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New Report Says Africa’s Political Stability Risks ‘ll Be Heightened In 2023

(AFRICAN EXAMINER) – Political stability risks in Africa will be heightened in the coming year as socio-economic challenges exacerbate deep inequalities and highlight governments’ inability to address them, a newly published seventh edition of the Africa Risk-Reward Index Report. has warned.

The report was jointly launched on Tuesday by a leading global specialist risk consultancy, Control Risks and its economics consulting partner Oxford Economics Africa.

The Africa Risk-Reward Index is an authoritative guide for policymakers, business leaders, and investors. The report details developments in the investment landscape in major African markets and delivers a grounded, longer-term outlook of key trends shaping investment in these economies.

Published with the theme, “Opportunity through uncertainty”, the report observed that anti-government sentiment is high and rising across many of Africa’s populations, with governments accused of failing to tackle the rising cost of living.

It added although this has driven unrest in many African capitals, it is unlikely to precipitate significant political change, as elites have either ignored concerns, co-opted popular movements to take power or to strengthen their own hold on authority, or simply do not have the financial capabilities to do anything tangible (with weak or non-existent welfare systems).

“Incumbents and elites have made weak promises of reform but are unlikely to follow through despite rising public anger. Examples include Nigeria, Ghana, Uganda, South Africa – the common thread being that opposition in these countries is vocal and disruptive but is mostly ineffective in engendering change”, the report said.

The report also noted that a string of coups (in Sudan and several West African nations) was conducted on ‘behalf of the people’, with militaries deposing long-serving leaders and their incumbent parties, adding that rather than leading to tangible change, military regimes have reneged or delayed transitions, proving themselves to be just as much a part of the establishment as the leaders they deposed.

“Elsewhere, in Kenya, presidential frontrunner William Ruto has adopted populist campaigns as part of his bid to differentiate himself from elites. However, he is unlikely to follow through populist promises, as he is part of the country’s elite”, it added.

In the year ahead, businesses are likely to be directly or indirectly affected by protests and should plan for risks such as incidental security threats, supply chain delays, looting and vandalism, or duty of care concerns for employees.

It further warned that in the year ahead, businesses are likely to be directly or indirectly affected by protests and should plan for risks such as incidental security threats, supply chain delays, looting and vandalism, or duty of care concerns for employees.

The report stated that the disruption to global supply chains brought about first by the COVID-19 pandemic and more recently by the conflict in Ukraine have highlighted Africa’s external dependence for most of its commodities and severe gaps in the continent’s internal supply chains, such as food.

It added that these challenges are prevalent, despite African countries having committed in 2019 to speed up regional integration under the African Continental Free Trade Agreement (AfCFTA).

“Most of Africa’s agriculture-related activity is subsistence, and where it is not, getting food from farm to end-consumer is costly. A large infrastructure deficit in transport and power remains a key obstacle to addressing these challenges”, the report posited.

Head of Africa Macro at Oxford Economics Africa, Jacques Nel said Africa’s dependence on imports of even the most basic foodstuffs is one of its most pressing issues.

“Given the continent’s dependence on rain, agriculture and susceptibility to climate change, in the context of an international shift towards shoring-up national food security, the situation could deteriorate further.

“Addressing this issue will require investment, both public and private, in storage & warehousing, agro-processing, agricultural infrastructure, and financial services. Technological developments in the fintech and agricultural sectors as well as progress on the AfCFTA could catalyze the development needed”, he added.

He also pointed out that the continent’s policy environment is however heavily protectionist, which will prevent improvements in the short term as many of the trade protocols of AfCFTA remain theoretical.

He said even within individual blocs, such as the East African Community and the Economic Community of West African States, there is competition rather than cooperation to serve primarily non-African markets.

“Land is also a highly politicised issue across the continent. Meanwhile, the so-called success stories in the agriculture sector also tend to be primarily extractive and focused on low-calorie crops (such as horticulture and cocoa). Questions also remain about value-addition and agri-manufacturing capabilities, which are growing from a very low base across the continent”, he further explained.

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