Report Reveals Political Risk in Africa

Political risk will remain a major concern for dealmakers in Africa in 2018.According to a recent report:”Resourceful dealmaking: Outlook for Mergers And Acquisition (M&A) in Africa,” published by Mergermarket in collaboration with specialist risk consultancy Control Risks, there has been a dramatic fall in M&A activity, with declines of 25 per cent in volume and 26 per cent in value in the first half of 2017, compared with a relatively buoyant 2016. Senior Political Risk Consultant at Control Risks, Imad Mesdoua said: “The drop-off signifies growing investor anxiety surrounding governance issues and weaker economic signals across key African markets. Specifically, political risk and transparency concerns have become the principal obstacles to successful acquisition in Africa. Ethical and compliance considerations are another major factor clouding the outlook for potential investors.” It noted that political uncertainty and relatively weak economic fundamentals have negatively affected M&A activity in Africa, adding that a fall-off in deals was seen in the first half of 2017 compared with a relatively buoyant 2016. “Political risk will be a major obstacle to dealmaking in Africa over the next 12 months, according to 84% of respondents. Other risk factors include transparency concerns and completeness of information, which ranked joint first alongside political risk (84%), as well as compliance and integrity issues (80%). “Almost three-quarters (72%) of respondents say that getting caught up in a regulatory or criminal investigation is one of the highest risks in relation to a target company’s ethics and compliance standards.