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Control Risks: Africa’s debt crisis offering new opportunities
The debt challenge facing many African countries have been exacerbated by the COVID-19 pandemic, increasing the risks to investors. However, this has forced governments to rethink their finances to promote greater stability going forward. A report by Control Risks indicates this move might just be the silver lining for African nations amid the Coivd-19 induced disruptions. Bukola Bolarinwa, Senior Analyst for West Africa at Control Risks joins CNBC Africa for more.
Tue, 21 Sep 2021 14:16:31 GMT
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AI Generated Summary
- The report by Control Risks highlights how the COVID-19 pandemic has exacerbated the debt challenge in African countries, prompting governments to rethink their financial strategies for increased stability.
- Efforts to enhance local vaccine production capacity in Africa have created opportunities for investments in the biotech and health tech sectors, addressing challenges in vaccine supply and distribution.
- Rising debt levels in Africa have led to innovative financial mechanisms, including a shift towards domestic borrowing and local currency-denominated debt, to provide more stability to the continent's debt situation.
A recent report by Control Risks has shed light on the debt challenge facing many African countries, which has been further exacerbated by the COVID-19 pandemic, leading to increased risks for investors. The report highlights how this crisis has forced governments in Africa to rethink their financial strategies, aiming to promote greater stability in the midst of economic uncertainties. Despite the challenges posed by the pandemic, Control Risks suggests that this shift in financial mindset might actually present new opportunities for African nations. Bukola Bolarinwa, Senior Analyst for West Africa at Control Risks, joined CNBC Africa to discuss the key themes of the Africa Risk Reward Index 2021, as outlined in the report. The discussion revolved around three key themes: Healing Stronger, Paying the Bill, and Cooperation, Competition, and Conflict. Bolarinwa pointed out that the pandemic has spurred efforts to enhance local vaccine production capacity on the continent, with initiatives such as the manufacturing of Johnson & Johnson's Janssen vaccine in South Africa and the establishment of genome sequencing in various African countries. These developments have not only addressed the challenges in vaccine supply but have also created opportunities for investments in the biotech and health tech sectors. Regarding the theme of Paying the Bill, Bolarinwa highlighted how rising debt levels in Africa have prompted governments to explore innovative financial mechanisms to manage their debt, including a shift towards domestic borrowing and local currency-denominated debt. These strategies aim to provide more stability to the debt situation across the continent. The third theme, Cooperation, Competition, and Conflict, delved into the evolving security dynamics in Africa, emphasizing the need for African countries to develop homegrown solutions to address security challenges. Bolarinwa noted a decline in external military interventions and an increasing emphasis on regional and continental security arrangements. For investors looking at opportunities in Africa, Bolarinwa emphasized the importance of understanding the nuances of each country and sector beyond the headlines. She highlighted that even in high-risk countries, there are opportunities for successful business ventures and returns. The Control Risks report aims to provide clients with a comprehensive view of the risks and opportunities present in African markets, guiding investors in navigating the complexities of the region's economic landscape.
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