Political risk worry business

Political risk worry business

MASERU – BUSINESSES in Africa are increasingly worried about political risk and violence, according to Allianz Risk Barometer, an institute that monitors risk.
The survey conducted among 1 237 risk experts from 55 countries, revealed that political risk and violence rose to the top three risks that African businesses are worried about.
The biggest threat, though, remained market volatility and low commodity prices, all of which have already hit businesses hard in recent months.

The findings reveal that companies operating in Africa increasingly worry about the unpredictable business environment where markets are volatile and there are political perils like protectionism and rising terrorism.

Other growing concerns are said to be digital dilemmas arising from new technologies and cyber risks, as well as natural catastrophes.
Christof Bentele, Head of Global Crisis Management (AGCS) says while conventional terrorism is a real concern, the growing risk of political violence such as war, civil war, insurrection and other politically motivated incidents which focus on countries — particularly in the Middle East and Africa — rather than certain locations should not be underestimated.

“The impact for globally operating businesses and our customers can be much greater and longer-lasting,” Bentele says.
According Former Finance Minister Timothy Thahane difficulty in reaching political decisions in countries like Lesotho, Boko Haram in Nigeria, labour instability in South Africa  and the current events in countries like Ethiopia, Cote d’Ivoire, Libya, South Sudan and Burundi are worrying business that want to invest in Africa.
Thahane also said the economic risks associated with climate change can be devastating.

“We had El Nino last year and we are about to experience La Nina,” Thahane says.  He says this year “the price of oil might go up, while the dollar might strengthen and possibly the other currencies will weaken and everything that is bought in dollars will become expensive”.

Thahane further says the impact of Britain’s exit from the European Union will also be felt by African countries because as Britain is one of the continent’s biggest trading partners.
Thahane says there is a need for political stability to create investor confidence as the predictability of political situations plays a huge role in gaining investors’ confidence.
“Good governance, clean rule of law, respect of courts and the zero tolerance to corruption.  Thirdly we should focus on the improvement of labour productivity, he said.
He also indicated that it is important to invest in skills, technology and innovation.

“Most African countries such as South Africa and Nigeria face macroeconomic challenges including low commodity prices, the Chinese slowdown and the tightening of US monetary policy and also suffer their own internal pressures such as inflation, weak domestic demand and socio-political tensions,” said Delphine Maïdou, CEO of AGCS Africa.
To mitigate volatility risks and anticipate any sudden changes of rules that could impact markets, companies around the world will need to invest more resources into better monitoring politics and policy-making around the world in 2017.

According to trade credit insurer, Euler Hermes, a subsidiary of Allianz SE, since 2014, there have been 600 to 700 new trade barriers introduced globally every year.
“Companies worldwide are bracing for a year of uncertainty,” says Chris Fischer Hirs, CEO of Allianz Global Corporate & Specialty (AGCS) SE.

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