Angola and Mozambique are on the list of African countries with better prospects for economic growth and business opportunities, according to a study by the Nielsen consultancy that surveyed executives in Africa.

In the first edition of the “Africa’s Prospects” study on the macroeconomic climate, business and consumer and retail indicators for the first quarter 2015, Mozambique is ranked in third place in terms of growth prospects and opportunities for companies, behind Ethiopia and Ivory Coast.

In the study of 26 African countries, Angola is in fifth place with a score of 6.3 (the same as Kenya and 0.1 percentage points below Mozambique) with the capacity for growth offset by “several operational challenges to be overcome by the companies.”

While economic growth in Mozambique is estimated at 7 percent, in Angola’s case the study includes an estimate of 4.4 percent, up from some of the latest downward revisions for the Angolan economy, due to prolonged low oil prices.

The Nielsen study said Angolan consumers were struggling with higher inflation rates, similarly to Ghanaians and Nigerians.

The consumer goods basket used by Nielsen puts Angola as the most expensive country, with a total cost of USD31.97, ahead of Ivory Coast and Ghana, while the list of the cheapest countries is topped by Uganda, Lesotho, Botswana and Swaziland.

The study stresses the growing importance of African economies, particularly in Southern Africa, which are growing faster than those of developed countries, and these countries as consumer markets, with a population increase above the global average.

Although the business climate is often difficult for companies, these countries have been making reforms, which is reflected in their rise in the business climate index prepared by the World Bank.

Angola and Mozambique have been attracting large international retail chains, with a study by AT Kearney placing them among the 15 most attractive African countries for this type of investment.

The consultancy puts Angola in third place among the most attractive African countries for international retail chains and Mozambique emerged as the 15th most attractive, taking into account factors such as the size of the urban population, enterprise efficiency and risk for investors.

Due to the sharp expansion of the population and increase in average income, Angola has attracted chains such as South Africa’s Spar, following the example of its compatriot Shoprite, after Brazil’s Odebrecht was called up by the government for a partnership for the logistics management of state chain Nosso Super.

The Chinese community is strongly represented in retail trade in Angola and Mozambique and has been investing in large stores.

In Mozambique there is a new hypermarket managed by the “Number One Supermarket, Lda” company and offers food, beverages, household appliances and others, an investment of US$2 million in the city of Quelimane, capital of Zambézia province.

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Africa’s Prospects: Macro Environment, Business, Consumer and Retail Outlook Indicators

Prospects For Africa

Africa’s rise in prominence is part of an overall global trend that has seen a shift in economic opportunity from the developed to the developing world. In fact, 6 out of the 10 fastest growing economies in the world are in Africa. In particular, SSA is expected to remain one of the fasted growing regions, with 2014 GDP growth at 4.5%. This outstrips the levels delivered for high-income countries and most of the developing world, excluding China.

Added to this, many African countries feature highly amongst the largest ranked populations and population growth markets in the world. Currently there are an estimated 350 million middle class consumers on the sub-continent. With increasing scope and consumer spending potential, this places Africa firmly in the spotlight as the prominent environment for growth of global, regional and local companies.

Despite burdensome business regulations, Africa is also actively reforming. The ease of doing business is improving, evidenced by the fact that it is currently the region with the highest number of business reforms (World Bank 2015 Ease of Doing Business report). Combined with stabilizing political climates and increasing investment in infrastructure, Africa presents immense prospects.

Success in Africa will depend on many factors including agility and localization of strategy. Realizing the opportunities will also take time, as companies navigate complex political and regulatory environments and develop extended operational perimeters and local talent. The additional workload that comes with doing business in Africa includes managing auxiliary services such as power, water, transport and supplies, which cannot be taken for granted even in large cities. Addressing the shortage of local talent from the outset is also key. At an entry level, lack of training and literacy are issues while the shortage of managerial expertise results in competition for talent and high salaries. In addition, dealing with corruption is one of the many operational challenges faced by corporate executives.

The 26 countries detailed in this report account for 93% of Sub Saharan Africa’s economy and 85% of the population. More than half, or 15 of these countries, show GDP growth ahead of the SSA average of 4.5%.

Business Sentiment

During the first quarter of 2015 business executives across Africa, with single and multi-country responsibility, ranked the same 26 Sub Saharan Africa markets based on their view of growth opportunities. Business views incorporate sentiment for the countries overall economic growth as well as a company’s ability to execute on the ground and tap into consumer spending. The markets topping the list in terms of overall country growth expectations are: Ethiopia, Ivory Coast, Mozambique and Kenya. Angola ranks 5th on the list, however, companies do not recognize their growth opportunity as highly for Angola and Ethiopia, as they struggle to overcome various operational challenges within these markets. In addition, sentiment on both growth outlook for the country and their own business is less favorable versus a year ago in Nigeria, South Africa, Tanzania and Zambia.

Lower expectations for Nigeria echo the more moderate macroeconomic indicators. While South Africa ranks on the lower level of the list, businesses still view their opportunities to grow, ahead of the overall country expectations.

» Click here to find out more about the Africa’s Prospects report.