Can non-commercial risks be mitigated?
No deal is risk-free. And certainly, a decision to invest in a nation that might be emerging from war or civil conflict—like Mozambique or Uganda—could add more uncertainty than investment in a more stable nation. Investors might not be able to make their risks go away completely as they consider sub-Saharan investments. But they can take steps to balance the potential risks, thus making deals viable, explains MIGA’s Bridgman. Sound deal structure and good project fundamentals are the place to start. And companies should also investigate the added protection that political risk insurance—or PRI—provides. “Political risk insurance makes it possible to get debt funding for projects in countries where banks otherwise might not be willing to lend. It can also make these funds cheaper, and protect the investment for a longer tenure,” he says. “PRI allows investors to act on a hunch.” And this ability to act on a hunch, being in the right place at the right time, is the hallmark of successfu
