Middle East, North Africa elevated on 2014 Political Risk MapPosted On: Dec. 16, 2013 12:00 AM CST
Risk for direct foreign investors operating in the Middle East and North Africa has risen markedly in the wake of the Arab Awakening, insurance broker Marsh Inc. and risk analytics firm Maplecroft Ltd. said in a report released Monday.
The 2014 Marsh-Maplecroft Political Risk Map, which annually assesses political risks across 197 countries, finds that more than 60% of countries in the MENA region have experienced a significant increase in the level of political violence since 2010. According to the map, of the 17 countries that have experienced a significant increase in their level of dynamic political risk since 2010, more than half are located in the MENA region. The country with the most significant increase in risk rankings was Syria, which the report now ranks as the second-highest risk country, trailing only Somalia. The report also indentified Egypt as a country representing an “extreme” risk for political violence, as a result of the coup that overthrew Egyptian President Mohamed Morsi and increased terrorist activity in the Sinai Peninsula.
Moreover, this uptick in violence coincides with more firms looking to do business in the region, said Alyson Warhurst, CEO of Maplecroft. “The increase in political violence in East Africa presents significant challenges to foreign investors looking to the region following the discovery of substantial oil and gas reserves,” she said in a statement.
The report also finds several countries, including Philippines, India, Uganda, Ghana, Israel and Malaysia, where the overall political risk dynamic has significantly improved since 2010.
“Companies with direct foreign investments and cross-border contracts continue to operate in a fast-changing, highly volatile global political landscape that can quickly escalate with negative consequences,” Evan Freely, Marsh’s global credit and political risk leader, said in a statement. “It is imperative that companies stay abreast of the key issues impacting the regions in which they operate and have plans in place to protect their strategic interests from the threats of unforeseen political changes and violence.”