The heart of the matter – Dr Elizabeth Stephens, JLT

Head of credit and political risk analysis at JLT and a partner within the political risk, credit & terrorism team at JLT Specialty Limited, where she monitors and analyses global political risk development and advises corporate and banking clients on their risk exposures, Dr Stephens has been fearing the spread of violence since the Arab Spring of 2010. “So many people are surprised by what is happening [in Mali and the attack in Algeria] but it is about the knock-on effect. If there is no control within a country there will be crime. If there is no control over weapons then there will be an outflow of weapons and men. If they are well armed and well trained it leads to a coup,” she said. She added: “Al-Qaeda has a history of attaching itself to separatist groups and in Africa the Islamist groups have linked themselves to the drug route which means they have money,” she warns.hideDr Stephens is more surprised that other people have been surprised by the Mali incursion and also by the attack on the plant in Algeria. She also fears it is far from the end of the subject. “The French are liberating the cities in Mali but it is a vast country with mountainous borders which are perfect for the Islamists to hide in.” Her words came just before the French faced a surprise attack in the northern Mali city of Gao, lending further credence to her fears that this is a sign of things to come. Dr Stephens fears there may well be a knock-on effect in Niger, for example, because it hosts a US drone base, likewise Burkino Faso may suffer because of its US and European ties and there are concerns about Senegal because it is an Islamist state. Better news for Algeria is that Dr Stephens is hopeful that the recent attack was a one-off. Security, she says, is very tight, although it does suffer from a porous border with Libya. Better news too is that huge investors are still seeing plenty of opportunity in Africa. Areas such as agriculture are likely to attract more funding, particularly where there are opportunities for ‘super-farms’. These investors do want reassurance that countries are able to sort out their own affairs without violence. For example, all eyes have been on Kenya as it headed towards its first national elections since the riots of 2007 and 2008 in which more than 1,200 people died. Dr Stephens says the predictions are that violence will be spontaneous this time around rather than politically organised as in 2007. However, as 4 March draws closer the pundits are warning of an escalating threat. Others too, are preparing. For example, exporters in Uganda have been lining up alternative routes via Tanzania, rather than using the usual routes to the Kenyan seaboard, according to Dr Stephens. All of this, she says, should not detract from the vibrancy and success of Kenya more generally. It is seen as a major African hub with a growing and successful business sector. Even South Africa—once considered a shining star—has a few issues. Dr Stephens warns the country is ‘losing its political legitimacy and has been suffering its highest level of political violence since 1994’. There is also growing concern around nearby Angola as well as Ethiopia. Underwriters have quite significant exposures in Angola, for example, thanks to mining, where its leader Dos Santos is now quite an old man and has been in power for a lengthy period of time. Dr Stephens says this mirrors the situation in both Libya and Egypt to some extent and she knows the markets would like more certainty and stability about succession plans. “Having a dictator in place for many years can give companies a false sense of security,” she warns. “People become complacent because they are a ‘friend’ of the regime but the big question is what will happen when that leader goes.” Ethiopia too faces some instability while nearby Somalia has a history of problems not least from the well-publicised piracy issues. However, oil exploration in that region is proving positive and could bring change. Dr Stephens has a global brief in her rôle at JLT but Africa is a core part of that, not least because of its diversity and opportunities. Often her clients also wrap Africa up in a global portfolio when looking for insurance because it is frequently the most cost effective route. “The portfolio approach to insurance is usually most cost effective,” Dr Stephens explained, “because companies are able to spread the risks between the various countries. Since the Arab Spring there really is no such thing as a safe haven—that myth has been dispelled once and for all—but neither is the whole of Africa a hot bed. Sometimes we hear people lump the whole of Africa into one but it is a continent of some 54 countries, all with very different identities and economies.” Having said that, Dr Stephens says increasingly all parts of the globe are becoming entwined into one. Looking to the future, Dr Stephens believes Africa as a whole could provide some answers to growing global issues, such as scarcity of food. People are becoming increasingly concerned that with the global population increasing, there will be insufficient resources to provide food. There is plenty of available land across Africa and much of the continent also has plenty of another increasingly scarce resource—water. This could become critical as other parts of the planet dry up. “The Yemen, for example, could be out of water within 10 years,” she warned. “Africa has fertile land and water, it could genuinely be the world’s bread oven particularly if these conglomerates can go in and make the land productive. It could feed the local community and have enough for exports. “The problem at the moment is that Africa has the resources but not necessarily the management across the board. It would also be important that these companies manage the balance between serving the local community and exploiting local resources. It would be politically insensitive to export grain from a country where people are starving, for example.” Providing such insights forms part of her daily life as she helps clients understand the tangled web that leads to political violence and instability. The good news is that business leaders are recognising the value in such information, helping to inform their investment decisions. “There is a lot more cultural awareness, for example,” she said. “Companies no longer just send someone from head office to manage a local operation but train up the indigenous population. Most companies are far more engaged with the local communities than a decade ago.” They have, she says, learnt to appreciate the damage that can be done to share prices if production is disrupted by local community action, while the same action can also badly affect the reputation of the parent company. “For example, Chinese investment was welcomed by African governments but after a period in which local communities have reacted against the Chinese companies for not treating workers well and after questions about the long-term value of letting valuable commodities out of the control of the host country, Chinese companies have found it hard to win contracts. “Governments have been looking to balance investment and local needs and the Chinese have been unable to ignore what is happening. “It has been a learning process for everyone—host governments are more aware of the risks of asset stripping while the companies have learned to involve local communities in a much greater way.” Another major change across Africa has been a growing middle class. Dr Stephens says some countries are ahead of others but South Africa, Nigeria and Angola all have prosperous middle classes, which she says is a great sign heralding future stability. However, Africa is still a continent where investors need to look at their long-term goals. Infrastructure is far from complete across the region and companies need to invest in roads and rail before they can build their own projects. All of this takes huge amounts of money and certainty that the project will still have the necessary support in the time it takes to return a profit. What is more certain is that Dr Stephens has enjoyed her first seven years at JLT, in which she has developed a real interest and excitement about Africa as a whole.

The heart of the matter – Dr Elizabeth Stephens, JLT

Want to read this article?

Read Next

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

New CEO of Davies’ multi-sector global consulting division

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

New CEO of Davies’ multi-sector global consulting division

Want to read this article?

Read Next

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

New CEO of Davies’ multi-sector global consulting division

Related Articles