Control Risks’ Africa Risk-Reward Index launched

Control Risks’ Africa Risk-Reward Index launched

Leading global specialist risk consultancy Control Risks and its economics consulting partner Oxford Economics Africa have announced the seventh-edition launch of their Africa Risk-Reward Index today: ‘Opportunity through uncertainty’.

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

Africa’s Gross Domestic Product (GDP) grew by an estimated 6.9 percent in 2021, revealing positive forward momentum. However, the continent will continue to face uncertainty. The pandemic’s after-effects and the Russia-Ukraine war are projected to impact the African continent’s economic outlook for many years to come.

In 2021 about 22 million jobs were lost due to the pandemic, with 30 million people being pushed into extreme poverty. This number is estimated to rise by a further 1.8 million people in 2022. Increased costs, supply chain disruption and climate change have exacerbated the continent’s food crisis; and across Africa, anti-government sentiment is already high and rising as governments are seen to be failing to address socio-economic challenges.

This year’s risk-reward scores paint the picture of a continent at inflection point, where opportunities abound at a time of high uncertainty.

In the report, three major themes are examined in summarising Control Risks’ views on Africa’s trajectory.

Shaping Africa’s role in the global energy transition

This explores how the urgent global transition away from fossil fuels, combined with the disruption to European energy markets, has prompted a renewed focus on energy in Africa – both as a source of energy for other parts of the world and as a continent with the potential to ‘leapfrog’ development through the widespread adoption of clean energy.

There are opportunities across the energy sub-sectors (renewables, oil and gas, hydrogen) and throughout the value chain (extraction, developers, generation, transmission, distribution and export), with governments largely welcoming investors.

“The [energy] transition in Africa needs to be staggered; many countries have and will exploit their fossil fuels while also developing their focus on renewables. Countries with high LNG potential such as Angola, Mozambique, Tanzania and Nigeria will see sustained investor interest; and conversations around ending flaring will be important to watch,” said Patricia Rodrigues, Senior Analyst at Control Risks.

“Private actors will need to be mindful of political risks, given the competition for projects in saturated markets as well as contractual issues with governments, which can lead to delays. Investors should be aware of the environmental, social, and governance (ESG) concerns associated with their industry, given the potential for ‘greenwashing’ and the continued extractive nature of many projects,” Rodrigues added.

Solving Africa’s food-security conundrum

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

“Africa’s dependence on imports of even the most basic foodstuffs is one of its most pressing issues,” according to Jacques Nel, Head of Africa macro at Oxford Economics Africa.

Furthermore, he said: “Given the continent’s dependence on rain-fed agriculture and susceptibility to climate change, in the context of an international shift toward 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 catalyse the development needed”.

However, the continent’s policy environment is heavily protectionist, which will prevent improvements in the short-term: many of the trade protocols of AfCFTA remain theoretical. Even within individual blocs such as the East African Community and Economic Community of West African States (ECOWAS), 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.

Cash-strapped governments navigating a wave of discontent

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. 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 and South Africa – the common thread being that opposition in these countries is vocal and disruptive, but mostly ineffective in engendering change.

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. However, 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 on populist promises as he is part of the country’s elite.

Political stability risks will be heightened in the coming year as socio-economic challenges exacerbate deep inequalities and highlight governments’ inability to address them. 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 Africa Risk-Reward Index is defined by the combination of risk and reward scores that integrate economic and political risk analysis by Control Risks and Oxford Economics Africa.

Risk scores from each country originate from the Economic and Political Risk Evaluator (EPRE), while the reward scores incorporate medium-term economic growth forecasts, economic size, economic structure and demographics.



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