SHARE
Image: https://flic.kr/p/jfYTmR
Tax SAIBA Accounting Weekly
Tax SAIBA Accounting Weekly
Tax SAIBA Accounting Weekly

Globally, 2018 will see the highest economic growth in a decade, but a geopolitical outlook is characterised by uncertainty and confusion, according to international specialist risk consultancy Control Risks’ Riskmap 2018.

According to Control Risk, assertive leaders and populist imperatives are combining with an appetite for military action in multiple arenas.

“Terrorism is ever more diffuse as ideologies trade methodologies. The cyber threat will reach new disruptive heights just as businesses are coping with a raft of new data regulation. Knowing the minds and motivations of world leaders will be essential to distinguish risk from rhetoric and reality in 2018.”

In a media statement, Control Risk says political uncertainty through transitions and instability are among the key risks for businesses in Southern Africa in 2018, says specialist global risk consultancy Control Risks in its annual political and security risk forecast RiskMap.

Control Risks’ Senior Partner for Southern Africa George Nicholls comments:

“2018 will see continued uncertainty around political leadership in our Southern African markets. The transitions in Zimbabwe and Angola in 2017, elections in Mozambique in 2018, and factionalism within South Africa’s ruling African National Congress (ANC) once again remind businesses in the region of the importance of gaining a clear understanding of the impact of such uncertainty on their risk environment.”

Control Risks has identified the following as the key risks facing businesses in Southern Africa in 2018

  • Political instability in South Africa: 2018 will see a continuation of divisions within the ANC following the December 2017 election of a new party president. Competing factions – and the possibility of a split in the party – will drive policy uncertainty and political instability, with President Jacob Zuma likely to step down before the end of the year.
  • Political transitions, generational change: Zimbabwe’s President Robert Mugabe has stepped down, Angola’s President José Eduardo dos Santos has been replaced by João Lourenço, and Mozambique’s President Filipe Nyusi is consolidating his authority. Anticipating and preparing for how these transitions will affect business is essential for success in 2018 and beyond.
  • Reputational risks in noisy political environments: 2017 saw a series of high-profile corruption scandals in South Africa. These were evident in a mass email leak showing frequent improper communication among senior government officials, politically connected individuals and private business interests. Some businesses have learned the hard way that when a narrow set of interests undermines and subverts the integrity of state institutions, this provides a breeding ground for many other risks to flourish. Protecting reputation – and understanding what might compromise it – has never been more important.
  • Large-scale cyber attacks against infrastructure: 2017 was the year of major but random disruptive attacks. 2018 could see the likes of WannaCry, NotPetya and BadRabbit recur, but in a more powerful, targeted and disruptive manner. National infrastructure systems are particularly at risk.
  • New threats in Mozambique: Major final investment decisions have been taken on liquefied natural gas projects in northern Mozambique, signalling a likely increase in foreign investment. Rapid economic development in a marginalised part of the country with little state capacity will present a challenging security environment. The influx of money and foreign workers will disrupt social structures and raise expectations of change, increasing the risk of social discontent and the formation of organised groups targeting public and private interests.

Across the African continent, businesses might see the negative impact of a potential renewed debt crisis coming. Many countries in Africa, Mozambique among them, face the prospect of a sovereign debt crisis, a decade after they followed Ghana’s lead in entering the international bond market. The problem is driven by high levels of external debt and persistent uncertainty over the recovery of commodity prices to fund repayments. Nonetheless, ongoing reforms and government recognition of these issues will drive improvements in 2018.