Continental Re foresees opportunities, growth in Africa
EXECUTIVE Director, Continental Reinsurance Plc, Lawrence Nazare, has predicted that there were emerging risks in the world and opportunity for growth in Africa this year.
The West African largest reinsurer said this while speaking on 2015 outlook on geopolitical risks and opportunities.
According to him, “Opportunities on the African continent are expected to come from the consumer driven sectors such as FMCGs, real estate, telecoms, and health seeing sustained expansion due to Africa’s expanding middle class,” he said.
He noted that some key geopolitical risks, which present grave medium to long term consequences, that are likely to continue into 2015 are the escalating extremist spawned terror crisis threatening security across the Middle East, parts of Asia, North Africa, East African the Sahel and West Africa and, increasingly major cities across the globe.
Nazare said other likely geopolitical risks of concern include right wing nationalism threatening the welfare of immigrants in most developed nations and renewing racial and sectarian divisions.
He also said a new cold war precipitated by events in the Ukraine resulting in a new bipolar schism with no fundamental ideological base, and territorial claims motivated by resource prospects, like the South China Sea and Antarctica that were threatening future global peace were risks.
Said he, “A major possible risk in 2015 is another global meltdown from the oil price war going on. If OPEC maintains production, oil prices will fall below the economic production price for US oil franking and may lead to another US recession with the consequent ripple effect on the rest of the world,” he said.
While speaking about Africa, he said, the leapfrogging into the information age presents opportunities but a crisis of identity and relevance for the African economy that effectively now straddles multiple epochs from medieval, pre-industrial, agricultural/resource, industrial, to high-tech information driven.
“Changes in the global economy in 2015 are expected to come from the slowdown in China and the drastic change in OPEC, particularly Saudi views on crude oil prices that will negatively impact established oil exporting countries in Africa and all the new and other expectant countries looking forward to a hydro-carbon inspired boom,” he said.
He said that tourism sector faces the risk of further slowdown due to increased extremist activities and bad image resultant from Ebola crisis.
According to him, lower commodity prices leading to Gross Domestic Product growth stagnation, currency pressures, high inflation and balance of payments constraints were economic risks that will impact Africa’s fastest growing regions in 2015.
He said the slowdown of African economies due to depressed commodity prices, particularly oil leading to capital flight, fiscal pressures on governments, negatively impact all sectors particularly insurance.
“The lack of fiscal space for governments and reduced budgetary commitments to social services and infrastructure and relapse of fragile economies into extreme poverty are economic risks that could potentially face Africa’s fastest growing regions in 2015,” he said.