Africa from the Inside: Spotlight on Risk in Africa

The Forecasting risk in Africa 2017

The blanket “Africa Rising” narrative led to an inability to foresee and mitigate risk on the part of many multinationals in the region. Intra-regional multinationals in Africa must now adapt to “Africa 3.0” – the emerging post-crisis African economy.

Key takeouts from this report 

  • A rising debt crisis: Many African states are experiencing a fiscal blowout – they have taken on too much public sector debt and are unable to service it.
  • Captured capital: The question for investors in Africa will increasingly be how to mitigate currency risk and repatriate or re-invest what could be termed “captured capital”.
  • Currency risks: With the commodity price collapse over the past three years, currency volatility for many emerging and frontier economies has been a severe buffeting force to contend with.
  • Possibility of bank failures: How governments react to prevent or manage banking failures will determine their future economic trajectory over the longer term.
  • Political & governance risk: In many countries in the region there is an obvious need for a shift in approach toward political and economic governance.
  • Lower for longer commodity prices: Of continued concern for Africa’s growth outlook are persistently low commodity prices, in particular oil.
  • China’s rebalancing as a risk: An economic crisis – a so-called “hard-landing” in the Chinese economy – would result in a severe negative knock-on effect in Africa.
  • What our experts say  

    The strategy of “fortitude” will continue in 2017 with investors in the region having to review their risk mitigation strategies to match the changing and diverse set of territories across the African continent.

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