Country Risk in Africa: A Label That Explains Too Little

By Ajay Wasserman

“Country risk” is one of those phrases that lends an air of sophistication to an investment conversation without actually explaining very much. Say it in a boardroom in London, New York, or Johannesburg, and heads nod knowingly. Yet ask three investors what they mean by it, and you will likely get three different answers.

I have heard the term applied to everything from the naira’s swings against the dollar and Zambia’s political transitions to Kenya’s regulatory shifts, stalled licence renewals in the Democratic Republic of Congo, crumbling infrastructure in Mozambique, and the sheer difficulty of moving money across the Central African CFA franc zone. These are not the same risks. They do not share the same triggers, timelines, or remedies – and they certainly cannot be managed with the same tools.

One Label, Many Problems

Consider two hypothetical but familiar African scenarios. A telecoms operator earning revenue in Ghanaian cedis while servicing dollar-denominated debt faces a currency mismatch problem: a squeeze that tightens every time the cedi weakens. A mining company in the Democratic Republic of Congo waiting on a licence renewal faces a bureaucratic and political problem entirely disconnected from exchange rates. Meanwhile, a copper producer in Zambia contending with erratic power supply from a state utility is wrestling with an infrastructure problem, and a construction firm in Nigeria waiting for a government ministry to settle its invoices is exposed to counterparty and payment risk.

Lumping all four under the umbrella of “country risk” may sound prudent. It is not. It is a shortcut – one that substitutes a vague sense of caution for the rigorous analysis that good underwriting actually requires.

Where the Real Work Begins

The serious work starts only once a risk is named specifically. What, precisely, could go wrong? How would it hit revenue, operating costs, project timelines, or the eventual recovery of capital? Can the structure of the deal itself absorb some of that exposure? Should capital be deployed in tranches rather than all at once, releasing further funding only as milestones are met? Can contracts, political risk insurance, security arrangements, sovereign guarantees, or a well-chosen local partner reduce what remains?

Only once these questions are answered in detail can an investor judge whether the expected return genuinely compensates for the risk left standing. Africa’s private equity and infrastructure markets are full of examples – from renewable energy projects in South Africa to fintech ventures in East Africa – where careful structuring transformed a seemingly “high-risk” opportunity into a bankable one.

Comfort Is Not the Same as Safety

None of this is an argument for ignoring country risk across Africa’s 54 markets, each with its own currency regime, regulatory culture, and political rhythm. But unfamiliarity should never be mistaken for danger by default.

Too often, investors wave away genuinely promising opportunities in markets they simply do not know well, while pouring capital into weaker deals in geographies that merely feel familiar. Comfort is a psychological state, not a risk metric. Complexity, likewise, is not automatically synonymous with unacceptable exposure – it is often just a signal that more analytical effort is required before a decision can be made.

The Real Objective

The goal was never to find a country without risk. No such place exists, in Africa or anywhere else. The goal is to understand the risk with enough precision to decide whether it can be carried, mitigated, or properly priced into the return an investor demands.

Africa does not need investors who fear country risk. It needs investors willing to do the work of understanding it.

Ajay Wasserman is the Group CEO and Chief Investment Officer of Fio Capital Group, a private family office and investment holding company based in Pretoria. Focused on empowering entrepreneurs and fostering sustainable growth, he believes the future success of global economies depends on the innovation and leadership of private entrepreneurs and businesses.