Political risk in Africa: predicting the unpredictable – by Jolyon Ford at Oxford Analytica.
A principal quality that analysts of African business and politics need is humility. Events in North Africa in 2011 must have led to some uncomfortable questions between firms and their risk advisors – I have yet to see any end-2010 forecasts that painted anything like the picture of upheaval that we witnessed in the region last year.
For all the interesting posts on this site, none foresaw recent events like the military coup in Mali or the sudden death of Malawi’s president. (Let’s be honest though, there are no prizes for having forecast military interruption of the elections process in Guinea-Bissau).
One can be confident saying that many in the business of risk analytics in Africa would not have predicted the Mali coup. To be fair to our “˜profession’, it is entirely possible that the officers involved in that particular putsch did not foresee themselves doing the deed until the days or hours before. They may have taken not just the government but also themselves by surprise (when Sgt. Samuel Doe swung into Liberia’s Executive Mansion this month in 1980, he appeared to be acting as much on impulse as on meticulous planning or date with destiny.) So political risk analysts ought not to lose sleep over the improbability of not “˜telling the future’ – this may not be their role, and analysis premised on reaching a prediction suffers from a number of flaws.
Analytical reactions to occasional rumours of Robert Mugabe being on his deathbed tend to focus on whether the rumours are true, rather than questions such as what it might mean if they are (and one day, they will be); the possible reasons why such stories are generated (there are at least three); the range of scenarios with or without Mugabe’s death, which can become elevated as the likely turning event in a way the occludes other issues that are either in train or which could significantly shift current trajectories.
On top of all this is the recognition – which would serve many business decision-makers better than analysts perpetuating the pretence of prediction – of the difficulty of assessing complex political dynamics. It is important sometimes to state openly that we do not know what lies within the seeds of time, nor can we say which grains will grow, what will happen in ANC leadership elections, who will win in Ghana or Sierra Leone, whether Kenyans will avoid electoral conflict or not. The significance lies more in the reasoning and assumptions – the attempt to predict outcomes is often misconceived.
Very few in this line of work (this author included) accurately forecast Michael Sata’s somewhat surprise victory in Zambia’s 2011 elections, which now seems an obvious outcome in retrospect. Such events, and those in Mali, are reminders of the limits and pitfalls in our “˜discipline’. Pricing of political risk in contemporary sub-Saharan Africa tends to be both overdone (for example, foreign investor over-reactions in South Africa last year) or underdone (the prevailing “˜lions on the move’ bullishness about the continent that ignores a range of factors and experiences). Getting that balance right on will remain a difficult and humbling task.
Jolyon Ford is senior analyst (Africa) at Oxford Analytica.