Early signs suggest that the US-China rivalry will find its way to the African continent in 2019. While the US is multiplying warnings about the perils of Chinese debt-fuelled spending for economic stability, China will continue to broaden its engagement across the continent, with particular focus on East Africa. This is one of the key findings of RiskMap 2019, a publication forecasting political and security risk for business leaders and policy makers across the world, by specialist global risk consultancy Control Risks.
Daniel Heal, Senior Partner for East Africa based in Nairobi elaborates: “So far, the US-China rivalry that dominated global headlines in 2018 has played out less visibly in Africa than on other continents. Support for China or the US has not emerged as a defining issue in African politics, with most countries keen to pursue closer ties and seek financing from both sides rather than falling neatly on one camp. In 2019 we might see this changing.
“While still the largest investor on the continent, the US has seen its engagement on the continent become more narrowly focused on security matters under the current administration – in contrast to China which has made formidable inroads in sub-Saharan Africa over the last decade.
“2019 will show revived US interest in development finance and lending for infrastructure projects on the continent and a more concerted US commercial strategy towards Africa is likely to take shape. The increased rivalry will therefore open up additional investment opportunities but will also present African countries with increasingly starker foreign policy and commercial choices.”
Control Risks’ top-five global risks for 2019
1. US-China trade rift foretells a new global order
The US-China trade confrontation will define global geopolitics in 2019. Friction between these two nations will complicate business not only for those European businesses operating in both countries but also for those with connections several times removed.
1. The global data rollercoaster
The stand-off between the three major data regulation ideologies will present a new level of risk for international business in 2019. For China, data is something to be controlled; for the EU, it is something to be protected; for the US, it is something to be commercialised. Businesses must be prepared for the challenge of collecting, storing and transferring data within and between these three domains against a backdrop of inconsistent enforcement and escalating cyber security threats.
2. US political gridlock
The vice of legislative gridlock will close on policy making in Washington and throw the US into a period of political uncertainty. Resurgent Democrats in the House of Representatives will seek to scrutinise the president under an investigative lens. Pushback from a Republican Senate and White House will erase any hopes of consistency for business operations. Trade policy will remain unpredictable; the pace of deregulation will slow.
3. Extreme weather disruption
Some of worst business disruption in 2019 will stem from extreme weather and its consequences. From storms to floods to droughts and forest fires, the costs of interrupted production, distribution, sales and travel will skyrocket in 2019. Last year’s record for weather-related insurance claims will likely be surpassed.
4. Multinationals becoming nationless
As globalised companies enter 2019, they risk becoming nationless nomads, as nationalist politics continue to advance across the world. Formal and informal barriers are rising. Frictionless trade is beginning to rub, supply chains are starting to drag. Business leaders must recalibrate and adapt to this new reality, or global players will end up being played by a world in uncertain transition.