Top five risks for business in 2021
17 January 2021 | Business
These risks are present in Africa but play out in unique ways. In some areas the continent presents a positive break from the more negative global trends, such as in the regional cooperation shown by the continent in its response Covid-19 and the planned launch of the African Continental Free Trade Area (ACFTA).
Underpinning these risks, the danger of missing the rebound in a year of multi-speed recovery is a top risk for business in the coming year.
According to Control Risks CEO Nick Allan there’s no doubt that businesses will continue to face considerable disruption from the Covid-19 pandemic.
“Overall, 2021 will be a tough year for a continent that will struggle to recover from the pandemic as fast as much of the rest of the world. Despite many significant opportunities for investors, the markets they are investing in, will be ones characterised by significant operational and political uncertainty.”
Allan adds that investors that will achieve success in 2021, are those that understand that Africa’s post-pandemic landscape will be tangibly changed from what came before, presenting different challenges but also new opportunities.
1. A world with Covid
2021 will be a year of uneven recovery as vaccine rollouts create a world of haves and have-nots. Much of Africa, unfortunately, will be in the have-not category and companies will face prolonged operational uncertainty. Africa’s economic recovery will also be more gradual, as governments with limited fiscal headroom cannot engage in sustained stimulus spending and must instead rely on under-developed private sectors to drive their recoveries.
While 2021 should see superficial stabilisation in the US-China relationship, the straining of the international rules-based system seen over the past few years will not go into full reverse. Competition rather than cooperation will remain the norm.
3. Go green or go bust
An inflection point is coming for the relationship between businesses and climate change in 2021. No organisation can now afford not to take a stance. Although no African country bar South Africa has made a net zero pledge to date, the continent nonetheless has huge renewable energy potential.
4. Digital acceleration hits emerging threats
The remarkable increase in connectivity across Africa has opened up a vast array of new opportunities. This is evidenced by the rapid growth in the African tech sector. But this connectivity also brings risks. Cyber crime has boomed across Africa, from simple scams to sophisticated attacks on critical infrastructure. Companies in Africa, just like the rest of the world, will have to balance the drive for technological innovation with security, integrity and resilience challenges.
5. Missing the rebound
The coming year will see strong GDP growth in multiple markets, the roll-out of vaccines and a world hungry to start living again. While progress will be faltering, an uplift is coming - do not miss the rebound. If 2020 was about survival for many companies, 2021 is the time to focus on opportunity. Through innovation, rapid technology adoption and streamlining, they have emerged stronger, while weaker competitors have fallen.
“Governance, policy consistency and rule of law are critical for investors in Africa and deep-rooted challenges remain across the continent in this realm,” said Tom Griffin, Partner - Africa and Middle East, Control Risks.
“However, we do see positive change across the region. Recovery will be an opportunity for governments to address structural constraints and promote new approaches and technologies.
The top 5 risks are released as part of Control Risks’ annual RiskMap report, a global risk forecast for business leaders and policy makers across the world, published today.
Source: Control Risks Group Holdings Ltd