Risk managers must not run risk of missed opportunities

Missing opportunities can be the downfall of many businesses, too busy dealing with the here and now instead of looking to the future. Risk managers too must be mindful of this problem, as David Kaye reports As leading South African risk manager Gert Cruywagen is fond of saying: “One of the greatest risks is the risk of the missed opportunity.” Mr Cruywagen, director of risk at Tsogo Sun Group, made the point again when speaking at the Institute of Risk Management South Africa (IRMSA) Cruywagen Risk Labs, which were held across the country recently. He stressed that risk managers need to deal with what is immediately in front of them but also keep a firm eye on the horizon – a message also stressed by IRMSA’s new president Berenice Francis when talking to Commercial Risk Africa last week. In the past month, there have been a series of initiatives, all of which are set to boost development across the continent, something for risk managers to keep that weather on. Firstly, AP Moller Holding, PKA, PensionDanmark and Lægernes Pension have launched a new infrastructure fund with a focus on Africa. The fund has received commitments of $550m from anchor investors. The new fund is to focus on investments in infrastructure in Africa that will support sustainable economic growth, while delivering an attractive return to investors. Kim Fejfer, managing partner and CEO of AP Moller Capital, said: “Together, we will build and operate infrastructure business in Africa to support sustainable development and improvements in living standards across the continent. We will combine the best from industry in terms of project management and operational capabilities, with the best from private equity in terms of agility and focus.” “Africa, with a working-age population likely to reach more than one billion people in the next decades, has a pressing requirement for more investments in infrastructure. In this respect, we are delighted to have established a new [and] promising company in our portfolio with a strong team, who hold the right capabilities and experience to manage infrastructure investments in emerging markets,” added Robert Mærsk Uggla, CEO of AP Moller Holding. The fund has a duration of ten years and has an initial target of 10 to 15 investments in total. Following first commitments, the fund will be open for additional institutional investors for the next 12 months. The ambition is to raise $1bn in commitments. Torben Möger Pedersen, CEO of PensionDanmark, added: “The fund is a good example of how private capital can be mobilised on a large scale to implement the UN’s Sustainable Development Goals.” Meanwhile, risk managers in the hospitality sector should be aware of an influx of both foreign investment and foreign travellers to hotels across the continent. The emerging markets are set to post faster growth in revenue than their counterparts in developed countries, making them integral to the expansion strategies of some of the world’s leading hotel developers, according to PwC’s 7th edition of the Hotels Outlook: 2017-2021 report. Pietro Calicchio, hospitality and gaming industry leader for PwC Southern Africa, says: “The growth potential of Africa is high, mainly because of the rapid economic growth in some economies, a growing middle class and an increase in visits from foreign visitors. “The emerging markets are a sought-after destination for foreign investors – it is in these markets where there is continued economic growth and a need for additional infrastructure. In addition, governments and policymakers are introducing a range of tax incentives and other incentive schemes to foreign investors.” However, there are challenges, including the drop in oil prices and other commodities, social unrest, unstable electricity supply and the impact of one of the most severe droughts across the African continent. The report also highlights Ghana and Ethiopia as emerging hotel markets. Ghana The hotel sector in Ghana has remained resilient despite recent global economic challenges. Following the collapse in the oil price and that of other commodities, the government has taken steps to diversify the economy, including promoting the hospitality and tourism sector. Ghana’s hospitality industry grew 1.2% from 2015 to 2016. There is expected to be an increase in the number of business travellers to the country as the government embarks on a number of initiatives to stimulate economic growth. The government is also making improvements in transport infrastructure, with the construction of a third terminal at Accra’s Kotoka International Airport and allocation of funds for the repair of roads to popular tourist destinations. The hotel industry is expected to grow 1.1% in 2017, 2.1% in 2018 and 2.3% in 2019. Ethiopia Ethiopia is set to boost investment in the hospitality sector to generate more foreign earnings. While the economy in Ethiopia continues to enjoy substantial growth, the hotel sector is poised to benefit from an increase in the number of inbound travellers with the expected opening of some international hotel brands. Currently, there are five international hotel brands under construction. However, the sector was challenged by political unrest, which erupted in 2016. Government plans include expanding Ethiopian Airlines’ footprint of regional and international routes and Addis Ababa international airport is also undergoing expansion that will enable it to service 20 million passengers a year by 2019. Egypt steps up PPP usage Most recently, a new public-private partnership (PPP) in Egypt is paving the way for greater use of PPP arrangements across the country to deal with some major infrastructure issues. In this case, and with only a third of Egypt’s population connected to a sewer system and rapid urbanisation straining already overburdened infrastructure, New Cairo’s rapid growth has strained officials’ ability to provide adequate services, especially sanitation. With the city population expected to more than quadruple by 2030, the government hired IFC in 2007 to structure a PPP to finance, design, construct, operate and maintain its wastewater treatment plant. The New Cairo Wastewater Treatment Plant—the first PPP in the country—now serves more than 1 million residents. Treated wastewater from the plant is being used to irrigate agricultural land and urban green areas, reducing the need to use fresh water. In addition, the sludge from the plant serves as fertilizer that increases the productivity of the fields, boosting economic growth in agricultural sectors. This is creating regular jobs in addition to the 60 direct jobs for skilled workers at the plant. The Egyptian government has said PPPs are at the heart of its long-term economic development strategy. The New Cairo project’s design, including its solid regulatory framework, has already inspired other collaborations, such as Cairo’s Abu Rawash wastewater treatment plant. And although the New Cairo Wastewater Treatment Plant was conceived to provide adequate water sanitation, it has potential for replication in other parts of the water sector.

Risk managers must not run risk of missed opportunities

Want to read this article?

Read Next

‘Pressure rising’ on developing Asian aging risk: ADB

European business confidence in China plummets

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

‘Pressure rising’ on developing Asian aging risk: ADB

European business confidence in China plummets

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Want to read this article?

Read Next

‘Pressure rising’ on developing Asian aging risk: ADB

European business confidence in China plummets

International SOS warns of ‘burnout epidemic’

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Related Articles