Perceived risk, according to the Minister of State at the Finance Ministry, Dr. Mohammed Amin Adam, basically means the perception in someone’s mind that this country or continent does not deserve or does not have what it takes to add value to any investments they bring in, thereby give them a return on their investment.

For this perception to change, he said African leaders need to collaborate, share knowledge and harmonise regional regulations so that regardless of the political environment, the regulations are consistent and sound.

This, he said, will address the perceived risk of investing in Africa.

According to him, data available suggests that out of the $2.3 trillion allocated for investment in renewable energy worldwide, only $55 billion has been invested in Africa.

He attributed this to the inconsistent policies on the continent.

Speaking in an interview with journalists on the sidelines of Africa Climate Summit 2023 in Nairobi, Kenya, Dr. Mohammed Amin Adam said, “It is important for us to develop partnerships among ourselves with the aim of creating a regional policy environment that can incentivize investment.”

“We must collaborate, share knowledge, and have harmonized regional regulations so that, regardless of the political environment, the regulations are consistent and sound. This should help to reduce the perceived risk of investing in Africa and allow us to attract the level of investment we need,” he stated.

The Minister of State at the Finance Ministry added that, “The international capital market is not favourable to Africa when it comes to access to capital because they often side with what we call perceived risk...That is the perception. But in reality, we have measures and policies in Africa that reward investments. Therefore, the reason for the perceived risk needs to be addressed.”

Dr. Adam, however, noted that the international capital market is not favourable to Africa in terms of access to capital.

SA/NOQ

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