Politics, Economics and Risk in Africa

Summary

In this insightful discussion, Ronan, a director of Signal Risk, explores the intersection of politics, economics, and risk management in Africa. With 20 African countries facing elections, he addresses the uncertainty and anxiety surrounding these events, their impact on local and intra-African businesses, and the importance of policy predictability for investors. Ronan also touches on the challenges faced by Nigeria and South Africa, two key economies, and the role of digital democracy amidst the rise of social media and internet shutdowns.

Takeaways

• 🌐 The guest specializes in translating the intersection of politics and economics into actionable insights for commercial decision-makers in Africa.
• 🗳️ Approximately 20 African countries are going into elections, which brings anxiety and uncertainty affecting local and intra-African businesses.
• 📉 Investors are concerned about potential fiscal slippage, currency impact, corruption, violence, and internet shutdowns during elections.
• 🔄 The narrative of straightforward African elections is changing with examples like Kenya's annulled election and the DRC's manipulated outcome.
• 🇳🇬🇿🇦 For pan-African players, Nigeria and South Africa are crucial economies but have been performing below expectations for the past five years.
• 🇳🇬 In Nigeria, regulatory policy predictability and business-friendliness of the administration are significant concerns for investors.
• 🇿🇦 In South Africa, the new president's ability to consolidate power and gain a mandate for his reform agenda is a key focus for investors.
• 💡 The desire for a stable and predictable regulatory environment is a common theme among investors in African markets.
• 📱 The role of digital democracy has evolved from a force for good to one that can exploit divisions and create polarization.
• 🌐 Internet shutdowns as a response to elections and social unrest are becoming more common, raising questions about their impact on society and governance.

Q & A

What is the primary focus of Ronan's work?

Ronan focuses on the intersection of politics and economics, translating complex information into digestible insights for commercial decision-makers.

How does Ronan's work help in anticipating events?

Ronan's work simplifies complex information to help businesses react to events and anticipate future occurrences, providing a stable and predictable environment for decision-making.

What are the common concerns during elections in Africa?

Common concerns during African elections include fiscal slippage, currency impact, corruption, violence, internet shutdowns, and the overall uncertainty that can disrupt business operations.

Why are smooth transitions of power important for investors?

Investors prefer certainty and minimal disruption; smooth transitions of power allow them to continue investing and conducting business in a stable and predictable environment.

What are the key issues in Nigeria that investors should be cautious about?

In Nigeria, investors should be cautious about regulatory policy predictability, business-friendliness of the administration, currency and liquidity issues, and security concerns.

How has the new president's impact been in South Africa?

The new president in South Africa has been in power for about a year, but the honeymoon phase is over. The upcoming elections will show the level of support for his reform agenda.

What is the role of digital democracy in the context of South Africa?

Digital democracy, initially seen as a force for good, has been exploited to create polarization and societal fractures. The role of digital platforms in governance and society is becoming increasingly complex.

How have internet shutdowns in Africa impacted society and governance?

Internet shutdowns in Africa have been used as a tool to control information flow and suppress opposition, leading to concerns about democratic processes and freedom of expression.

What are the implications of elections on local and intra-African businesses?

Elections can lead to uncertainty and anxiety, affecting local and intra-African businesses through potential policy changes, economic instability, and disruptions in the business environment.

What is the current state of the economies in Nigeria and South Africa?

Both Nigeria and South Africa have been performing at subpar levels for the last five years, with issues related to policy predictability, economic stability, and investor confidence.

How can investors approach the uncertainty surrounding African elections?

Investors should focus on policy predictability, regulatory environments, and the potential for economic stability post-elections to navigate the uncertainty surrounding African elections.

Outlines

00:00

🌐 Political and Economic Risk in Africa

The guest, Ronan, discusses his role in analyzing the intersection of politics and economics in Africa, with a focus on translating complex information into actionable insights for business decision-makers. He emphasizes the uncertainty and anxiety surrounding elections in Africa, which can affect local and intra-African businesses. Concerns such as fiscal slippage, currency impact, corruption, and violence are common. Ronan mentions the unpredictability of African elections, citing examples from Kenya, DRC, Angola, and Botswana. He stresses the importance of certainty for investors who prefer stable and predictable environments for business operations. The conversation also touches on the challenges faced by Nigeria and South Africa, two of the continent's largest economies, including regulatory policy predictability, business-friendliness, currency and liquidity issues, and security concerns.

05:01

📱 The Dual Role of Digital Democracy

The second paragraph explores the role of digital democracy, initially seen as a force for good by bringing the electorate closer to politicians and fostering accountability. However, it has been subverted to exploit divisions and create polarization through social media, fake news, and propaganda. This has led to a societal fracture, with a binary tension between the positive aspects of digital democracy and its misuse as a tool for societal division. The discussion raises questions about the future of digital democracy as internet access becomes more widespread, especially in light of recent internet shutdowns in Africa. The conversation ponders how this tension will be resolved and how young populations will react to such measures.

Keywords

💡Risk

Risk refers to the potential for loss or injury in various contexts, including business and economics. In the video, the guest discusses the implications of political and economic events, such as elections, on businesses. Risk assessment is crucial for decision-makers to anticipate and react to events that could disrupt business operations or investment strategies.

💡Politics

Politics is the activities associated with the governance of a country or area, especially the debate between parties having power. The video discusses how politics intersects with economics and how changes in political leadership or policies can affect business operations and investment climates in Africa.

💡Elections

Elections are formal decisions made by voters by which they can choose people to hold public office. The script mentions upcoming elections in African countries and their potential impact on local and intra-African businesses, reflecting the uncertainty and anxiety that often surrounds such events.

💡Uncertainty

Uncertainty refers to the state of being uncertain; a lack of certainty. In the context of the video, uncertainty is highlighted as a major concern for investors and businesses during election periods, as it can lead to unpredictability in fiscal policies, currency values, and overall economic stability.

💡Regulatory Environment

The regulatory environment refers to the set of rules and regulations that govern business operations in a given area. The guest speaker discusses the importance of a stable and predictable regulatory environment for attracting investment, citing examples from Nigeria where regulatory unpredictability has been a concern.

💡Currency

Currency refers to money in the form of coins and banknotes of a particular country. The script mentions the potential impact of elections on currency values, which is a critical factor for businesses and investors as it can affect the cost of goods, services, and the overall economic stability of a country.

💡Liquidity

Liquidity refers to the ability of an asset to be bought or sold without affecting its market price. The video touches on liquidity issues in Nigeria, which can affect businesses' ability to access cash or credit and, in turn, impact their operations and investments.

💡Security

Security in the context of the video refers to the safety and protection against potential threats or hazards. Security issues, such as violence or unrest, can disrupt business operations and deter investment, as highlighted in the discussion about Nigeria.

💡Digital Democracy

Digital Democracy refers to the use of digital technologies to enhance democratic processes, such as voting or citizen engagement. The video discusses the role of social media in elections, initially seen as a force for good but later recognized for its potential to exploit divisions and create polarization.

💡Internet Shutdowns

Internet Shutdowns refer to intentional disruption of internet services, often by governments. The script mentions internet shutdowns in Africa as a response to elections or social unrest, which can significantly impact digital democracy and the ability of citizens to access information and communicate.

💡Investor Climate

Investor Climate refers to the overall environment that affects an investor's decision to invest in a particular region or sector. The video emphasizes the desire for a stable, predictable, and investor-friendly climate, which is influenced by factors like policy predictability and economic performance.

Highlights

Ronan is the director of Signal Risk, focusing on the intersection of politics and economics in Africa.

His work translates complex political and economic information into actionable insights for commercial decision-makers.

About 20 African countries are going into elections this year, creating uncertainty and anxiety for investors.

Election outcomes in Africa can affect fiscal policies, currency values, corruption levels, and potential violence.

Internet shutdowns have become a common response to elections, affecting business operations.

Election results in Kenya and the DRC have shown that surprises are becoming the norm.

Smooth transitions of power have not been straightforward in Angola and Botswana.

Investors seek certainty and stability for predictable business environments.

Nigeria and South Africa, two of the largest economies in Africa, have been performing at subpar levels.

Regulatory policy predictability is a concern for investors in Nigeria.

Currency and liquidity issues, as well as security concerns, are key areas to watch in Nigeria.

South Africa's new president is facing challenges in consolidating power and pushing a reform agenda.

The upcoming South African elections will be crucial in determining the direction of the country.

Digital democracy was initially seen as a force for good, bringing accountability and closer governance.

Social media, fake news, and propaganda are now being used to exploit divisions and create polarization.

The tension between digital democracy and digital dictatorship is increasing as access to the internet becomes more prevalent.

In January, five African countries shut down the Internet, raising questions about the future of internet freedom and democracy.

Transcripts

[Applause]

[Music]

I'm joined in the studio today by one of

our fellows for the scent of African

management of markets runner got with us

and he's also the director of signal

risk

you're welcome Ronan thanks for having

me you deal in a very important area

that has to do with risk and politics

and economics on the continent do you

mind telling us more about what you do I

focus on the intersection of politics

and economics and translating that into

what it means for commercial

decision-makers so looking at the so

what because you know everybody's got

Google everybody's got information at

their fingertips but translating this

into a meaningful you know piece of

information with which you can make

decisions is is often the difficult

piece so we take really complex

information and we try and simplify it

in such a way that it's digestible easy

to understand and it helps to react to

events and also to anticipate things

that's pretty interesting because if you

think about the election event on the

continent we've got about 20 African

countries going into elections this year

from your expertise and based on what

you know what is the implication of that

on local businesses and even more

importantly on intra African businesses

when you think about elections in Africa

you know generally there's a lot of

anxiety and uncertainty around what

they're going to bring you know is there

gonna be fiscal slippage is there going

to be an impact on the currency is there

going to be corruption is there going to

be violence you know those generally

were the questions that people and

investors would have in the run-up to

elections now you've got a whole

different set of dynamics are they gonna

be Internet shutdowns is one very clear

case in points and as the past couple of

years have shown us that surprises are

starting to become the norm so in Kenya

the election result was annulled in in

the DRC an election was manipulated in

favor of an opposition candidate which

is something completely new in an

African context smooth transitions of

power and straightforward transitions of

power in Angola and Botswana haven't

been all that straightforward so you

know what I'm learning is that there's

no such thing as a straightforward

African election anymore and the the big

the big

issue when you're looking at elections

in Africa is around is around certainty

investors kind of don't want a lot of

disruption they don't want protracted

and elongated affair they want the thing

to be done in dusted so that it can get

on with with investing and doing

business in a stable and predictable

environment if we talk about the two

largest economies on the continent so

they're one of the they're part of the

countries who are going into election to

the CSO a talk in South Africa and

Nigeria which has just recently

completed theirs if I was thinking of

investing in any of these countries from

Africa what do what would you won't be

the one thing you think I should be

cautious about or what would be the one

thing I should focus on if you're gonna

be a pan-african player you can't ignore

Nigeria and South Africa two very very

important economies but they've been

performing at subpar levels for the

better part of the last five years

Nigeria you know the the big question

marks are on the regulatory policy

around policy predictability around how

business-friendly the current

administration is all investors really

want is is for a stable and predictable

regulatory environment and that hasn't

been the case if you look at kind of

incidents with MTN a few of the oil

companies a few of the telcos and other

international businesses so you know

that's kind of the first first factor

and then in the Nigerian context the the

currency and liquidity issues as well as

the security issues have have been a a

key area to watch in South Africa you

know we've had a new president

that'sthat's come through last year you

know he's been in power for four-round

about a year but the honeymoon is well

and truly over and now we go to the

polls to see what kind of mandate he's

gonna get again you know there's there's

a lot of talk about a reform agenda but

the president at the moment is it hasn't

really consolidated both internally

within his party and now it needs to get

a mandate from the electorate so I think

this is kind of pretty crucial in

determining the direction of in which

South Africa is going to go and how a

search of the president can be in in

this reform agenda so you know in both

countries I think the the the message is

quite clear

that you know you've been performing at

sub-optimal economic levels policy

predictability uncertainty and more

investor friendly climate is what

investors want to see do you think

there's a role for digital democracy if

we talk about South Africa first of all

is there any role that did totemo

because he can play yeah so let's let's

rewind a little bit you know when when

Egypt and Tunisia the revolutions

happened over you know Digital democracy

Facebook social media was seen to be a

force of good it was seemed to bring the

electorate's closer to alienated

politicians or people who kind of were

very distant from them you know this

this culture of accountability it it was

it was meant to kind of to improve

governance but now what we found is that

in fact social media and and fake news

and and propaganda is is being used to

kind of exploit divisions and to create

greater polarization and what's

happening then is that we're seeing

society is becoming more fractured so

you've got a very kind of almost binary

tension between this digital democracy

and a force of good and digital

dictatorship which is which is being

used to pull societies apart and how

this tension is going to be reconciled

you know as mirabile proliferation and

access to social media and the internet

becomes becomes more prevalent it's

going to be interesting you know in

January alone we had five countries shut

down the Internet's in Africa is this a

start of a trend is it going to be

circumvented how populations especially

young populations going to react to this

these are all questions that that we're

going to need to to to answer over the

coming days months and years thank you

very much this has been very handy

insights and it's nice it's nice to have

you share them with us

[Music]