African buzz
Risk management needs
to be taken seriously
Hope for Eritrea
Eritrea is in a difficult economic
situation following an extended period
of international isolation and emergency
measures to manage the economy.
According to Christelle Marais, executive
director of Lucidum Consulting and exco of
the Institute of Risk Management in South
Africa (IRMSA), risk managers have to deal
with a number of significant challenges that
are not always recognised. Marais says this
includes:
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Risk management is treated as
‘compliance’ only;
Risk managers are not being taken seriously
when including real risks in reports, when
pointing out real causes of those risks and
when showing real consequences if those
risks were to materialise;
Disempowerment when the
accountabilities that risk management
framework seeks to ensure, are negated
and not keeping organisational role players
to account, are rationalised;
Risk reports are often changed, redacted,
reduced (or worse, just not submitted)
because they include things that would
make leadership uncomfortable.
Exclusion from key discussions;
No effort by leaders to understand what
‘risk appetite’ is and how the continued
disregard of the impact of wrong decisions
can destroy a company; and
Reports regarded by governing body as
having failed to convey the message, when
things go wrong.
Marais says her message is not so much to risk
managers only, it is also to leaders in all spheres
of the economy (public, private, non-profit
organisations, and civil society. She asks these
leaders to:
• take risk management seriously;
• understand that operating within ‘risk
appetite’-levels when pursuing an ‘ethical
culture’, ‘legitimacy’, ‘good performance’
and ‘effective control’ will help
organisations succeed;
• enable your risk managers, include
them in key decisions; they may be the
only ones able to integrate all risk-
related information across your entire
organisation so that you can take informed
decisions; and
• heed warnings that expose risk of
wrongdoing. To fail in risk management,
is to fail our country, its economy and its
people.
14 AFRICAN MINING JULY - AUGUST 2019
An International Monetary Fund (IMF)
team, led by Bhaswar Mukhopadhyay,
held discussions in Asmara from
May 13-22, 2019 on the Article
IV Consultation with Eritrea, the
first such discussions in 10 years. At
the conclusion of the mission, Mr.
Mukhopadhyay issued the following
statement:
“Eritrea has just emerged from 20
years of conflict with Ethiopia and a
decade of sanctions imposed by the
international community. The war and
then international isolation deprived
the country of vital investment, trading
opportunities and external support,
and have left the economy in a difficult
situation. The peace agreement with
Ethiopia and lifting of international
sanctions provide a welcome
opportunity to build an impetus for
economic development and to begin
implementing much needed reforms.
“The information base of economic
developments in Eritrea has
deteriorated, and the conditions
prevailing in the country have given
rise to data and capacity constraints.
Nonetheless, the mission received useful
information to better understand the
macroeconomic situation and capacity
development needs in Eritrea.
“In recent years, policies have tried
to adapt to the difficult conditions
prevailing in the country. A sustained
period of high fiscal deficits – reversed
over the past three years – has led
to a heavy public debt burden, the
banking sector is vulnerable and foreign
exchange is scarce. Notwithstanding
such economic pressures, the Eritrean
authorities have made remarkable
progress on some development goals,
notably in the health and education
sector, and prioritised public investment
in the earlier years.
“Looking ahead, the near-term outlook
for real GDP growth is challenging due
to the tight fiscal situation and existing
restrictions on economic activity. Over
the medium-term prospects for a pick-
up in growth are promising, including
due to new mining projects coming on
stream. Policies to restore the health
of the fiscal and financial sectors will
be central to ensuring macroeconomic
stability and broader economic
reforms will help to deliver inclusive
development.
“The mission team expresses its
gratitude to the authorities for their
warm hospitality and the productive
discussions. The IMF stands ready
to assist the authorities in the
implementation of their economic
policies, including through the provision
of technical assistance, and looks forward
to continuing the policy
dialogue.”
Distributed by APO Group
on behalf of International
Monetary Fund (IMF).
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The peace agreement with Ethiopia
and lifting of international sanctions
provide a welcome opportunity for
Eritrea to build an impetus for economic
development.
“Eritrea’s economy is dominated by
agriculture and mining and is highly
vulnerable to shocks. Most of its
population is engaged in rain-fed
subsistence agriculture, which is exposed
to repeated droughts. Data estimates
show that GDP fell sharply in 2017,
driven by the regional drought. Real
GDP growth is expected to have
recovered in 2018.
Eritrea’s economy has suffered
significantly as a result of
international isolation.
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