Kennedy Bungane, chief executive officer of Barclays Africa, talks about how political, regulatory and credit risk are coming down in Africa but going up elsewhere.
There is always discussion about risk and reward in Africa – how to move away from perceived risk to actually objectively understand what risk you’ve got, whether you have the capacity within your company to measure, manage and price it so your returns are commensurate to it. These are paradigm themes in Africa.
Rather than looking at just risk and return, companies should go back to basics. It comes down to appetite. Firstly, define the things you need to do to sustainably deliver on your strategy. Once you’re clear on your appetite for risk, then you can do away with the other risks that your company is not geared up to measure, manage and price properly. Then you’ve got a shot.
A lot of the big issues around risk pertain to access to finance – I think we’re making steady progress on this. There are risks that are higher than in the developed world, but we have returns that commensurate very favourably. And, in any case, in most of the world, there are just no returns. By contrast, risk in Africa (political, regulatory and credit) is coming down, while it is going up elsewhere without the commensurate returns. So there is a higher growth trajectory and expectations for returns here and, therefore, you need to have a higher appetite for risk – as long as it is risk that suits you and your business.
Read more at How We Made It In Africa