HomeAboutTech & BusinessLIFESTYLEPhotography/FashionPOETRY Tech & Business Political flux threatens stability of business environment in East Africa February 20, 2017
Internal political uncertainty across a number of key nations will pose a much greater risk to businesses on the continent than the effect of international geopolitics. African nations vying to emerge as the commercial gateway for foreign direct investment, offer opportunities but also unknown threats for business Macro-economic instability fuelled by low oil prices and global economic sentiment will continue to be the main driver of business risks across East Africa in 2017. Governance improvements and the embedding of certain democratic practices and norms will limit the scope of potential for deterioration, but challenges will still persist. Cyber-attacks are advancing in nature. Businesses will become increasingly vulnerable until the impact of cyber risks on their operations and reputation is as well understood as the effects of political and security risk. These are some of the key themes from the annual political and business risk forecast “RiskMap 2017″.
” Macro-economic and domestic political changes are driving African nations to reinvent themselves in the hope of becoming Dubai or Singapore style commercial hubs. This will present lucrative new opportunities for business, but equally engender unknown risks and require a deeper understanding of the local political and regulatory environment. “said Mr. Daniel Heal, senior Partner for Control Risks East Africa.
Companies will pursue different strategies to protect value and seize opportunity in 2017. Many organisations will be defined as Arks, Sharks or Whales by their response.
Arks will ve defensive and focus on core businesses and markets. They will shed non-performing assets, reverse unsuccessful mergers, cut costs and delay expansion. While particularly associated with mining and oil and gas due to the collapse in commodity prices, the Ark strategy also characterises retrenchment by retailers and re-shoring by manufacturers.
Sharks are less risk-averse and will hunt for opportunities in new activities and locations. Financial services facing regulatory uncertainty and the rise of competing power centres in the emerging world is likely to take on risk to capture first-mover advantages in frontier markets or disruptive sectors.
Whales will take advantage of their deep pockets and cheap financing to engineer mega-mergers and monopolise markets. Their main risks are economic nationalists and competition regulators. Consolidation strongly characterises the technology sector, pharmaceuticals and agribusiness, which have often arbitraged regulatory environments to gain dorminant market positions.
For business to succeed in this diverse region, it is important to take a threat-led approach and understand the unique and evolving risks that could impact the business in that specific market
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