Nigeria, Ethiopia top Africa investment index

By Peter Apps

LONDON (Reuters) - Nigeria and Ethiopia topped a new index of African potential investor destinations on Wednesday, with the survey organisers saying the continent offers good potential growth even against the global economic crisis.

The world's poorest continent had seen an investment boom in recent years but flows into the region are seen drying up as the global financial crisis and falling commodity prices take the shine off what were seen as promising frontier markets.

Business consultancy African Rainbow's Star of Africa index ranks 53 African countries in terms of their investment potential in various fields, with its creators arguing that potential growth in energy, water and communications consumption could amply reward investors taking the risk.

"It is for investors to make sure they don't miss a trick by overlooking a country they would otherwise have missed," said Katharine Pulvermacher, chief executive of African Rainbow.

"Africa is going to overtake the Middle East to become the second fastest growing region in the world after emerging Asia. It will be affected by the global financial crisis but it is much less exposed than many places."

South Africa, Mauritius and Tanzania took third, fourth and fifth place respectively, she said.

But it said some countries still have a long way to go, with Somalia, Chad and Eritrea named the least appealing markets on the continent, particularly due to low ratings for corporate governance and social capital.

Nigeria also scored poorly for corporate governance but its potential for infrastructure expansion in electricity, water, information technology and communications as well as its status as Africa's most populous country were enough to propel it to the top of the list.