While the South African economy is again stuck in a deep recession and measures aimed at fiscal consolidation are stalled, the new administration may have achieved sufficiently firm institutional gains to stave off a third sovereign credit rating downgrade by Moody’s in October.
In the first six months of its administration, the new government had taken a measured and pragmatic approach to pursue internal and external peace, enhanced political pluralism, and economic privatisation, yet remains challenged by both socio-political and institutional pressures.
The ongoing contract frustration experienced by telecoms firm MTN in Nigeria and the threat of punitive action against banks such as HSBC are highly indicative of intensifying populist and politically motivated rhetoric against foreign investors ahead of next year’s elections.
An escalation of violence is likely in the pre-election period in the Anglophone Southwest and Northwest regions, while road closures, kidnap threats, and robberies will pose a heightened risk in afflicted locations.
The newly elected president has consolidated his political authority through shaking up the cabinet, while he is sending a reformist message to creditors that he will prioritise growth as a mechanism for development, beginning with measures to stabilise the country’s precarious fiscal and monetary positions.
A booming economy and improved governance are creating fresh opportunities for project finance deals. While the economic and financial outlook is relatively strong, there are emerging concerns over political patronage and contract discrimination under the current administration.
The low capability of recent attempted terrorist attacks on Cairo’s diplomatic and government assets indicate the curtailed threat of local militant groups, although an expected drawdown of counter-terrorism offensives could provide terrorism groups the opportunity to recuperate.
The new government will seek international re-engagement, political conciliation, and economic recovery, while taking a measured approach, prioritising less disruptive policy, and personnel changes and gradually moving toward more comprehensive change.
The possibility of intervention by other militant groups in Tripoli’s ongoing security crisis risks escalating the conflict and establishing new flashpoints, including militant-secured areas of strategic significance such as Mitiga Airport.
Commercial and humanitarian interests face an ever increasing risk of banditry from both militant groups and criminal organisations, especially outside of the capital where government security forces hold little sway.
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