By Samuel Ouma
On September 21, 2021, leading global specialist risk consultancy Control Risk and Oxford Economics Africa launched the 2021 edition of the Africa Risk Reward Index.
The specialists explained how government responses to three key issues (post-pandemic healthcare, debt, and insecurity) can accelerate or stall Africa’s economic recovery.
This year’s risk-reward scores paint a picture of a continent recovering, though in an uneven and sometimes unpredictable way that raises as many challenges as it does opportunities. Reward scores have increased across the continent, in some cases substantially, but the risk scores show a more varied picture.
According to the policymakers, African governments responded quickly to contain the Covid-19 pandemic, however, testing and treatment have been constrained by lack of capacity. For instance, vaccines rollout has is progressing slowly in the continent due to supply constrains.
Nevertheless, these challenges have prompted new efforts to develop African capacity in the areas of healthcare and biotechnology such as Genome sequencing capacity which currently being established in Liberia, Nigeria, Senegal and Sierra Leone.
Other intitiatives to increase the continent’s ability to develop and manufacture vaccines, are an mRNA vaccine technology transfer hub in South Africa and manufacturing facilities in Egypt and Morocco.
Numerous laboratories, testing capacities and cross-border digital test and trace solutions have also been established.
“The global vaccine rollout has been extremely poor, with the unequal distribution of vaccines raising both moral and medical objections. Yet the one silver lining is that the challenges Africa has faced in obtaining not just vaccines but a whole range of equipment and treatments has spurred innovation and driven significant investments in African biotech and health-tech capacity. The emergence of an African biotech sector holds huge potential well beyond the COVID-19 pandemic and well beyond just healthcare applications,” said Barnaby Fletcher, Associate Director at Control Risks.
On debt, it has been discovered that Africa’s debt burden has grown massively heavier over the past 18 months, as governments have borrowed to finance both their health response to Covid-19 and stimulus measures meant to lessen the pandemic’s economic impact.
This debt burden poses risks for economies and companies alike as the obligation of servicing that debt will put strain on state-owned enterprises and tend to limit opportunities for private-sector companies that do business with government.
The policy makers believe that the new social bonds and regional funding mechanisms can help reduce the threat such debts pose and offer new opportunities for investors.
On security, they said Africa is at risk now that Western world no longer has the political appetite for foreign military interventions. They raised concern of an increase in militancy and tensions in the Horn of Africa, saying it can make Africa’s security more volatile than it has been in the past.
They added that in the absence of foreign military intervention, new approaches are needed to tackle security threats to shape the continent’s security landscape.
The Africa Risk-Reward Index is an authoritative guide for policymakers, business leaders and investors.
The report monitors developments in the investment landscape in major African markets and delivers a grounded, longer-term outlook of key trends shaping investment in these economies.