Africa: Prime 5 Dangers for African Companies in 2021
In 2021, companies will face a globally fragmented restoration from COVID-19; now’s the time embrace danger and give attention to the rebound.
The COVID-19 pandemic, rising digital threats, local weather change and the US China relationship are among the many prime 5 dangers for companies in 2021, revealed Monday by Management Dangers, a specialist world danger consultancy.
Underpinning these dangers, the hazard of lacking the rebound in a yr of multi-speed restoration is a prime danger for enterprise within the coming yr.
“There is no doubt that companies will proceed to face appreciable disruption from the COVID-19 pandemic, however we imagine that the alternatives are actual and thrilling for a lot of corporations in 2021,” feedback Management Dangers CEO, Nick Allan.
All prime 5 world dangers are current in Africa however play out in distinctive methods. In some areas the continent presents a optimistic break from the extra damaging world tendencies, akin to within the regional cooperation proven by the continent in its response COVID-19 and the deliberate launch of the African Continental Free Trade Area (ACFTA).
General, nevertheless, 2021 can be a tricky yr for a continent that can wrestle to get better from COVID-19 as quick as a lot of the remainder of the world. Regardless of many important alternatives for buyers, the markets they’re investing in can be ones characterised by important operational and political uncertainty.
The buyers that can obtain success in 2021 are those who perceive that Africa’s post-pandemic panorama can be tangibly modified from what got here earlier than, presenting totally different challenges and new alternatives.
The worldwide Prime 5 Dangers for Enterprise in 2020
The Prime 5 dangers are launched as a part of Management Dangers’ annual RiskMap report, a worldwide danger forecast for enterprise leaders and coverage makers the world over, revealed at this time.
1. A world with lengthy COVID
2021 can be a yr of uneven restoration as vaccine rollouts create a world of haves and have-nots, with pockets of eternally COVID on the backside of the pecking order. A lot of Africa, sadly, can be within the have-not class and firms will face extended operational uncertainty as localised restrictions are sporadically imposed in response to virus spikes. Africa’s financial restoration can even be extra gradual, as governments with restricted fiscal headroom can’t have interaction in sustained stimulus spending and should as an alternative depend on under-developed personal sectors to drive their recoveries.
2. US-China: stabilisation with out normalisation
Whereas 2021 ought to see superficial stabilisation within the US-China relationship, the straining of the worldwide rules-based system seen over the previous few years is not going to go into full reverse. Competitors moderately than cooperation will stay the norm in worldwide relations. On this regard not less than Africa represents a welcome break from world tendencies, as 1 January noticed the launch of ACFTA, and though full implementation of a continental free commerce space can be sluggish, the truth that Africa is transferring in that course when a lot of the world isn’t must be enticing to potential buyers.
3. Go inexperienced or go bust
An inflection level is coming for the connection between companies and local weather change in 2021. No organisation can now afford to not take a stance. The surroundings is a crucial side in a broader space of the ESG agenda. Though no African nation bar South Africa has made a web zero pledge to this point – with out particular funding, governments don’t view it as a precedence – the continent nonetheless has enormous renewable power potential. Renewable power initiatives related to microgrids make sense in a continent of small inhabitants centres unfold over enormous areas, and the current liberalisation of power markets in lots of nations has opened up a number of alternatives for private-sector buyers. With out authorities backing, nevertheless, investor could ignore these alternatives for the subsidies and help on supply elsewhere.
4. Digital acceleration hits rising threats
The exceptional enhance in connectivity throughout Africa – in cell phone penetration, web penetration, social media use and knowledge visitors flows – has opened up an enormous array of recent alternatives. That is evidenced by the speedy progress within the African tech sector over the previous few years. However this connectivity additionally brings dangers. Cyber crime has boomed throughout Africa, from easy scams to stylish assaults on crucial infrastructure. Prison and state actors have additionally engaged in affect operations, spreading misinformation and inflammatory content material that poses reputational dangers to corporations in addition to political gamers. Corporations in Africa, identical to the remainder of the world, must stability the drive for technological innovation with safety, integrity and resilience challenges.
5. Lacking the Rebound
The approaching yr will see robust GDP progress in a number of markets, the roll-out of vaccines and a world hungry to start out dwelling once more. Whereas progress can be faltering, an uplift is coming – don’t miss the rebound. If 2020 was about survival for a lot of corporations, 2021 is the time to give attention to alternative. Underneath the duress of COVID-19 many corporations have flexed, not damaged. By means of innovation, speedy know-how adoption and streamlining, they’ve emerged stronger, whereas weaker opponents have fallen. These corporations that flip the effectivity beneficial properties of 2020 into productiveness beneficial properties, proceed to precisely assess tendencies and present flexibility in adapting their operations will profit from the approaching surge in demand.
“Governance, coverage consistency and rule of legislation are crucial for buyers in Africa and deep-rooted challenges stay throughout the continent on this realm, nevertheless we do see optimistic change throughout the area. Restoration can be a possibility for governments to deal with structural constraints and promote new approaches & applied sciences – the area stays entrance and centre for a lot of of our shoppers. For Management Dangers, Africa sits on the coronary heart of our previous, current, and future – we proceed to take a position and see progress throughout the area” explains Tom Griffin, Companion – Africa and Center East, Management Dangers.