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Sector Note -
This quarter’s topic: We take another look at the rankings of the various countries in Africa that have significant exposure to mining. We take the widely accepted Transparency International corruption ranking as a starting point and modify it to account for exceptional geology, current security risks and recent resource nationalisation and other state-sponsored negative interference. Once again, Botswana comes out at the top of our rankings followed by Namibia, Senegal, South Africa and Ghana. The DR Congo lies at the bottom, closely preceded by Eritrea, Zimbabwe and Angola. Interestingly, most of the more significant moves in our rankings were primarily driven by changes to political and fiscal risk – mining investment at the exploration stage is highly mobile and is quick to react to changes in investment risk. In essence, for investors the threat to their investment return is far more important than geology.