Investors in Africa are able to see beyond negative headlines of violence in nations such as South Sudan, Nigeria and Kenya, but they also seek more protection against risk for their business ventures, a senior World Bank official says.Michel Wormser, Vice-President and Chief Operating Officer of the World Bank’s Multilateral Investment Guarantee Agency (MIGA), says, “There was a time when Africa for many investors was just like a big, big country.
When something happened in one side of Africa, it seemed to affect perceptions of the whole continent. This is not the case today. Many investors understand the difference between countries and even understand the difference within a country between regions and sectors.”The World Bank agency provides political risk insurance and credit cover for investors in developing nations often emerging from years of conflict.Wormser says most investors in Africa now had enough sophistication to discern long-term opportunities despite a flurry of negative news, such as the civil war in South Sudan and the abduction of more than 200 schoolgirls in Nigeria by Islamist group Boko Haram.“There is more understanding of the riskiness and more ability from investors to distinguish between what is media hype and what is the reality on the ground, and the likeliness of their investment to yield what they expect,” he adds.In Nigeria, for example, where President Goodluck Jonathan has sought international help to combat a five-year-old Boko Haram insurgency in the northeast that has killed thousands, private investors were participating in ground-breaking power generation expansion projects made possible by recent reforms.MIGA, its sister arm the International Finance Corporation and the World Bank itself were helping to mobilise nearly $1.7 billion (about Dh6.2 billion) of private financing for projects to expand Nigeria’s electricity generation.
This involved more than $600 million of guarantees for the Azura Edo power plant near Benin City in southern Nigeria.The country, which recently replaced South Africa as Africa’s largest economy, only had an installed generating capacity of 4,000 MW — 10 times less than South Africa, Wormser says.He says the “huge increase” in investment flows to Africa had been accompanied by greater efforts by investors to insure their equity and loans against political and commercial risk, both with private and public insurance providers and multilateral insurers.MIGA’s coverage, including support for infrastructure and power-generation projects in several African nations, would reach a record $3.2-$3.4 billion in the 2014 fiscal year, up from $2.8 billion last year, he says.
