The companies listed for investment through Energise Africa have their main operations in Sub Saharan Africa hence investors have to consider the impact of changes in the political climate in the countries in which the Bond Issuers are operating.
Elections often have a strong impact on the economic stability of a country and significant changes could create issues for foreign investors especially as new regimes might close the door or making repatriation of funds difficult/impossible. Political instability could have a very strong impact on economic stability, the judicial system, stability of the financial markets and institutions, and other similar factors. Such risks are difficult to assess but could have a detrimental effect on investment returns. Corruption in many emerging markets, may be more prevalent than in developed markets. In some cases, it’s rooted in cultural differences and thus strongly influential in people’s way of life. Corruption could affect a business’s ability to present fair financial statements. It may add costs that are hard to predict or manage. It could make doing business difficult and make contracts void in court.
Due to political regime change and/or other economic factors, emerging market countries may present a higher potential for the outbreak of conflict or other types of social instability. The displacement of local populations as a result of war or unrest may affect their ability to repay loans to Bond Issuers.