Market Volatility and Political Risks Worry Businesses in Africa
By Abdi Ali
Published January 19, 2017
Companies operating in Africa are on the threshold of 2017 worrying about the unpredictable business environment.
An annual survey that analyses corporate risks lists market volatility, low commodity prices, and political risks and violence as being the biggest threats to the continent.
The sixth annual Allianz Risk Barometer that was conducted among 1237 risk experts from 55 countries shows that political perils, such as protectionism or terrorism, are on the rise across Africa. Other growing concerns are digital dilemmas arising from new technologies and cyber risks as well as natural catastrophes.
“Most African countries such as South Africa and Nigeria face macroeconomic challenges including low commodity prices, the Chinese economic slowdown and the tightening of US monetary policy,” says Delphine Maïdou, CEO of Allianz Global Corporate & Specialty SE (AGCS) Africa that carried out the survey.” These countries also “suffer from their own internal pressures such as inflation, weak domestic demand and socio-political tensions.”
The report calls upon businesses to invest more resources into better monitoring politics and policy-making in 2017.
The growing risk of politically-instigated violence, such as war, civil war and insurrection, AGCS cautions, should not be underestimated.
“Instability in African states such as Burundi, The Gambia, Democratic Republic of Congo, Libya, Somalia and South Sudan is a chief concern as well as the persistent Islamic terrorism of Boko Haram in some parts of Nigeria,” says Christof Bentele who heads the Global Crisis Management section of AGCS.
Increasing reliance on technology and automation is both transforming and disrupting companies across all industry sectors.
While digitalisation is bringing companies new opportunities, AGCS says, it is also presenting new challenges, such as cyber attack, to businesses.
“Cyber incidents is ranked fifth in Africa with the most common threats being from hackers, disgruntled employees, negligence and competitors,” says Nobuhle Nkosi, head of Financial Lines with AGCS Africa. “This is a doubled-edged sword to the continent as Africa has a particular role in embracing and responding to new technologies compared to mature markets while speeding up cyber security and personal data protection legislations.”