foreign direct investment. Lately, the region has seen a shift as more investors and countries focus on boosting regional economic growth.
The MEA market now presents investors with attractive opportunities for profit gain and returns in a broad range of sectors. From emerging industries such as finance, services and health technology to more traditional sectors including energy and construction.
ABiQ saw the potential MEA countries present and has updated our country risk rating to broaden our country scope and provide regular overviews and insights for prospective investors.
The Covid-19 pandemic has brought on a new set of challenges for the MEA economies. The region scores an average of 6.01 or slightly above the global average of 5, making it one of the strongest scoring regions above Latin America.
The UAE (5.06), South Africa (5.87) and Morocco (6.02) stand out as the highest-scoring markets with scores closer to the best rating possible of 1.
The region performs the strongest for country rewards, as most markets have above-average economic and population growth rates for the post-Covid-19 period. Improving relative political risk, strong economic fundamentals and the rapid adoption of technology account for a country’s higher rank.
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