Control Risks: Global Powers’ Interests Shifting to Africa

By Samuel Ouma

Control Risks, a specialist risk consultant, and its economics consulting partner, Oxford Economics Africa, have revealed that Africa continues to pique the interest of global powers.

The firms made the revelation during the launch of the eighth edition of their Africa Risk-Reward Index themed ‘Opportunity through adversity’.

The report stated that with the ongoing Ukraine-Russia war, countries worldwide are scrambling for influence in Africa and its potential resources.

Some countries, like the US, China, France, Russia, Japan, the UK, Italy, etc., compete for influence on the continent, boasting rich resources.

Aware of the rivalry, Africa's major economies are attempting to balance their desire for neutrality and their need for foreign financial help.

However, African nations' attempts at non-alignment are under increasing strain as they must traverse the consequent regulatory complexity caused by competing regulatory regimes, sanctions, export bans, and increased scrutiny on companies' supply chains.

The report also noted that African governments and institutions increasingly assume a bigger role in handling security issues on the continent due to the perceived incapacity of outside forces to bring about long-lasting stability.

“These changes in tackling insecurity will present challenges for policymakers and businesses in Africa in the coming years. Businesses will be forced to navigate a more complex operating environment where military force, regional competition, and political and business interests are intertwined”, said Patricia Rodrigues, Associate Director at Control Risks.

With rising geopolitical competition, fresh opportunities for African nations will come up as geopolitical powers strive to expand their influence through money and investment.

However, in the short term, African nations will continue to face adverse economic circumstances, deterring risk-averse investors.

“The Russia-Ukraine conflict and a tightening in global monetary conditions have unnerved international investors. This has raised concern that economic development on the continent might pause or even regress. One area where this has not been the case is financial services, and more specifically, the expansion of access to financial services through

innovation,” said Jacques Nel, Head of Africa Macro at Oxford Economics Africa.

With investors fleeing to safer havens, the report further stated that home-grown African champions are rising to fill this financing gap and are rapidly strengthening their dominance in Africa's financial services market.

Even though the continent has yet to achieve financial inclusion, financial institutions from regional economic powerhouses are stepping in to help bridge access and inclusion gaps.

Africa's financial industry is now facing a slew of difficulties, including susceptibility to governance concerns, fraud, cyber risks, terrorist financing vulnerabilities, and increased international monitoring of illegal money flows.