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Why Africa investors face heightened risks ahead of elections

Why Africa investors face heightened risks ahead of elections

Foreign investors re-engaging with Africa following the continent’s pandemic-driven economic slump will be drawn to attractive returns offered by big-ticket infrastructure projects, often promoted in advance of elections. But when vying for contracts at such times, investors may face two key risks: heightened corruption risks as tendering processes become rushed; and, a fragile political context threatening deal progression.

Since voters are keen to see their leaders pursue national development objectives and boost job opportunities, incumbents tend to make big infrastructure pledges in the run-up to elections, hoping to bolster their prospects at the polls. A case in point at present is Angolan President João Lourenço promising a number of large-scale projects, including multi-billion-dollar solar parks, to help diversify the country’s economy, as he prepares for a presidential ballot on 24 August.

However, in their haste to get deals over the line before voting commences, some leaders may expedite award processes. Investors might welcome speedier awards as these can be drawn out, lengthy affairs, yet prospective applicants need to be alert to raised compliance risks amid the possibility of procedural shortcuts and incentives to sign contracts. In short, at election time, due process in commercial transactions is less likely to be followed...

Read the full article on Investment Monitor.

 

Photo by OSVALDO SILVA/AFP via Getty Images

Published: 2nd August 2022