Testing global outlook impacts sub-Saharan African risk
African sovereign risk perceptions have increased, partially reversing the region’s gains in 2011.
In a year in which investor confidence in Africa has been undermined by Europe’s travails, the region’s country risk scores have fallen by an average of 0.4 points during the last six months. Africa remains the world’s weakest region, 16 points adrift of Latin America and 14 behind Asia.
While Egypt (down 12 places in the rankings) and Zimbabwe (down 13) continue to be weighed down by their own domestic problems, the continent has mainly suffered from increased global risk perceptions, with weaker global growth crimping commodity prices and exports, despite continuing strong domestic demand as the region’s populations expand.
The falls in ECR scores during the last six months have been most pronounced for several sub-Saharan borrowers. They include Malawi (down 4.3 points to 28.2), Ghana (-4.2 to 41.8) and Nigeria (-4.1 to 37.7), where economic and debt concerns have taken prominence over domestic political risks. The falls mean that Kenya, Zambia, Tanzania and Uganda have all slipped in the global rankings.