Africa Beckons Investors: Debunking the Myth of High Risk

Africa Beckons Investors: Debunking the Myth of High Risk

At the World Governments Summit in Dubai, African leaders and business executives presented a compelling case for investment in Africa, challenging the widely held perception of high risk.  Data and experience reveal a dramatically different reality: Africa offers remarkably low-risk investment opportunities, significantly less risky than Latin America or Eastern Europe. 

Dr. Akinwumi Adesina, President of the African Development Bank Group, highlighted a Moody's Analytics study showing a mere 1.7% loss rate for African investments and infrastructure over 14 years, compared to 13% in Latin America and 10% in Eastern Europe.  This data directly contradicts the inflated risk premiums typically assigned to African ventures.

Tony Elumelu, founder of the Tony Elumelu Foundation, reinforced this message, emphasizing the high returns available in Africa for those who identify opportunities where others see only risk.  He underscored the importance of strategic planning and risk mitigation. 

The African Development Bank Group is further addressing perceived risks by launching the Africa Investment Guarantee Agency, which will provide coverage against climate, equity, political, and currency risks.

Africa's advantageous position in global demographic, energy, and agricultural transitions makes it even more attractive for investors.  A young, growing workforce and abundant mineral resources, vital for renewable energy technologies, position the continent as a key player in the global economy. 

African leaders are championing "conscientious concessions," ensuring investment deals benefit all stakeholders: investors, governments, and local communities. The African Development Bank Group provides legal support to African nations in negotiating such agreements.  Sierra Leone's Chief Minister David Moinina Sengeh specifically addressed the "resource curse" narrative, arguing that it stems from exploitative deals, not the resources themselves. He championed "conscientious concessions" that benefit all parties, citing positive developments in Sierra Leone's mining sector as an example.

 Recent events, like the Africa Investment Forum Market Days, have demonstrated strong investor interest when barriers are removed, generating billions in investment interest. This success underscores the continent's drive towards industrialization and value-added manufacturing, moving away from dependence on raw commodity exports.

The African Continental Free Trade Area, with its vast market potential, further strengthens Africa's appeal. The continent is committed to trade and investment-led development, driven by African initiative.

 The message to global investors is clear: the true risk lies not in investing in Africa, but in overlooking its immense potential.  Tools like ADD™'s integrated due diligence platform can be instrumental in verifying partnerships, streamlining trade agreements, and mitigating financial risks. The Africa Due Diligence platform facilitates verification for individuals and businesses, with options to upgrade verification levels as needed.