return to political stability. Nonetheless,
challenges will persist in 2018 for organi-
sations operating in the country and East
Africa more widely. High debt levels in
Kenya and unpredictable policymaking in
Tanzania are among the key risks for busi-
nesses operating in the region in the year
ahead. Management of high debt levels
and regulatory uncertainty in some mar-
kets pose key risks for business in 2018.
Control Risks’ Senior Partner for East
Africa Daniel Heal comments: “2018 is set
to be a promising year for Kenya and the
East Africa region. We have started to see
the recovery of investor confidence due
to the return of political stability in Kenya,
as well as renewed interest in major infra-structure projects both in Kenya and
across the region. We expect this to con-
tinue throughout 2018.”
“However, in Kenya, a pending repay-
ment of the first portion of a Eurobond
worth USD 774.8m in 2018 should be a
trigger for the government to refocus at-
tention on controlling public borrowing
and spending before debt becomes un-
manageable. Kenya has a strong appetite
for external borrowing and has remained
politically intransigent about its down-
sides. While Kenya remains highly unlikely
to default on its debt, growing interest
payments and international banks’ shrink-
ing appetite to provide further loans will
result in lower public spending, which has
been a key driver for economic growth in
recent years.”Lingering debt crisis raises potential rep-
utational risk
Countries in the region with a more diver-
sified economic base such as Kenya and
Ethiopia will keep sovereign risks at bay
over the next year, and are unlikely to
face a debt crisis in 2018. However, in-
vestors will have concerns about the sus-
tainability of borrowing over the longterm. Governments across the region will
have to make significant improvements in
public financial management, reduce pub-
lic spending and demonstrate prudent
oversight mechanisms to avoid negatively
impacting the wider economy in the
medium term.Regional political cooperation increases
vulnerabilities for investors
The infrastructure boom in East Africa is
set to continue this year. However, cross-
border projects will depend on closer and
more effective political cooperation be-
tween regional governments, raising po-
litical risk vulnerabilities. Increasing focus
on local content will present a range of
reputational risks for investors around
third-party management, and land and
community issues will require early and
committed engagement from investors to
avoid any major operational impact.Tensions between Kenya’s national and
county governments may generate new
political risks
The country’s return to political stability
this year will begin to unlock investment
demand. However, the government will40 | http://www.nomadafricamag.com | ...Celebrating the world’s richest continent | Issue 11
Above:People walk the busy street filled with electronics shops and
advertising placards of mobile phone operators at Computer Village,
Lagos, Nigeria. The World Bank forecasts that economic growth in Nigeria
would edge up to at least 2.5 per cent this year.
Unpredictable policymaking in
Tanzania will continue to present
major regulatory risks for
international and regional investors.
President John Magufuli’s grip on
power is tightening, and his
authoritarian style and erratic
approach to legislation will further
damage investor confidence.