African governments will need to be resilient to withstand the electoral, constitutional and financial pressures that will test governments across the region in 2016. This is one of the key messages of RiskMap 2016, published today by global business risk consultancy Control Risks (www.ControlRisks.com). RiskMap highlights the most significant underlying trends in global risk and security, and provides a detailed view from the markets that will matter most in 2016.
The shifts in political power as witnessed during the 2015 elections in Nigeria and Burkina Faso (which had been regarded as the start of a wave of political revolution across the continent, where “people power” rather than cronyism, nepotism and corruption determined the outcome of elections) will not continue in 2016.
RiskMap 2016 expects the slow growth experienced across the continent in 2015 due to the fall in commodity prices, a wave of currency depreciations, weakening terms of trade and restrictions on access to forex to drag on into the first few months of 2016, before a modest pick up as commodity prices partially recover and economies begin to diversify.
The frequency of election related violence; extremism and terrorist attacks, maritime piracy (particularly in the gulf of guinea) and criminality in the region will continue to be a threat to stability. Due to the close interconnectedness among countries in West Africa, there is likely to be an increase in the number of conflicts spilling over boarders such as the fight against Boko Haram which has spilled over the Nigerian borders into Chad and Cameroon. This will mean that reducing conflict and promoting stability will be high on the agenda of policy makers in region for 2016.
Tom Griffin, Senior Managing Director, Control Risks West Africa, comments:
“While we anticipate governments surviving pressures on them in 2016, there may be heightened volatility and tension during sensitive periods such as elections, and the political environments they shape are evolving. This requires investors to understand fully the drivers of change and their potential to impact the business environment, and to be prepared for alterations to posture and strategy.”
Country specific outlook
Nigeria: President Muhammadu Buhari’s government and policy directions will continue to take shape after his election victory in March 2015. He and his cabinet, recognising the urgency of enacting reforms that will help Nigeria cope with lower revenue from oil sales; will prioritise work on reshaping the national oil company and taking more control over how it uses its income. His administration, seeking to avoid recession by passing an expansionary budget, is expected to target large-scale spending on building essential public infrastructure and focus on diversifying the economy beyond oil and gas. Reforms will however be slowed and made more difficult by a troubling fiscal situation. The security situation remains a concern for Nigeria, particularly in the Delta where the pro-secessionist movement, uncertainty around the amnesty program and unemployment driven social unrest coupled with a lack of representation of the region within federal government is a cause for concern
Ghana: The country, that has yet to emerge from a fiscal crisis that began in 2012, will hold an election in December 2016 with the government of John Mahama under severe pressure from the opposition, and from a public increasingly dissatisfied with the country’s chronic power shortages and lack of economic progress. The poll is likely to be very closely-fought, and end in a victory for Nana Akufo-Adda’s New Patriotic Party.
Burkina Faso: After a contested transition period in 2015, Roch Marc Christian Kaboré’s election as president in a peaceful poll will boost prospects for stability and economic growth. However, various challenges await the new president in 2016: from reforming a political system that has entrenched corruption for nearly three decades, to restoring investor confidence in the mining sector and curbing the growing threat of Islamist militancy along Burkina Faso’s northern borders.
For the full report including essays and regional reports, please click here (controlrisks.com/webcasts/studio/2015-GENERAL/Riskmap-2016/media/2015-12-08-RM-REPORT-2016-EMBARGO.pdf) . To view the Map please follow this link (controlrisks.com/webcasts/studio/2015-GENERAL/Riskmap-2016/RM-2016-maps-PDFs/RiskMap_Map_2016_UK_WEB-LR.pdf).
Source: Control Risks Group Holdings Ltd