Markets & Finance

Nairobi beats Lagos in ranking of global investment hotspots


Nairobi City skyline. The Kenyan capital has been ranked fifth out of seven African cities that made it to a list of 120 most competitive global commerce centres. FILE

Nairobi is ranked higher than Nigerian commercial capital Lagos among African cities that are predicted to be top contenders for investors’ dollars and melting pots for talent in the next decade.

A new report by the authoritative Economic Intelligence Unit (EIU), the research arm of international magazine, The Economist, ranks Nairobi fifth out of seven African cities that made it to a list of 120 most competitive global cities.

South Africa had the top three African cities, Johannesburg, Cape Town and Durban, in the report titled Hot Spots 2025: Benchmarking the Future Competitiveness of Cities.

The report, which was produced jointly with American financial conglomerate Citibank, places Cairo at number four in Africa, and Alexandria and Lagos at number six and seven respectively.

Nairobi was ranked number 112 out of the 120 global cities included in the survey, with the EIU categorising it among “important emerging cities” with potential to be globally competitive.

“The EIU analyst team reviewed the list and included established financial and commercial centres (for example, Geneva), as well as important emerging cities (such as Ahmedabad, Ho Chi Minh City, Nairobi, Panama City), which did not meet our initial criteria of population and GDP size,” said the report.

The report ranked cities based on their competitiveness and ability to attract international capital.

“In its broadest form, competitiveness is defined as a city’s ability to attract capital, businesses, talent and people. The Index benchmarks the competitiveness of cities at two points in time: today and in 2025,” said the report.

New York was top in the overall global ranking while Tehran was at the bottom of the list.

Johannesburg took position 66, Cape Town (77), Durban (95), Cairo (106) ahead of Alexandria (117) and Lagos (119).

Nairobi’s ranking represents a drop of one position from the 2012 ranking, having scored 36.9 out of 100, one more point than last year.

Nairobi’s profile as a regional business hub has been growing as seen by the number multinationals, from diverse industries, which have chosen to open shop in the Kenyan capital or decided to choose the city as their base for Africa-wide operations.

(Read: Global firms pitch camp in Nairobi to tap new markets)

Tullow Oil, BP Group, Shell, General Electric, Google, IBM, Visa International, Pepsi, Nestle, Foton Automobiles, Bank of India, HSBC and JP Morgan Chase was granted a licence to open a representative office by regulator the Central Bank of Kenya.

Industry players said that more can be done to increase Nairobi’s competition and the first place to start would be to revamp the city’s infrastructure.

Global real estate consultants Knight Frank, whose reports on trends have prominently featured Nairobi as a major city, say that poor roads, interrupted water and power supplies are hindering the city from achieving higher rankings.

Knight Frank chief executive (Kenya) Ben Woodhams said that poor infrastructure is the city’s biggest problem and at best private sector interventions are stop-gap fixes. “People are doing the best they can such as running generators but more has to be done,” said Mr Woodhams.

The report also says capital and talent follow where it is easier to do business and good roads, reliable and constant power are part of this.

“A city’s physical infrastructure, financial maturity and global appeal help businesses to operate efficiently,” said the report. Despite the inadequate infrastructure Kenya’s capital has a lot going for it especially being the gateway to the East African region, added Mr Woodhams.

“Generally speaking Nairobi is a good place to be. There is a massive population in East Africa and that is why global corporations are setting offices,” said Mr Woodhams.

“Core to Citi’s strategy is a focus on the 150 cities we believe will shape the world in the years ahead. The Citi-commissioned EIU research will enhance understanding of the factors driving urban competitiveness and illuminate how the highest performing cities continue to create competitive advantages,” said Citi chief executive Michael Corbat.

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