Sub-Saharan Africa continues to offer mining investors significant opportunities despite the broad and ever evolving range of political, economic and security risks that repeatedly hit the news headlines. With African governments all looking to secure higher economic growth rates in the face of lower commodity prices, now is the time to invest.
In this report, Amy Gibbs from JLT's Credit, Political and Security risk team argues that there is no such thing as a ‘bad' country - and that foreign investors can shape the risk environment in which they operate.
Mining companies worldwide have always been risk-takers. Willing to venture into territories that most industries would not even consider, for decades miners have been at the pointiest end of country risk. Indeed, most mining firms were operating in emerging markets well before there was a specialist insurance market dedicated to this niche category of risk. In short, mining firms take big risks, but the trick is they know how to manage them.
Risks in sub-Saharan Africa are certainly no exception. The problem is that ‘country risk,’ which includes risks from across the political, economic and security spectrum, constantly evolve and, following the global financial crisis, some of the key trends underpinning country risk have accelerated. As such, mining firms should be stress testing their risk management to ensure that procedures remain nimble, yet robust, to counter the new ‘normal’ – elevated country risks that can, if not managed appropriately, severely impact the balance sheet.
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For further information, please contact Simon Delchar, CEO, Property, Casualty, Mining and Power on +44 (0)207 466 6226