Specialist risk consultancy, Control Risks, and independent global advisory, NKC African Economics, the Africa-focused subsidiary of Oxford Economics, have launched the fifth edition of the ‘Africa Risk-Reward Index.’
The index offers a comparative snapshot of market opportunities and risks across the continent and provides a grounded, longer-term outlook of key trends shaping the investment landscape in major African economies, which should inform the strategies of organisations looking to invest in or grow their business in Africa.
Investors seeking to minimise risks and maximise rewards are cautioned not to focus on headlines, but rather on specific country, sector and project contexts.
A statement by the two firms said, “The COVID-19 pandemic has undoubtedly eroded the overall improvement in risk-reward scores seen across the African continent in recent years, but this should not deter investors. Africa’s recovery may be prolonged and uneven, but it could also be transformative.
“The pandemic’s huge economic cost has triggered a universal drop in our reward scores, but the impact on risk scores has been more varied. Ethiopia has seen the largest ratings drops as COVID-19-induced challenges combine with escalating ethnic tensions in the context of a delayed election.”
It noted that Egypt’s risk score had remained relatively steady, but its reward score badly hit by the triple blow of the pandemic, low oil prices and plummeting tourism revenues.
Regarding Algeria, it said its risk score improved since the mass protests and landmark elections of 2019, but challenges for its oil-dependent economy still dragged down its overall score.
“The COVID-19 pandemic is a global crisis, but Africa’s recovery will be slower and more uneven than most,” warned Barnaby Fletcher, Associate Director at Control Risks.
“However, this recovery will be an opportunity for governments across the continent to address structural constraints and promote new solutions. We are already seeing signs that they are doing so, and for investors this opens up some interesting opportunities.”
The index examines the longer-term implications of COVID-19 in Africa. The first article looks at the longer-term impact of COVID-19 and imagines a post-pandemic landscape, while the second explores the role that African tech can play in revitalising more traditional industries.
The last article covers the growing efforts by both external and domestic actors to manipulate the public debate in Africa through influence operations and disinformation campaigns, and the risks these efforts pose to commercial companies.
