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Updated Jan 31, 2020

Business risk consultancy EXX Africa has laid out key risks that could hinder economic growth and investment opportunities in Africa. The special report, “African ‘Winners’ and ‘Losers’ in 2020”, predicts which countries are best and worst positioned to handle upcoming challenges. 

Still reeling from the economic hit the “hidden debts” scandal imposed, Mozambique is expected to have a positive 2020 economically, leveraging its large offshore natural gas reserves to attract foreign investment. 

The EXX Africa report also places faith in South African president Cyril Ramaphosa, despite a sluggish economy and slow progress made on Ramaphosa’s promised reforms. Growing debt, credit downgrades, and persistent power-distribution issues are concerning economic indicators, but the report notes that Ramaphosa has large enough support from within the ruling ANC party that these reforms may materialize and right South Africa’s ship. 

Egypt, Tunisia, and Ethiopia were also marked as “winners”. Relative stability in Egypt’s economy should translate into better living standards and greater investment in large-scale infrastructure projects. Tunisia and Ethiopia are also expected to benefit from liberalizing reforms if their respective governments can establish greater legitimacy and provided the Ethiopian general elections in August go off peacefully.

On the “losers” side of the EXX Africa report, Burkina Faso topped the list because of the continuing threat that jihadist militia violence inflicts on the country’s people and infrastructure. The report states that Burkina Faso’s local security apparatus is “ill-equipped to counter the threat” of repeated Islamist terrorist violence. 

Guinea, though benefiting from a thriving mining industry, faces significant political upheaval with President Alpha Condé’s attempts to run for a third term despite a constitutional limit of two. President George Weah of Liberia, though not engaging in similar undemocratic behavior, has been heavily criticized by Liberians for failing to mitigate the impact of falling productivity, rising inflation, and a high current account deficit. 

Zimbabwe is struggling with a hunger crisis, poor governance and numerous shortages of necessary goods such as fuel, water, and medicine. The country’s economy is expected to contract by 13 percent in 2020. Zambia may see a full breakdown of its power supply, with high debt levels preventing it from paying for energy imports.

The report concludes with five risk trends that will impact investment in Africa over the next year. Political risk ranks highest, with numerous elections being held in crisis-stricken countries like the Central African Republic, Burkina Faso, and Guinea. Ethiopia faces a major test if it can deliver on elections this year amid efforts to rebuild relations with Eritrea after years of war and placating domestic political forces unhappy with Prime Minister Abiy Ahmed’s reforms. 

Street protests against corrupt governments can evolve into civil conflicts or military coups, which almost always drive away foreign investors. 

Trade is the third risk, especially as the African Continental Free Trade Agreement (AfCFTA) gets under way to unite the disparate economies of Africa’s fifty-four countries into a cohesive unit. The recent row over the change of the CFA franc to the eco in West Africa highlights some of the challenges that will face the AfCFTA. 

Lastly, Southern Africa and East Africa must contend with food and energy insecurity, bilateral disputes, economic unrest, and expanding migration.

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