Money Markets

Consultants bring Africa’s risk profile into sharp focus

Internally displaced people camp at Nakuru’s Afraha Stadium. Political turbulence following last year’s post-election violence was cited as the greatest threat to the business environment in the country. Photo/FILE

Internally displaced people camp at Nakuru’s Afraha Stadium. Political turbulence following last year’s post-election violence was cited as the greatest threat to the business environment in the country. Photo/FILE 

A consultancy firm focusing on analysing the risk of doing business in individual African countries has been launched, adding onto the information resource pool international investors need to make decisions on which part of the continent to invest in.

The launch comes at a time when Kenya’s risk profile is rising, following revelations that rival ethnic groups are rearming themselves in anticipation of a fresh outbreak of violence in the up-coming 2012 general elections.

In its forecast of Africa’s political climate in 2010, the firm paints a gloomy picture for Kenya.

“Events in 2010 will likely determine whether or not this unnatural union (coalition government) between foes works. So far, the Kibaki-Odinga administration has shown neither the maturity nor the foresight needed to handle these coming tests,” reads a brief on the organisation’s website.

The consultancy, Bello & Manchau (B&M) Inc, aims to help its clients “navigate and reduce the risk of doing business in Africa by closely monitoring and analysing political, economic, security, and social development across the continent for their impact on a client’s bottom-line.”

Key risks

Analysts say that data and research about Africa is hard to come by and they welcome researchers with a spotlight on the continent.

“Research on economic trends is important for investors because they are crucial in making business decisions,” said Fred Opondo, a fund manager at Standard Investment Bank, adding that though investors rely on local media reports for economic information, compressed analysis of each African country will add insights, especially for foreign investors yet to start operating in the continent.

B&M publishes a weekly a report every Monday on African markets, a summary of key political, economic, social and security risks affecting the multiple cities, states, countries, regions, industries, and sectors represented in the Dow Jones Africa Titans 50 Index.

The Dow Jones Africa Titans 50 Index is a pan-African index that measures the performance of 50 companies that are headquartered in or generate most of their revenues in Africa.

The Dow Jones Africa Titans 50 Index consists of stocks traded on domestic exchanges in South Africa, Egypt, Nigeria, Morocco and Kenya, as well as firms trading on international exchanges.

The firms must have a minimum market capitalization of $200 million and a minimum three-month average daily trading volume of $1 million.