Ecobank Research has identified the top five destinations in Sub-Saharan Africa which, despite market volatility and the fall in commodity prices, provide good opportunities for investment.

Côte d’Ivoire, Kenya, Ghana, Senegal and Ethiopia top the list. “Our priority was to select countries that have a good track record. You can have a country that has 15% growth one year – but it might be just because of a single mining project – and then three years down the line, it’s in a mess again,” Edward George, the bank’s head of group research, tells GTR.

When selecting the top-performing countries, the first step was to exclude what George calls the “bad boys” of Africa (Nigeria, South Africa and Angola). “There has been way too much negative press out there about Africa – certainly in the first half of this year. And if you look at these three countries, you would believe that. They’re all suffering dramatic slowing in growth in response to slumping oil and metals prices, as well as some local factors,” he explains.

As such, although these countries represent the three biggest economies in Africa, they have been omitted from the list of top investment destinations. “I’m not suggesting you totally discount these three countries. But if you want to start – or increase – your investment in Africa at this precise moment, we would not recommend South Africa, Nigeria and Angola as your top priorities,” he adds.

Country profiles on these – and all Sub-Saharan nations – are included in the recently-launched fourth edition of Ecobank’s Middle Africa Fixed Income, Currency and Commodities (FICC) Guidebook.

The guidebook is intended as a reference tool for investors interested in doing business in Africa. “The problem with information about Sub-Saharan Africa is that it’s very fragmented, and as a pan-African bank, we wanted to demonstrate the depth and spread of our local knowledge,” says George.

“The guidebook has two primary uses: first, it provides an overview of the region, what the key economies are, what you need to understand about the key sectors; and second there is a detailed country-by-country guide of 41 markets in Sub-Saharan Africa,” he explains.

Côte d’Ivoire and Kenya

George identifies Côte d’Ivoire and Kenya as his top picks for investment in the region because of their political stability and domination of intra-regional trade flows.  “The more intra-regional trade countries engage in, the more they spread their economic relationships, and the less susceptible they are to sudden swings in a particular commodity or market,” he says, lauding the two countries’ diversity of commodities and services: Côte d’Ivoire is the world’s largest producer and grinder of cocoa and West Africa’s leading exporter of palm oil, rubber and cashew nuts, while Kenya is Africa’s largest exporter of horticultural goods, tea and coffee, and is a major processing hub for food and palm oil products. “They have not been negatively affected, as has Nigeria for example, by the slump in oil prices,” George explains.

What’s more, over 40% of Côte d’Ivoire and Kenya’s trade flows are with other African countries – almost three times the average for African countries for intra-regional trade. “However you’re investing in these countries, you’re doing so in markets which are growing strongly: they have the rule of law, strong government, and a vast array of different means of making money. There’s a lot of opportunity,” says George.

The following factors assisted Ecobank Research in its decision-making process for the remaining three countries:

Ghana: economy has turned a corner, but there is still work to do

“Since the start of the IMF programme Ghana has made significant progress with controlling public spending, curbing inflation and stabilising the currency. After the oil-fuelled boom gave way to economic slump, real GDP growth has started to regain pace amidst an improving investment environment.”

Senegal: under the radar

“Senegal’s real GDP growth, while not stellar, has been gathering pace since 2012. The CFA Franc’s peg to the Euro has kept inflation low, while the fiscal deficit is improving.

“Senegal is a major intra-regional trader, with its port at Dakar acting as an entry point for goods and services going into and out of the Sahel.”

Ethiopia: the long-term play

“Although Ethiopia’s annual growth rate has fallen from over 10% to around 6% now, CAGR remained at over 20% in 2011-15, around double the rate of Kenya & Tanzania.

“Ethiopia has one of the highest rates of investment of any country in Africa.

“It is Africa’s largest producer and consumer of coffee, as well as being the region’s largest wheat producer.

“Ethiopia and Kenya are Africa’s two largest exporters of vegetables, cut flowers and live plants to world markets.

“The government has strong control over all sectors of the economy, but is opening up new sectors to investment.”