Ecobank Group Chief Executive Officer (CEO), Albert Essien, has urged investors to engage with African asset classes on a long-term basis for maximum returns.
He offered strategies for managing risk in the countinent’s growth markets at the fourth Conference on Managing Risk in Africa held in Munich, Germany.
He advised investors not to view Africa as one, but rather 54 countries with different growth prospects, different infrastructure, trade agreements, tax regulations, culture, and levels of technological development.
Essien urged investors to engage with African countries on a long-term basis and avoid abrupt changes in investment focus because of perceived instability in certain markets.
He encouraged managing risks associated with doing business in Africa, including fiscal and monetary policy issues such as foreign exchange (forex) restrictions, transparency and compliance, political instability and corruption and resource and infrastructure challenges.
He offered executives overseeing market entry strategy in Africa six key considerations:
• Understanding the local business culture.
• Assessing which markets represent the best balance of risk and reward.
• Finding and vetting appropriate local partner.
• Understanding local market regulations.
• Local environmental factors.
• Levels of technological development.
Essien listed market entry risks to include political, reputational, operational, physical, staff, and assets. He encouraged scenario planning as a good way to anticipate future trends and their impact and probability.
“Whatever risks are identified, they are best viewed holistically rather than in isolation. New market entrants will need to develop a clear risk appetite and weigh the opportunity against the cost of risk mitigation, which can be expensive,” he said.
He advised setting up a risk review board with participation from senior management to help ensure the right level and scope of risk monitoring.
