Episodes
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As part of The Payments Exchange series in collaboration with Crown Agents Bank, this episode brings you a critical discussion adapted from a recent webinar.
On July 29, 2024, the Ethiopian Central Bank made a historic decision to float the Birr. This episode explores the potential impacts on Ethiopia’s trade and investment landscape, foreign exchange dynamics, and how businesses and international organisations can navigate these significant changes and capitalise on this transformative moment for Ethiopia.
Featuring:
Barkot Tekle, Head of Central & Development Banks, Emerging Market Financial Institutions at Crown Agents Bank Duncan Keil, Chief Executive Officer at ICAP Africa Zemedeneh Negatu, Global Chairman at Fairfax Africa Fund & Invest Africa Advisory Board Member Patricia Rodrigues, Associate Director at Control Risks -
At the end of May, South Africans went to the polls for national and provincial elections that marked a significant shift in the country's political landscape.
After more than two decades of waning voter support, the African National Congress (ANC) lost its majority in the National Assembly. This historic change for a party that has held unitary control over the executive branch since the first racially inclusive post-apartheid elections in 1994. In this recent vote, however, the ANC secured just 40% of the national vote and 159 out of 400 seats in the National Assembly. This necessitated the formation of a coalition government, wherein the ANC retains 20 out of 32 cabinet posts, the Democratic Alliance holds 6, and the remaining portfolios are shared among smaller parties (click here to see the new National Executive).
To delve into what this historic election and the new coalition government mean for investors and businesses operating in and around South Africa, Ipeleng Selele, Chairperson of Brand South Africa; Seamus Duggan, Director for Global Risk Analysis at Control Risks; and Jeff Gable, Chief Economist at Absa, share their insights on the election results, new cabinet, and the challenges and opportunities for investors and businesses created by this new political landscape in South Africa.
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Episodes manquant?
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Welcome to the first episode of The Payments Exchange mini-series. Over the course of four episodes, we will explore the payments ecosystem across the African continent with Crown Agents Bank and a guest expert. In this episode, Chris Partridge, VP & Head of Bank and Non-Bank Financial institutions at Crown Agents Bank, and Mark O'Sullivan, CEO of IPT Africa dive into the dynamic landscape of payment systems in Africa, highlighting the current trends and challenges shaping the industry and its prospects. From mobile money to digital wallets, they uncover the key factors driving change and discuss the implications for businesses, consumers, and policymakers.
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In this podcast, we explore the evolving risk landscape in Africa and its impact on trade, investment, and gender. Genevieve Ahinful, Head of Political Risk and Trade Credit at Africa Specialty Risks, and Tokunboh Ishmael, Managing Director & Co-Founder, Alitheia Capital, discuss changing perceptions, offering insights into the opportunities and challenges for investors, and the need for companies to implement a gender-focused approach to their overall strategy.
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In 2024, Africa grapples with a complex landscape, encompassing supply chain disruptions, geopolitical tensions from Russia's invasion of Ukraine, the persistent impact of COVID-19, rising inflation, and conflicts in the Middle East. Amidst these challenges, African nations are urged to leverage industrialisation opportunities, potentially catapulting the continent's GDP by 20%.Anticipating economic growth, countries like Angola and Mozambique are poised for a 6.2% expansion in 2024, surpassing the previous year's trajectory. Mozambique stands as the 16th fastest-growing economy, engaging in ongoing debt restructuring talks.While most African nations expect a relief from inflationary pressures, Angola and São Tomé and Principe may continue grappling with double-digit inflation, primarily driven by elevated oil prices.Lusophone countries, navigating the delicate balance between revenue generation from fossil fuels and the imperative to transition to clean energy, spotlight Mozambique's focus on Liquid Natural Gas (LNG) projects. Mozambique positions itself as a significant player in the global LNG market, seizing heightened demand amid the Russia-Ukraine conflict.As Africa's second-largest oil producer, Angola aspires to achieve 80% renewable power by 2025. Recent market reforms attract a diverse spectrum of investors, marking a departure from Chinese dominance to include Japanese, Middle Eastern, and European stakeholders.Even in island jurisdictions like Cape Verde and São Tomé and Principe, the imperative to transition to clean energy is evident. São Tomé sets an ambitious target of increasing the proportion of renewable energy to 50% by 2023, focusing on solar and hydro projects. Overcoming the current dependence on imported diesel for 90% of its energy, São Tomé and Principe envisions a sustainable energy future that yields inclusive growth.The investment landscape in Lusophone countries is encouraging, with international investors increasingly showing a willingness to support pivotal projects. This growing confidence within the investment community bodes well for the energy transition and overall economic development in these strategic markets.
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In 2024, Africa is set to be the second-fastest growing major region, with most countries experiencing accelerated economic growth compared to 2023. East Africa, led by Ethiopia, Kenya, Tanzania, Uganda, and Rwanda, is poised to be at the forefront, contributing to Africa's real GDP increase from 2.6% in 2023 to 3.2%. However, political risks may rise due to elections in some major African economies.
Following prominent multilateral events in 2023, including the inaugural Africa Climate Summit, Africa's vulnerability to climate change has gained greater attention. East Africa lags in meeting its $739.4 billion regional target for climate-resilient development by 2030, impacted by factors like drought and conflicts affecting growth in Kenya, Ethiopia, and Somalia. Although renewable energy investments have driven recent growth, more efforts are needed to meet the region's escalating energy access demands, and build climate-resilient infrastructure to support the region’s growing population.
Intra-African trade stands at 13%, significantly lower than the EU’s 60%. As a key member of the East African Community, Tanzania, strategically located on the Indian Ocean, aims to enhance regional integration, boosting intra-African trade. The moderinisation of the Port of Dar es Salaam will play a crucial role in facilitating trade with landlocked countries in the region like Uganda and Rwanda, ensuring that they are “land-linked”.
Despite numerous tailwinds, including sustained economic growth, economic diversification, increased regional integration, and favourable demographics, East Africa’s promising growth potential calls for continued investment in the region’s infrastructure. Addressing the current challenges of poor infrastructure, which adds between 30% to 40% to the costs of goods traded among African countries, will further enhance the region’s positive trajectory and capitalise on the favourable conditions to yield inclusive growth.
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The economic dynamics and political landscape within the framework of Africa’s North markets for the 2024 fiscal year present a nuanced scenario.
The growth in North Africa is estimated to have decreased by 1.3 percentage points to 4.1 percent in 2022. This decline was attributed to the sharp contraction in Libya, accounting for 6 percent of the region’s GDP, and the impact of drought in Morocco, constituting 13 percent of the region’s GDP. A more robust growth trajectory is anticipated in 2023–24, averaging 4.5 percent. This resurgence is underpinned by a strong recovery in both Libya and Morocco, along with the consolidation of gains in other countries.
In contrast, Egypt’s growth almost doubled from 3.3% in 2021 to 6.1% in 2022 due to greater investments in infrastructure, higher gas production and increased vessel traffic through the Suez Canal.
Among the major North African markets, Morocco is poised to experience one of the most substantial rates of growth acceleration after a pronounced slowdown resulting from drought, escalating energy prices, and a deceleration of growth in the EU, its primary trading partner. Morocco's GDP is projected to expand by over 3.1% this year, a significant improvement from the 0.8% recorded in 2022. North Africa holds immense potential to meet its energy needs and act as an alternative source for the EU’s oil and gas requirements particularly in Libya and Algeria, given its proximity to Europe and the EU’s shift away from Russia’s oil and gas.
However, concerns persist regarding the quality of growth and its sustainability in the future. Sub-Saharan Africa has witnessed an upsurge in attempts to destabilise governments through unconstitutional or violent means in recent years. Coups, violent extremism, riots, and social unrest have become more prevalent. The region remains susceptible to significant challenges, including climate shocks and the volatile political situation in Libya.
While pockets of economic resilience exist, the region confronts notable challenges related to political stability and the long-term sustainability of economic growth. Addressing these challenges will be pivotal in fostering a more stable and prosperous future in North Africa’s markets.
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Southern Africa’s regional economic performance in 2023 compares unfavourably to that of other sub-regions, with growth slowing to 3.3% from 4% in 2022. The outlook for 2024 is uncertain due to the Southern Africa region remaining subject to significant downside risks. Over the 2023-2024 period, six Southern African countries (Botswana, Mauritius, Mozambique, Namibia, South Africa, and Zimbabwe) will hold presidential and/or parliamentary elections. These elections could exert upward pressure on wages and public spending, challenging fiscal discipline and the implementation of bold structural reforms.
Nevertheless, the continent has shown resilience despite significant shocks. Southern Africa’s overall outlook for 2024 remains cautiously optimistic, with growth expected to rebound to 4%. This growth is set to be broad-based, with top performers for the fiscal year likely to include Mozambique, Madagascar, Mauritius, and Zambia.
Despite grappling with high debt distress, exceeding 104% of GDP, Zambia’s GDP has consistently grown over the last two years. Zambia is poised to experience an improved macroeconomic environment, driven by a strengthened mining policy and a more reliable electricity supply. The Mauritian economy is projected to grow by 5% in 2023 and 4.2% in 2024, spearheaded by the tourism sector. Nevertheless, the ongoing Russia-Ukraine conflict, coupled with higher living costs in Europe, will lead to greater monetary tightening. Struggles with a power, logistics, and growth crisis have impacted South Africa’s public finances. South Africa’s medium-term outlook remains dim, but vital reforms are gaining traction.
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The economic dynamics and political landscape in the context of Africa’s Francophone markets for the 2024 fiscal year paint a complex picture.
The Democratic Republic of Congo (DRC) remains the largest intra-African trading nation; its share of total African trade increased by 35.7% from $12.19 bn in 2021 to $16.53 bn in 2022. This is largely a result of government commitments to regional integration and strengthening cooperation across the continent. Cote d’Ivoire also stands out as a critical contributor to intra-African trade, with the country’s short and medium-term economic outlook remaining positive, albeit slightly below pre-COVID-19 levels.
Among the major Francophone markets, Morocco is expected to enjoy one of the strongest rates of growth acceleration following a sharp slowdown caused by drought, rising energy prices and growth deceleration in the EU, its main trading partner. Morocco’s GDP is forecast to expand by more than 3.1% this year, up significantly from the 0.8% recorded in 2022.
Still, the quality of growth and its sustainability in the future remains a matter of concern. Sub-Saharan Africa has witnessed an increased incidence of attempts to destabilize governments by unconstitutional or violent means in recent years. Coups, violent extremism, riots, and social unrest have become more commonplace. Ongoing conflicts, contested elections, and economic challenges have caused instability in countries like Chad and Burkina Faso. The upcoming presidential election scheduled for the DRC on December 20th 2023 will be a flashpoint for instability.
While there are pockets of economic resilience, the region faces notable challenges related to political stability and the long-term sustainability of economic growth. Addressing these challenges will be crucial for fostering a more stable and prosperous future in Africa’s Francophone markets.
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From supply chain disruptions stemming from Russia’s invasion of Ukraine to the lingering effects of COVID-19 to increased inflation and interest rates, and recent conflicts in the Middle East, 2024 is sure to bring a multitude of challenges and opportunities to Africa. However, against this backdrop of polycrisis, African countries have been urged to seize the opportunity presented with industrialisation which could see the continent’s GDP grow by 20%.
While growth in West Africa slowed to 3.6% in 2022 from 4.4% in 2021, it is projected to pick up in the medium term, reaching 4.1% in 2023 and accelerating to 4.3% in 2024. Senegal stands out as an exemplary economy, with IMF projecting the West African republic to grow at a record rate of 10.6% in 2024, the highest rate since independence.
Nigeria remains the most populous country on the continent, emphasising the continued need to diversify its economy and maximise renewable energy strategies. With regards to technology, Mobile Money services have made more inroads in Africa than in any other region, with West African countries, namely Senegal, Ghana and Cote d’Ivoire leading the way, indicating the need and desire to leapfrog traditional financial infrastructure.
Nevertheless, despite increased efforts to boost trade between countries on the continent, Africa trades far more with other countries than with itself. Increasing intra-Africa trade in 2024 will be critical to accelerate sustainable and inclusive economic growth across the sub-region and continent as a whole. Building partnerships that enable joint ventures and ensure local buy-in will be a priority for both the public and private sectors looking to further unlock Africa’s value-chain.
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To celebrate International Women’s Day throughout the month of March, Invest Africa has been hosting a podcast series #WinningWomenInAfrica to promote inspirational African female industry leaders.
#WinningWomeninAfrica will feature a weekly podcast, where our selected female industry leaders will reveal their path to establishing success, the challenges they encountered, and how women’s empowerment in Africa can be enhanced. Africa and the Middle East are the leading regions for the proportion of female CEOs, with Africa having the highest proportion of female board members globally at nearly 15%. Africa ranks second for the share of women-founded companies. Although global prosperity is more evenly distributed now than at any other point in history, there remains a staggering imbalance between men and women in the financial sector. According to the World Bank and International Finance Corporation, women-owned businesses face an estimated $1.7 trillion shortfall in access to finance.
Dr Ngozi Erondu is a trained infectious disease epidemiologist with 15 years of experience working to improve health systems and global health governance. Her policy expertise includes strengthening regional leadership in pandemic preparedness and health security governance reform.
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To celebrate International Women’s Day, Invest Africa hosts a podcast series throughout March #WinningWomeninAfrica to recognise inspirational African females.
#WinningWomeninAfrica will feature a weekly podcast, where our selected female industry leaders will reveal their path to establishing success, the challenges they encountered, and how women’s empowerment in Africa can be enhanced.
Africa and the Middle East are the leading regions for the proportion of female CEOs, with Africa having the highest proportion of female board members globally at nearly 15%. Africa ranks second for the share of women-founded companies. Although global prosperity is more evenly distributed now than at any other point in history, there remains a staggering imbalance between men and women in the financial sector. According to the World Bank and International Finance Corporation, women-owned businesses face an estimated $1.7 trillion shortfall in access to finance.
Yemi is at the forefront of digital transformation to tackle business and social problems and is recognised as one of the leading Women in Technology in Nigeria and an inspiration for many
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To celebrate International Women’s Day, Invest Africa is hosting a podcast series throughout March #WinningWomeninAfrica to recognise inspirational African females. #WinningWomeninAfrica will feature a weekly podcast, where our selected female industry leaders will reveal their path to establishing success, the challenges they encountered, and how women’s empowerment in Africa can be enhanced.
Africa and the Middle East are the leading regions for the proportion of female CEOs, with Africa having the highest proportion of female board members globally at nearly 15%. Although global prosperity is more evenly distributed now than at any other point in history, there remains a staggering imbalance between men and women in the financial sector. Women-owned businesses face an estimated $1.7 trillion shortfall in access to finance according to the World Bank and International Finance Corporation
Adesuwa Okunbo Rhodes founded Aruwa Capital Management in 2019 to bridge the investment gap for female-led businesses in Africa. Aruwa is one of the few women-owned and led private equity funds in Africa investing in untapped investment opportunities in Nigeria and Ghana. Aruwa has recently raised its first institutional fund in Nigeria, making Adesuwa the youngest general partner to raise US$ 20 million in Nigeria, with leading investments from the Visa foundation and Mastercard Foundation Africa Growth Fund.
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Spearheaded by the increased strength of Kenya, Tanzania, and Rwanda’s national economies, East Africa has become the fastest growing region of the continent in recent years. However, the impact of the COVID-19 pandemic coupled with the Russian invasion of Ukraine has derailed the region’s growth trajectory. Rising food prices have become a key area of concern regarding food security, especially as the region is grappling with drought. An estimated 55 million people in East Africa are expected to be food insecure, up from 42 million in 2021 (World Bank, 2022).
Nevertheless, the agriculture, construction, and energy sectors in East Africa offer the potential to yield inclusive growth. The rise in global oil prices has resulted in greater interest in Africa’s gas reserves as sources of energy alternatives; the liquified natural gas project in Tanzania has sparked renewed investor interest. Equally, Kenya’s underdeveloped mining sector is experiencing growth from 10.9% of GDP in 2021 to 22.6% in 2022.
Recovery paths across East Africa have been uneven. Tanzania has been an anomaly through these ongoing crises as its GDP is forecast to reach 5% in 2022 up from 2% in 2020 (AfDB, 2022). Kenya’s agriculture sector, which accounts for 20% of its economic output has demonstrated considerable volatility and remains vulnerable to climate change. Additionally, political fragility and instability such as the escalation of fighting in northern Ethiopia and the political uncertainty accompanying regional elections could hinder private sector business activity. In Rwanda, the inflation rate is forecast to be pushed up to 16% in response to rising food prices causing hurt to consumers’ pockets. The road to recovery for economies across the region will be long and uncertain.
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West Africa will be striving for economic growth against the backdrop of a major pair of twin shocks: the lingering COVID-19 pandemic and the Russia-Ukraine conflict. While GDP is set to decline by 1.2% in Burkina Faso, Mali, Cote d’Ivoire, and Senegal, Niger’s GDP is forecast to increase (AfDB,2022). As most West African countries are import dependent, the soaring inflation rates both within the sub-region and globally will undoubtedly lead to higher import bills and thus risk eclipsing the level of exports (WADO,2022). The challenge for the Economic Community of West African States (ECOWAS), which forms the financial backbone of the sub-region, will be to try to contain inflation rates low without suppressing inclusive growth.
These global crises have increased the potential for a food crisis, with West Africa positioning itself at the centre of it given the possibility of social unrest. Higher prices for fertiliser have led to shortages, leading to less agricultural yields in the sub-region. However, this presents policymakers and ECOWAS with the opportunity to re-orientate economic and social policies to enhance intra-regional trade and strengthen the resilience of food systems in West Africa to better cope with future international market shocks. The unpredictable character of the global energy sector as an upshot of the Russia-Ukraine conflict has signalled for West African countries to achieve greater energy self-sufficiency. Petroleum producers in the sub-region such as Nigeria and Ghana have the potential to attract wider investment from the private sector. They will need to increase their refining capacity to promote further intra-regional trade and provide an avenue for West African countries to source cheaper products at a competitive rate.
Security concerns and domestic political turmoil remain of paramount importance for achieving inclusive growth in the sub-region. Cross-border attacks in Cote d’Ivoire, Burkina Faso, and Benin will fail to aid both public and private investment. The volatile political circumstances in Mali and Burkina Faso and their increased ties to Russia’s paramilitary organisation, Wagner Group, will also prevent ECOWAS’ ability to achieve project growth and development targets. The result and impact of the upcoming Nigeria election in February will also be critical for the region as Benin’s President warned in 2016 “if Nigeria sneezes, the whole of West Africa catches a cold.”
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The theme across the African continent for national economies in 2023 is uncertainty. North Africa’s regional growth is forecast to slow down in terms of real GDP growth, from an average of 4.2% in 2022 to 3.8% in 2023. The course of the Russia-Ukraine conflict remains highly unpredictable, resulting in unstable inflation rates consequently pushing up food and fuel prices for large sections of societies across North Africa. Economic recovery will be uneven as oil and gas producers in the region such as Algeria and Egypt have the potential to benefit from elevated energy prices and an international mood to wean Europe off Russian hydrocarbon exports, placing a sharper focus on Africa. Despite being the 3rd largest natural gas supplier to Europe, Algeria lacks the infrastructure to meet its own domestic and Europe’s rising demand. Yet this is also an area that could benefit from Algeria’s new investment laws passed in July 2022 that aim to stimulate the development of the country’s natural resources, technology transfer, job creation, and export capacity.
On the political front, much of the region remains marred by political unrest which could further harm national economies. In combination with higher food prices, President Kais Saied’s power grab in Tunisia and subsequent policies have pushed the economy into dire straits, threatening increased poverty rates which could lead to violent social unrest. However, a preliminary agreement secured with the IMF in 2022 concerning a $1.9 billion loan could aid in alleviating the Tunisian economy which has been plagued by food and fuel shortages.
These challenges present the opportunity to build new social contracts and transform existing economic models to prioritise inclusive growth. With COVID-19 restrictions easing, the tourism industry particularly in Egypt and Morocco has seen an uptick in demand. As the host of COP27 in Sharm El Sheikh, there is greater potential for Egypt’s tourism sector to develop along sustainable lines to become a model for the global tourism industry. This shift toward normalising eco-tourism will be crucial as droughts and rising sea levels, both impacts of climate change, pose a great threat to the social stability and economic growth trajectories for all North African countries. Nevertheless, there is a desperate need to increase the availability and distribution of climate finance to all countries across the region, particularly Mauritania. North Africa has an abundance of renewable energy resources, notably wind and solar. Morocco has one of the world’s largest concentrated solar power plants, providing energy for just under 2 million Moroccans saving 800,000 tonnes of CO2 annually. Both Morocco and Egypt are betting big on green hydrogen as producers and exporters to capitalise on the international interest in hydrogen energy.
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Southern Africa was the hardest-hit sub-region during the COVID-19 pandemic causing regional GDP growth to contract significantly. Thus, these diverse economies are entering 2023 at various stages of economic recovery and development. A central theme for this year will be how countries in the sub-region can become less reliant on fossil fuels and investment opportunities in the renewable energy sector.
South Africa is the largest emitter of greenhouse gas annually owing to its substantial coal industry but will be performing an increasingly delicate balancing act between transitioning to a green economy and trying to ensure job security for those working with fossil fuels. This shift has the potential to achieve decarbonisation commitments at a quicker pace while promoting sustainable development. Increased investments in enabling infrastructure, particularly in Namibia’s high-profile green hydrogen projects, are set to support economic diversification as the Government pursues its plans to boost value-added processing and achieve export-driven growth. Equally significant is the discovery of liquified natural gas (LNG) in Mozambique. While LNG has been identified as the “cleanest” fossil fuel it is one, nevertheless.
African countries are being hit the hardest by disruptions in global supply chains as an upshot of the Russia-Ukraine conflict, increasing the need to diversify exports. In Zambia where food accounts for 50% of household consumer price baskets, higher prices for foodstuffs will significantly hurt the livelihoods of a sizeable portion of the population. Moreover, considering the move toward clean energy technologies there is a growing appetite for developments in Agri-Tech industries in Southern African countries such as Namibia to develop greater agricultural productivity. The reliance on European grain imports is only highlighting the necessity for African countries to become much more self-sufficient and to engage in intra-African trade to a greater extent, the African Continental Free Trade Area has the potential to deepen this. Low vaccination rates against COVID-19 in South Africa, Zambia, Botswana, Angola, and Lesotho will continue to constrain economic recovery.
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As 2022 draws to a close, Invest Africa's CEO, Karen Taylor, speaks with Amir Hussain, Senior Underwriter - Political Risk and Trade Credit of Africa Speciality Risks, and Robert Besseling, Founder and CEO of PANGEA-RISK, to discuss what lies ahead for the countries on the African continent in 2023. Despite the uncertainty surrounding upcoming elections, the growing opportunities to implement successful debt restructuring initiatives and investment in Africa's renewable energy sector leave enough room for an optimistic outlook.
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External headwinds influencing Africa's cost of living crisis is transforming the geopolitical landscape across the continent. Genevieve Ahinful, Head of Political Risk Insurance and Amir Hussain, Senior Underwriter, at Africa Specialty Risks, outline how businesses are navigating these uncertainties, amidst three major upcoming elections.
For more information on Africa Specialty Risks, visit their website: www.asr-re.com
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