Fresh from its coronation as the biggest economy in Africa, Nigeria has scored another first. The troubled West African country has emerged as the frontier-market economy that is attracting the most attention from American and European multinationals.
The Frontier Markets Sentiment Index, created exclusively for the Wall Street Journal by Washington DC-based advisory firm Frontier Strategy Group, tracks the level of interest shown by major European and American multinational companies in countries across the frontier markets world.
The index is a based on information collected from FSG’s roughly 200 multinational clients, which include companies such as Coca-Cola KO -0.12%, General Electric GE +0.30%, Novartis NOVN.VX -0.06%, Dell and Akzo Nobel AKZOY -0.97%. Matt Lasov, FSG’s global head of advisory and analytics, explains how the index works: “We collect data about which countries the companies are watching for potential future investment. Over time, that gives us a clear picture of their market priorities—which countries are they including in their future plans and which they are dropping.”
The research provides two key insights: the current state of sentiment toward countries in the frontier markets, and the change in sentiment over time. Corporate sentiment is calculated as the percentage of companies that include a particular country on their watch-list. If 50 of the 200 companies are keeping an eye on a particular country, the sentiment index score would be 25%.
The data point to some striking regional differences. Of the 20 countries attracting most interest from multinationals, nine are in sub-Saharan Africa. Few will be surprised to see Kenya and Nigeria among the top tier, but Ethiopia and Tanzania making it onto the list as the 12th- and 13th-most watched countries respectively might cause a few raised eyebrows.
One person who won’t be surprised to see growing interest among multinationals for investing in Ethiopia is Alexander Benard, chief operating officer of Schulze Global, a private equity firm. “We are very excited about Ethiopia,” Benard says. “We believe it has huge potential.”
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