Zim – “extreme” security risk to investors

Zimbabwe and South Africa have been rated "extreme" security risks, according to a British risk consultancy.

The entire country of Zimbabwe is rated an extreme risk while only areas of South Africa are rated extreme. Zimbabwe also rates “extreme” on the political risk scale, compared with South Africa which has been rated of “low” political risk. 

At its launch of RiskMap 2008 in Johannesburg on November 13, Chris Melville, Senior Africa Analyst of the Control Risks Group said: “Arguably more than any other region, Africa has been subject to the most extreme lurches of confidence, and Afro-pessimism is so entrenched in the western mindset that it is almost instinctive to believe that downscaling of ambitions by increasingly risk-averse investors will first materialise in Africa.”

Melville explained that the Afro-optimism experienced in 2007 “was based on more than a simple hunger for commodities and reflected important changes in the global investment environment as well as significant changes in Africa itself.”

Africa is considered today an important “arena for diversification, as well as being an important source of strategic resources and the location of one of the last great untapped markets, according to Control Risks. The consultancy strongly believes that investor confidence in Africa will become more resilient while at the same a greater appreciation of “Africa’s complexity and diversity” will become the focus of future risk management.

Melville identified South Africa as the respository of Afro-optimism a African renaissance, but cautioned this with concerns over the sustainability and direction of post-apartheid reform.

Control Risks says that although the current political turmoil in South Africa over the succession to the presidency of the African National Congress (ANC) is unlikely to affect “overnight” the “fundamental” conditions for policy and business in the country, “even in the event of a victory for Jacob Zuma.”

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