Africa: Francophone leaders outshine peers


Jeremy Weltman
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Côte d’Ivoire and Senegal shoot up in country risk survey; South Africa dives in ECR data, as anglophone states languish.


The latest Euromoney Country Risk survey shows Francophone west Africa’s biggest economies continue to improve in analysts’ views, while anglophone leaders including Kenya and South Africa have faltered. Nigeria’s ECR ratings showed a moderate improvement in the first half of the year, as the central bank partially liberalized its currency regime. But Nigeria’s rating has fallen over a one-year period and – like its anglophone west African peer Ghana – has declined over five years.


Côte d’Ivoire and Senegal, the biggest economies in the West African Economic and Monetary Union (UEMOA), share a single currency pegged to the euro, with convertibility partially guaranteed by France, and are pursuing harmonized frameworks to promote economic integration. Many of the predominantly Francophone oil-producing countries in the Economic Community of Central African States (including Angola, Gabon, Cameroon, Congo Republic) have been hit harder by the oil crisis, however, and performed less well.

South Africa has continued to fall in the survey, extending a longer-term trend and relinquishing its position as the continent’s highest-scoring state in the survey to Botswana. South Africa had the biggest ECR decline among the main continental economies in the first half of the year, as it suffered a credit rating downgrade to junk status by Fitch and Standard & Poor’s. The economy has been hit by lower commodity prices, and investors are nervous about the fiscal leadership and uncertainty ahead of ruling-party elections later this year.


In fact, all six of South Africa’s ECR political risk indicators have declined this year, while two of its economic indicators, for economic growth and government finances, are marked down, as the treasury grapples with how to stem a deteriorating fiscal position. 

In Zimbabwe, uncertainty over Robert Mugabe's succession, the maintenance of strict ownership laws integral to the indigenization policy, and an economy that is back on the ropes, continue to act as deterrents to foreign investors. It also saw a sharp decline in the survey.


Euromoney collates the views of more than 400 economists and other experts, evaluating the risks faced by investors across a range of political, economic and structural criteria. Scores for these indicators are added to values for capital access, credit ratings and debt, and are aggregated each quarter to provide a total risk score. 

Gaimin Nonyane, head of economic research at Ecobank and one of Euromoney’s country risk experts, says Côte d’Ivoire and Senegal were better prepared for the commodity crunch and benefited from the sub-regional peg to the euro. “The strong currency brought stability, and it meant those countries could afford their imports,” she says.

UEMOA’s institutional and policymaking credentials are underpinned by a common accounting system, periodic reviews of the convergence criteria, and a legal and regulatory framework for the banking system, with a shared central bank and pooled foreign exchange reserves. Côte d’Ivoire’s exchange rate stability score is unchanged this year, scoring more than five points out of the 10 available; Senegal’s is on a similar level.

“Contrast that with Nigeria, where exchange rate controls and devaluation led to higher import costs,” Nonyane adds. Nigeria’s currency stability indicator has been downgraded to little more than three points out of 10; South Africa’s is now less than five.


Speculation is growing there may be a currency adjustment in UEMOA, with a devaluation of the West African CFA Franc (the XOF) to bolster export competitiveness. Ecobank’s Nonyane expects the Central Bank of West African States (BCEAO) to maintain the exchange rate peg for the foreseeable future, as there is little appetite within member states to devalue. Other considerations include subdued economic activity in the zone, which with weak demand for exports negates the benefit of devaluation.

Côte d’Ivoire has nevertheless climbed three places in the survey this year, to 92nd out of 189 countries in the global risk rankings, up 59 places since 2010. 

Recent army mutinies and public-sector strikes have raised some doubts over government stability (it is the one ECR political factor downgraded this year) and low market prices are difficult for the cocoa industry. However, the economy is relatively diversified, with a services sector offsetting weaker agricultural and industrial sector trends. Plus, infrastructure is improving thanks to investments in telecoms, trade and transport – boosting structural risk scores.

Confidence in the fiscal framework and structural reforms support Senegal’s prospects, too: the country has risen two places this year (to 88th) and has jumped 41 places overall since 2010. Continuing engagement with the IMF has imbued confidence in the reforms-based development strategy adopted by president Macky Sall’s administration, known as the Plan Sénégal Emergent.