Emerging digital threats, the Covid-19 pandemic, climate change and the US-China relationships are among the top five risks for business in 2021, according to a report published by Control Risk, the specialist global risk consultancy.
The danger of missing the rebound in a year of multi-speed recovery is a top risk for business in the coming year if these risks are underpinned.
“There’s no doubt that businesses will continue to face considerable disruption from the COVID-19 pandemic, but we believe that the opportunities are real and exciting for many companies in 2021,” said Nick Allan, Control Risks CEO.
In Africa, all the top five global risks are present 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 to the pandemic and the planned launch of the African Continental Free Trade Area (ACFTA).
The top five risks released as part of Control Risks’ annual RiskMap report which is a global risk forecast for business leaders and policymakers across the world.
- A world with long COVID
According to the report, 2021 will be a year of uneven recovery as vaccine rollouts create a world of haves and have-nots and Covid-19 at the bottom of the pecking order. Unfortunately, much of Africa will be in the have-not category while companies will face extended operational uncertainty as localised restrictions are imposed in response to the covid-19 case rise.
As the governments with limited fiscal headroom cannot engage in sustained stimulus spending and must instead rely on under-developed private sectors to drive their recoveries, Africa’s economic recovery will be more gradual.
- US-China: stabilisation without normalization
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, the report stated.
Therefore in this regard, Africa represents a welcome break from global trends with the launch of ACFTA and despite the fact that the full implementation of the ACFTA will be slow, the fact is Africa is moving in that direction when much of the world is not should be attractive to potential investors.
- Go green or go bust
According to the RiskMap report, in 2021 an inflexion point is coming for the relationship between businesses and climate change. Although no African country apart from South Africa has made a net-zero pledge to date – without special funding, governments do not view it as a priority – the continent nonetheless has huge renewable energy potential.
In a continent with small population centres spread over huge areas and the recent liberalisation of energy markets in many countries which has opened up multiple opportunities for private-sector investors, these renewable energy projects which are connected to microgrids make sense.
Investors may however ignore these opportunities for the subsidies if the governments do not provide backing.
- Digital acceleration hits emerging threats
A vast array of opportunities have been opened by the remarkable increase in connectivity across Africa in internet penetration, mobile phone penetration, social media use and data traffic flow.
This is evidenced by the rapid growth in the African tech sector over the past few years which has in turn brought about cybercrime which has also boomed. 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.
- Missing the Rebound
According to the report, this year will see strong GDP growth in multiple markets. It also stated that If 2020 was about survival for many companies, 2021 is the time to focus on opportunity.
It also notes that the companies that will turn efficiency gains of 2020 into productivity gains will continue to accurately assess trends and show flexibility in adapting their operations will benefit from the coming surge in demand.
“Governance, policy consistency and rule of law are critical for investors in Africa and deep-rooted challenges remain across the continent in this realm, however, we do see positive change across the region. Recovery will be an opportunity for governments to address structural constraints and promote new approaches & technologies – the region remains front and centre for many of our clients. For Control Risks, Africa sits at the heart of our past, present, and future – we continue to invest and see growth across the region” said Tom Griffin, Partner – Africa and the Middle East, Control Risks.