The Truth About Africa’s Risk: Why Investors Are Getting It Wrong

Many global investors are misjudging Africa’s investment landscape, leading to missed opportunities and persistent misconceptions about risk. This was the central message from African leaders and business executives at the World Governments Summit in Dubai, where they challenged the notion of Africa as an inherently risky investment destination.

Dr. Akinwumi Adesina, President of the African Development Bank Group, presented data from Moody’s Analytics that contradicts the perception of Africa as a high-risk investment destination. “We actually asked Moody’s Analytics to look at the risk profile of Africa, of investments and infrastructure over the last 14 years. Guess what they found? The rate of loss in Africa is 1.7%. That in Latin America was about 13%. The one in Eastern Europe was more about 10%.” These figures suggest that Africa may be among the safest places to invest, despite the prevailing negative narratives.

Tony Elumelu, founder of the Tony Elumelu Foundation, reinforced this message by highlighting the continent’s high returns on investment. “There’s nowhere else we get the kind of returns on investments as what we make in Africa.” He emphasized that successful investors must recognize opportunities where others perceive risk: “You may decide to see risks or challenges, or you may see opportunities.”

To address lingering investor concerns, the African Development Bank Group announced plans to launch the Africa Investment Guarantee Agency, which will provide coverage against climate, political, equity, and currency risks. This initiative aims to bridge the perception gap and attract more global investors to Africa’s emerging markets.

Africa is at the center of multiple global transitions, including demographic shifts and the energy revolution. With 75% of its population under 35 years old and abundant critical minerals like lithium, platinum, and graphite, the continent is strategically positioned to shape the future. Adesina stressed this point: “What Africa actually does with its resources will shape the future of the world.”

The discussion also tackled the long-standing “resource curse” narrative. Sierra Leone’s Chief Minister David Moinina Sengeh dismissed this notion, advocating for “conscientious concessions” that ensure mutual benefits for investors, governments, and local communities. “It’s so easy to speak about concessions from any one of these countries or from private sector that is 100 years, lots of waivers, employees coming from abroad, everything gets shipped out. That’s not consensual. You’re talking about bad deals.”

The African Development Bank is actively assisting nations like Sierra Leone and the Democratic Republic of Congo in structuring fair agreements through its African Legal Support Facility. The results of such efforts were evident at the Africa Investment Forum Market Days in Morocco, which secured $29.4 billion in investment interest within just 72 hours.

A key focus of Africa’s economic revolution is industrialization. “The export of raw commodities of any kind is a door to poverty,” Adesina warned. Instead, Africa is prioritizing value-added manufacturing and leveraging the $3.4 trillion market potential of the African Continental Free Trade Area. The bank is also investing $3 billion in agro-industrial processing zones and collaborating with the World Bank on “Mission 300,” a project to provide electricity to 300 million Africans.

Looking ahead, African leaders are determined to take charge of their continent’s economic destiny. “Who’s going to dominate in Africa? Africans are going to dominate in Africa,” Sengeh asserted. Elumelu summed up the summit’s key takeaway for investors: “The time is now.”