CAPE TOWN, Sept. 14 (Xinhua) -- Escalating political risks in South Africa leads to doubts whether the balance between risks and opportunities in the country is still favorable for businesses, according to a new study released on Thursday.
South Africa's risk score of 5.0 remains below the region's average, but the reward score of 4.6 is also low, the Africa Risk-Reward Index shows.
The study is developed by Control Risks, a global risk and strategic consulting firm, in cooperation with Oxford Economics.
Whilst South Africa enjoys a deserved reputation as Africa's pre-eminent constitutional democracy, several of its key institutions have gradually weakened over the past decade, says the study.
Economic prospects are closely linked to the outcomes of the ruling African National Congress' (ANC's) National Conference in December, in which a new party leader will be elected.
The forecasted real GDP growth of 0.5 percent for 2017 is below population growth and certainly insufficient to reduce South Africa's staggering 27.7-percent unemployment rate, says the study.
The study lists South Africa, Nigeria and and Egypt as stumbling African giants which will be surpassed by Kenya and Ethiopia.
Egypt has seen rising security risks and political instability recently, while Nigeria has been hit by economic downturn and militancy, according to the study.
Ethiopia outperforms every African peer with its high reward score of 8.0, attracting 3.2 billion U.S. dollars of foreign direct investment in 2016 - more even than Nigeria, and double the figure for Morocco.
Kenya has achieved a period of strong GDP growth amid relative political stability: real GDP growth averaged at 6.0 percent in 2010-16. The 2017 growth forecast is at 5.4 percent.
Kenya and Ethiopia might soon outshine these heavy-hitters in the competition for investment, the study concludes.
The Africa Risk-Reward Index helps investors to identify some of the more hidden investment opportunities in times where the heavy-hitters are struggling.
