AFRICAN BUZZ
from critical infrastructure blackouts, fire, explosion or natural
catastrophes to digital supply chains or even political violence.
Cyber incidents moved from the third top risk in the region in last
year’s Allianz Risk Barometer (27% of responses) to second this
year (30% of responses). Awareness of the cyber threat has grown
rapidly in recent years, driven by companies’ increasing reliance on
data and IT systems and a number of high-profile incidents. Financing in Mining – As China experiences its slowest annual
growth since 1990, expect mining companies to mitigate their
risk from leveraging strong Chinese demand to revaluating how
they are financing their projects with a focus on reducing their
debt ratios and improving the overall health of their balance
sheet. There may also be an increase in joint ventures as mining
conglomerates seek to reduce their exposure to any one project.
The annual survey on global business risks from Allianz Global
Corporate & Specialty (AGCS) incorporates the views of a record
2718 experts in over 100 countries including CEOs, risk managers,
brokers and insurance experts. Increase attention on Hydrogen energy – what was once an
emerging energy source is quickly becoming established. We can
anticipate seeing an increase in Hydrogen based projects over the
next 12 months as there is increased focus on how organisation
can reduce their carbon footprint and in a way that is financially
and economically viable.
“Businesses across Africa and the Middle East are increasingly
concerned about business interruption as it has become the
continent’s top risk in 2020 from 5th in 2019. It also ranks in
the top three risks in Tanzania (#1), Nigeria (#3), South Africa
(#2) and Cameroon (#2). Cyber incidents rise to the second
top regional risk – and the top risk in South Africa – while
companies are also more worried about changes in legislation
and regulation, which rises to third. The top risks in South
Africa match the top three global risks, which show that African
businesses have similar concerns as other companies around
the world,” says AGCS Africa CEO Thusang Mahlangu.
PAN-AFRICAN:
TREND IN ENERGY, MINING AND
RENEWABLES
With increased emphasis on corporate social responsibility
and digitalisation, companies within the energy, mining and
renewables industry are expected to be acutely aware of the trends
that are impacting their industry. Accounting firm Moore Global
have outlined the five trends they expect to see emerge over the
next 12 months and into 2021.
Social responsibilities in Mining - Whilst cost cuts and
efficiency gains are important, they have always been
constants in the mining industry. The new focus is definitely
around environmental and social responsibilities and what
miners can do to help reduce emissions and leave a cleaner
social footprint in the communities where they operate.
The bigger mining companies have already implemented
initiatives, but how will the small to mid-cap cope the
challenge, especially given the increased level of public
scrutiny? Will it mean some projects are no longer viable
or will the drive for efficiency see the emergence of larger
companies and a different dynamic in the industry?
PAN-AFRICAN:
SA CAPITAL MARKETS ABOVE
THE REST
South Africa’s fall to third place in RMB’s 2020 Where to Invest in
Africa report reflects the country’s constrained levels of growth, but
the report also highlights that it remains Africa’s bastion of a well-
developed financial and capital market. The Johannesburg Stock
Exchange is Africa’s most liquid stock exchange where in excess of
USD1.4-billion is traded daily. This is significantly higher than the
Cairo Stock Exchange (Egypt), which trades USD44-million a day,
underscoring the depth of South Africa’s capital markets.
South Africa also ranks highly on other measures of financial
market depth such as private credit as a percentage of GDP,
demonstrating that consumers have access to a wider range of
financial instruments relative to other African countries.
Although South Africa’s Ease of Doing Business ranking has slipped
in the last few years, it remains one of the Top 10 easiest operating
environments in Africa. This has allowed international companies
to still view South Africa as a gateway to the rest of the continent.
These positives must, however, be viewed in light of the mounting
risks: South Africa is struggling with uninspiring growth rates.
Against a backdrop of modest demand and persistent electricity
constraints, its GDP growth outlook for South Africa is forecast
at 0.6% and 1.0% in 2020 and 2021. The recovery from previous
years, while muted, is premised on a gradually improving global
economic outlook and more accommodative monetary policy.
Increase in machine learning and AI in the Oil and Gas
Industry – AI and machine learning are disrupting all sectors and
oil and gas is not an exception. Expect to see oilfield recovery rates
increasing due to the application of AI and machine learning to
support development of better enhanced oil recovery techniques
and tools, as well as increasing the success rates of oil and gas
exploration activities.
10
African Mining March 2020
Electric Vehicles to face increased practicality issues – We
are all aware of the Electric Vehicle (EV) revolution, but how
far away are we from EV nirvana? Production of EV vehicles
is one thing, but there are a lot of practical issues associated
with implementation, integration and logistics. There will not
be gain without pain and serious change to consumer habits
and expectations.
Nigeria remains one of the top investment destinations in Africa. In
picture is the capital Abuja.
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