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Increasing security risks from militant Islamists, exacerbated by poor governance and a burgeoning cross-border illicit economy are some of the key increasing risks affecting West Africa, according to the report published Wednesday by analysis firm Maplecroft.
In its 5th annual Global Risks Atlas, the UK-based risk consultancy says West Africa is experiencing the highest regional surge of risks to investors.
The Atlas analyses 36 separate ‘global risks’ for 178 countries, across the areas of macroeconomic risk, security, resource security, climate change and infectious diseases. It also evaluates a country’s resilience to external shocks to identify high risk operating environments for companies and investors.
The firm warned the risky conditions have increased notoriously in mineral-rich countries such as Cote d’Ivoire, Guinea, Guinea-Bissau, Senegal, Mauritania, Sierra Leone, Gambia and Togo in that particular order.
According to the Global Risks Atlas 2013, which evaluates 179 countries across 36 risk issues, Nigeria’s threats profile remains consistently high, with the country ranked 15th most at risk – rising terrorism perils, however, mean it is at “extreme risk” for security.
Conflict and poor governance have seen Mali (30th) attain the largest increase in risk in the region, second only to Syria (10th) and Libya (19th) on the global scale.
“Global risks don’t respect borders and have major regional impacts on countries and business alike,” states Maplecroft’s CEO Alyson Warhurst. “Not only do we look at the areas of macroeconomic risk, security, resource security, climate change and infectious diseases; we also evaluate governance and societal resilience to measure how prepared nations are to address risks that are mostly out of their control.”
Maplecroft says that the vast majority of West African nations have very low levels of resilience to global risks, leaving them particularly vulnerable to external shocks.
With the exception of Ghana and Cape Verde, which were ranked as “medium risk” in the Global Risks Resilience Index, all others appear as “high risk” destination, being Cote d’Ivoire the only one rated as “extremely risky.”
Political factors
Political turmoil in West Africa, such as the 2010/2011 violence in Cote d’Ivoire and the 2012 coup in Guinea-Bissau, has reduced region-wide governance, which Maplecroft considers a key catalyst in the growth of the area’s illicit economy, mainly based on cocaine trafficking.
But not everything is doom and gloom in today’s report. The firm actually highlights improving profiles of some of the world’s most important growth economies, such as Poland, The Philippines, Bangladesh, Colombia and Russia. From this group, South Korea emerged as the best performing country across the macroeconomic environment, economic diversification and fiscal risk. Together with Poland, it also demonstrated high levels of resilience to global risks, ensuring that both countries are able to quickly adapt to potential impacts.
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2 Comments
Jimbo
This report, even several months on is both inaccurate and show’s a complete lack of understanding of the region and the risks associated with operating there.
I am disappointed to learn that this article is based on maplecroft’s own reporting as I have always thought they appeared to understand the geo-political risk landscape in Africa quite well, clearly not! I think I will stick to the likes of Control Risks for accurate reporting on the risks of doing business in the region.
K Koala
The report is less than accurate however that aside there is serious issues facing the mining community which this report loosely refers to.
The instability in Africa and it’s governments is one but not only Africa there are many other places around the world with the same issue. As for Mali yes they had a issue with rebels etc however they still managed a considerable gold output and most operations in that country kept working. The main areas effecting mines and investment in Africa and others is the mineral nationalization push and basically greed of governments. Yes companies need to be made a bit more responsible and pay the correct type of taxes and amounts but it should not be such an amount they it is not profitable to continue. Most of these countries this tax will not be seen by the people they will not see better roads and schools hospitals etc but the governments like to push they line to get the people behind them but is at there own peril. The will loose jobs communities will loose mine support etc.
The issues that effect miners are wide and varied when investing obviously the return is important, dispute resolution is important security of the asset etc etc .
The fact that these mines work in these countries is simple the country neither has the funds to do it or the skills to do it. So they train people and invest in the people and expect something back for there trouble.
I don’t care whether it’s Ghana or Australia they all need foreign investment it’s how they agree on it that counts.
So stop blaming the mining companies as thieve and stealing resources have a closer look how it happened and open your eyes.
Africa does not have the skills or capability or finance to do it all alone NO ONE DOES.
P.S Cannaan you are just listening to the same line everyone is fed to conjure up support Open your eyes you will see nothing of the extra taxes.