1 Leading global risk consultancy Control Risks (www.ControlRisks.com) and its economic consulting partner Oxford Economics Africa (www.OxfordEconomics.com) today announced the launch of the seventh edition of their Africa Risk-Reward Index: “Opportunity to through uncertainty.
2 ” Download the document: https://bit.ly/3xBSq5k The Africa Risk-Reward Index is an authoritative guide for policymakers, business leaders and investors.
3 The report details developments in the investment landscape in major African markets and provides an informed longer-term perspective on the key trends shaping investment in these economies.
5 However, the continent will continue to face uncertainty.
7 In 2021, around 22 million jobs (https://bit.ly/2Z1dRwt) were lost due to the pandemic, and 30 million people were pushed into extreme poverty.
8 This number is estimated to increase by an additional 1.8 million people during 2022.
9 Rising costs, supply chain disruption and climate change have exacerbated the continent’s food crisis, and across Africa, anti-government sentiment it is already high and rising, as governments are seen as failing to address socio-economic challenges.
10 This year’s risk-reward scores paint a picture of a continent at a turning point, where opportunities abound at a time of great uncertainty.
11 In the report, we examine three main themes outlined below, which summarize our views on Africa’s trajectory.
12 Shaping Africa’s role in the global energy transition This article explores how the urgent global transition away from fossil fuels, combined with the disruption of European energy markets, has prompted a renewed focus on energy in Africa, as a source of energy to other parts of the world and as a continent with the potential to “leapfrog” development through the widespread adoption of clean energy.
13 Opportunities exist in the energy subsectors (renewables, oil and gas, hydrogen) and across the value chain (extraction, developers, generation, transmission, distribution, export), and governments largely welcome investors.
15 “The [energy] the transition in Africa must be staggered; Many countries have and will exploit their fossil fuels at the same time as they develop their focus on renewable energy.
16 Countries with high LNG potential, such as Angola, Mozambique, Tanzania and Nigeria, will see sustained investor interest, and it will be important to watch talks about ending flaring,” says Patricia Rodrigues, senior analyst at Control Risks.
17 “Private players will need to take into account political risks, given competition for projects in saturated markets, as well as contractual issues with governments, which can cause delays.
18 Investors should be aware of the environmental, social and governance (ESG) concerns associated with their industry, given the potential for “greenwashing” and the ongoing extractive nature of many projects,” says Rodrigues.
19 Solving Africa’s food security conundrum Disruption to global supply chains caused first by the COVID-19 pandemic and more recently by the conflict in Ukraine have highlighted Africa’s external dependency for most of its commodities.
20 and the serious gaps in the continent’s internal supply chains, such as food.
22 Most of Africa’s agriculture-related activity is subsistence, and when it is not, getting food from farm to final consumer is costly.
23 A large infrastructure deficit in transport and energy remains a key obstacle to addressing these challenges.
24 “Africa’s dependence on imports, even for the most basic food products, is one of its most pressing problems,” according to Jacques Nel, head of macro Africa at Oxford Economics Africa.
25 “Given the continent’s reliance on rainfed agriculture and susceptibility to climate change, in the context of an international shift to shore up national food security, the situation could deteriorate further.
26 Addressing this problem will require investment, both public and private, in storage and warehousing, agro-processing, agricultural infrastructure, and financial services.
27 Technological developments in the agricultural and fintech sectors, as well as progress in the AfCFTA, could catalyze the necessary development.” However, the continent’s political environment is strongly protectionist, which will prevent improvements in the short term: many of the AfCFTA trade protocols remain theoretical.
28 Even within individual blocs, such as the East African Community and the Economic Community of West African States, there is competition rather than cooperation to serve primarily non-African markets.
29 Land is also a highly politicized issue across the continent.
30 Meanwhile, the so-called success stories in the agricultural sector also tend to be mainly extractive and focused on low-calorie crops (such as horticulture and cocoa).
31 Questions also remain about agricultural and value-added production capacities, which are growing from a very low base across the continent.
32 Cash-strapped governments riding a wave of discontent Anti-government sentiment is high and rising in many of Africa’s populations, with governments being accused of failing to address rising costs of living.
33 Although this has sparked unrest in many African capitals, it is unlikely to precipitate significant political change, as elites have ignored concerns, co-opted popular movements to seize power or strengthen their own grip on authority, or they just don’t have the financial capabilities to do anything tangible (with weak or non-existent welfare systems).
34 Incumbents and elites have made weak promises of reform but are unlikely to follow through despite mounting public anger.
37 Instead of leading to tangible change, however, military regimes have defaulted or delayed transitions, proving to be as much a part of the establishment as the leaders they deposed.
39 However, it is unlikely that he will follow through on his populist promises, as he is part of the country’s elite.
40 Risks to political stability will increase in the coming year as socioeconomic challenges exacerbate deep inequalities and highlight governments’ inability to address them.
41 In the year ahead, businesses are likely to be directly or indirectly affected by protests and must plan for risks such as incidental security threats, supply chain delays, looting and vandalism, or duty of care concerns.
43 Methodology The Africa Risk-Reward Index is defined by the combination of risk and reward scores that integrate economic and political risk analysis from Control Risks and Oxford Economics Africa.
44 Each country’s risk scores originate from the Economic and Political Risk Assessor (EPRE), while reward scores incorporate medium-term economic growth forecasts, economic size, economic structure, and demographics.
45 For details on the individual definitions of risk and reward, please contact us at: communicationsEMEA@controlrisks.com or email@example.com To request the report, please contact: firstname.lastname@example.org