Allianz Trade, the world leader in corporate credit insurance and a specialist in bonding, has just published its barometer for the first quarter of 2023 on country risk. Due to the global economic situation, country risk has deteriorated globally. In the new country risk map, Botswana, Morocco and Mauritius are the three most resilient countries in Africa:
The global economic environment has continued to deteriorate
For the past three years, under the effect of Covid-19 and the impacts of the Russia-Ukraine war, the global economic environment has continued to deteriorate. These factors have been compounded by another natural phenomenon, the drought, which has affected many countries and which demonstrates the negative impacts of climate change.
For these reasons, the global environment, marked today by worrying inflation in many countries, is characterized by a deterioration in country risk, posing significant risks to global economic operators.
Allianz’s quarterly report combs through 241 countries and territories to indicate each country’s country risk – the best understanding of the economic and political environment, business and financing risks around the world.
African news – Allianz’s quarterly report
The assessment of the overall level of country risk is based on a structural country rating and a short-term warning indicator. The structural country rating measures several factors: the assessment of macroeconomic imbalances, the assessment of the business environment, and the assessment of the stability of the political system and the effectiveness of the government (political risk).
These indicators are rated on a six-level scale from AA to D, where AA is the lowest structural country risk and D is the highest structural country risk.
The short-term alert indicator measures the business cycle and financing risks to the economy that have become elevated for many countries. These indicators are rated on a scale of 1 to 4, with 1 being the lowest level of risk and 4 being the highest. These four levels of risk are also referred to as “low”, “medium”, “significant” and “high”.
The short-term rating (country risk level) identifies more immediate threats by focusing on economic output over the next 6 to 12 months and macroeconomic indicators that warn of an impending financial crisis resulting from a disruption in financing flows. By combining the two ratings (structural country rating and short-term warning), Allianz Trade assigns a rating to each of the 141 countries assessed.
And if we take into account the sub-indicators, hundreds of economic indicators are scrutinized for each country.
Botswana, Morocco and Mauritius, the three most resilient countries in Africa
In Africa, the risk map has deteriorated and the world leader in credit insurance is pessimistic. It describes a fairly high risk of non-payment and business failures in the majority of African countries. The cause is the volatility of the international environment.
Some countries have shown greater resilience than others. According to the data in the Allianz Trade report, the economies of Botswana, Morocco, and Mauritius performed best under conditions of global fluctuation. As a result, these three countries received the highest scores on the continent.
The best rating on the continent went to Botswana with a “BB1”. The country offers low trade and financing risks. The same goes for political risk, thanks to the country’s good governance. Risks relating to the economy and business environment are considered medium. Morocco has obtained an overall rating of “B3”. The country’s economic, trade, financing, and business environment risks are generally average and declining. Morocco is the only country among the major economies of the African continent to receive such a rating.
Mauritius received a rating identical to Morocco’s (B3).
Behind these three countries, the best ranked in Africa are Cape Verde, Côte d’Ivoire, Rwanda and Senegal, all rated “C” with a “medium risk”. South Africa, Algeria, Kenya, Lesotho, Benin, Cameroon, Namibia, Djibouti, Namibia… are all rated “C” with a “significant risk”. On the other hand, the two leading African economies, Nigeria and Egypt, are rated “D” with a “significant risk”. This means that these countries present high country risks.
Grades of some African countries
Botswana, Morocco and Mauritius, the three most resilient countries in Africa
| Country | Structural country note | Short-term alerts (Country risk level) |
|---|---|---|
| Botswana | BB | 1 |
| Morocco | B | 3 |
| Mauritius | B | 3 |
| Cape Verde | C | 2 |
| Rwanda | C | 2 |
| Senegal | C | 2 |
| South Africa | C | 3 |
| Algeria | C | 3 |
| Nigeria | D | 3 |
| Egypt | D | 4 |
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