Terrorism a threat to African investment

Sunday, July 27, 2014

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Important growth economies in Africa are facing some of the world’s most extreme terrorist threats – which is sounding the alarm for investors to take their money elsewhere.

The Maplecroft Terrorism and Security Dashboard (MTSD) has revealed that fatalities from global terrorist activity has increased by 30% over the past year, identifying China, Egypt, Kenya and Libya as seeing the most significant increases in the risk of terrorist attacks.

The Maplecroft dashboard logs, analyses and plots all reported incidents of terrorism, piracy, political violence and human rights abuses by security forces down to 100m² worldwide, and also tracks seven years of global data to reveal terrorism and security trends across 197 countries.

Globally, the MTSD recorded 18,668 fatalities in the 12 months prior to July 1st, up 29.3% from an annual average of 14,433 for the previous five years.

Over the same period the MTSD recorded 9,471 attacks at an average of 26 a day, down from a five year average of 10,468, revealing that terrorist methods have become increasingly deadly over the last year, the group said.

Of the 197 countries tracked by the group, 12 have been identified being as “extreme risk” nations pertaining to terrorist activitiy:

12 Extreme Risk nations

Iraq
Afghanistan
Pakistan
Somalia
Nigeria
Yemen
Syria
Philippines
Lebanon
Libya
Colombia
Kenya

What should be of concern to investors, Maplecroft noted, is that many growth economies in Africa, such as Nigeria, Kenya and Egypt, are increasing in risk.

“Libya, Kenya and Egypt are among a handful of countries to witness a significant increase in risk in the MTSD – and investor confidence in key sectors, including tourism and oil and gas, has been hurt,” said Jordan Perry, a Principal Political Risk Analyst at Maplecroft.

According to the MTSD, terrorist threats in Libya have doubled in the past year, while Kenya’s tourism industry (which accounts for 12.5% of the country’s GDP) has also been hit hard by the increasing frequency and intensity of terrorism attacks by Somali-based Islamic militant group, al Shabaab.

Nigeria, meanwhile, has recorded more fatalities per terrorist attack than any other country, including Iraq, which recorded the most number of attacks – 3,158, totalling just under 6,000 fatalities.

In an intensifying campaign of violence by Islamic militant group Boko Haram, Nigeria has faced 146 attacks with 3,477 fatalities – an average of 24 deaths per attack.

“When faced with rising security costs and decreasing safety for their personnel, companies can, and do, reconsider their country-level commitments.”

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