Risks of investing in Africa and how UAE investors manage them

Risk in Africa is specific to each country, sector and contract, so a continental average says little about your deal. Egypt carries currency and debt history, Ethiopia sits outside the main investment arbitration convention, and Kenya pairs a stable shilling with heavy debt.

The backdrop matters too. In October 2026 the International Monetary Fund (IMF) saw risks to sub-Saharan growth tilted to the downside. It cited the Middle East war, fuel and fertilizer costs and interest bills of about 12% of government revenue.

The register lists ten risks that recur in African deals and how investors reduce each one. Use it as the agenda for your talks with lawyers, lenders and insurers:

No single tool covers every row. Investors combine a treaty-backed structure, a tight contract, insurance and financing partners whose presence makes a government think twice before changing rules.

Currency is the risk that most changes the return of a Gulf investor earning in local currency, and four large markets show the range of regimes:

• Egypt: in March 2024 the central bank floated the pound and raised its policy rate by 600 basis points to 27.75%. The pound fell from about 31 to more than 50 per US dollar within hours, and the IMF raised its loan from USD 3 billion to USD 8 billion.
• Ethiopia: on 29 July 2024 the central bank moved to a market-based regime, and the birr fell from 57.48 to 74.73 per dollar. Exporters now keep 50% of their foreign exchange, and firms in special economic zones keep 100%.
• Nigeria: from 2023 the government scrapped the fuel subsidy and liberalized the naira. The gap between the official and parallel rates narrowed from more than 60% to under 5%, according to the finance minister in August 2026.
• Kenya: the shilling has held a band of KSh 129–130 per dollar for about a year, at KSh 129.47 on 4 September 2026. The central bank says the rate is market-driven, and reserves covered 5.6 months of imports in June 2026.

For pricing, a float resets the starting point but does not remove the risk. Model your dollar return under a devaluation case, link tariffs to the dollar where the regulator allows it, and match the currency of your debt to that of your revenue. The hedging section sets out the instruments.

Sovereign debt matters to a private investor because a stressed government pays suppliers late, raises taxes and changes rules at short notice. Senegal and Kenya show two forms of the problem.

Senegal

In March 2025 the IMF confirmed that up to USD 7 billion of debt had been concealed over 2019–2024. Debt was revised from about 70% of gross domestic product (GDP) to nearly 100%, and the USD 1.8 billion IMF program was suspended. In September 2026 Senegal reached staff-level agreement on a USD 2.2 billion Extended Credit Facility (ECF) for 2026–2029 and plans to seek “debt treatment”.

Kenya

Kenya’s public debt stood at about 74.8% of GDP in a September 2026 report, and the IMF rates it at high risk of debt distress. External debt service takes about 32% of tax revenue, and the last IMF program lapsed in 2025 with a new one under negotiation.

IMF programs elsewhere

Programs in other markets set the policy path investors work within:

• Egypt: the program commits to a flexible exchange rate and a smaller state footprint, and Fitch expects general government debt to fall to 77% of GDP by fiscal year 2027.
• Ethiopia: the float came with a USD 3.4 billion program, and the government is restructuring about USD 8.4 billion of debt.
• Ghana: a USD 3.2 billion ECF (May 2023) supports a restructuring under the G20 Common Framework, with commercial creditor talks still ongoing in October 2025.

An IMF program brings discipline but also subsidy cuts and tax measures that can hit your customers. Track each review and its conditions.

The legal system decides how contracts are read, how companies are formed and how security is taken. The main markets fall into three families:

• Common law: Kenya, Tanzania and Ghana follow English common law; Nigeria applies common law at federal level and in most states, with Sharia in some northern states
• Civil law: Egypt (Napoleonic code with Islamic law), Ethiopia, Senegal, Côte d’Ivoire and Angola (Portuguese civil law)
• Mixed systems: Morocco (Islamic law with French and Spanish civil law), Rwanda (Belgian civil law with English common law) and South Africa (Roman-Dutch civil law, English common law and customary law)

The Organization for the Harmonization of Business Law in Africa (OHADA) was created by treaty in Port Louis, Mauritius, in October 1993. Its Uniform Acts on commercial law, companies, securities, debt recovery, insolvency, arbitration and accounting apply directly in all 17 members. These include Senegal, Côte d’Ivoire, Benin, Cameroon, Gabon, Guinea, Mali and the Democratic Republic of the Congo.

For an investor, OHADA means one set of company and security rules across most of French-speaking West and Central Africa. A template built for Dakar adapts to Abidjan or Libreville.

Your protection in a dispute with a state or a partner rests on three layers: an investment treaty, the forum that hears the claim and the convention that makes an award enforceable. Check all three before you sign.

Bilateral investment treaties

The UN Conference on Trade and Development (UNCTAD) lists 20 UAE bilateral investment treaties (BITs) in force with African countries and 16 signed but not in force:

• In force: among them Egypt, Morocco, Kenya, Ethiopia, Rwanda, Côte d’Ivoire, Angola, the Democratic Republic of the Congo, Zambia and, since September 2025, Chad and South Sudan
• Signed, not in force: among them Nigeria, Senegal, Benin, Gabon, Mali, Mozambique and Uganda
• No UAE BIT listed: South Africa, Ghana and Tanzania

Sources disagree: Clyde & Co names Tanzania among notable UAE BITs in Africa, which UNCTAD does not list, so rely on the treaty text and its ratification record. The UAE says its African Comprehensive Economic Partnership Agreements (CEPAs) also cover investment protection; the treaties section tracks them.

ICSID and the New York Convention

The International Centre for Settlement of Investment Disputes (ICSID) listed 158 Contracting States in July 2025, 48 of them African. Ethiopia, South Africa, Eritrea, Libya, Namibia and Guinea-Bissau are not on the list. A claim under the ICSID Convention needs the host state to be a party, so for Ethiopia or South Africa check which other forum your treaty offers.

The New York Convention on foreign arbitral awards has 172 parties, including roughly 42–44 African states and all 12 markets in the country profiles. Ethiopia joined in August 2020 with a reservation that limits it to awards made after that date.

Arbitration seats and courts

Four seats and courts are familiar to Gulf investors:

• DIAC: the Dubai International Arbitration Centre, the emirate’s main arbitral institution
• DIFC Courts: independent, English-language common law courts in the Dubai International Financial Centre (DIFC), which hear claims from outside the center when all parties agree in writing
• ADGM Courts: the courts of Abu Dhabi Global Market (ADGM), a financial free zone founded in 2013 where English common law applies directly
• CCJA in Abidjan: OHADA’s Common Court of Justice and Arbitration, a natural choice for contracts governed by OHADA law

Choose a seat whose awards will be recognized where your counterparty holds assets. Name the seat, the rules and the language in the contract.

Political risk insurance moves part of a loss from expropriation, transfer restrictions or political violence to an insurer backed by governments. Three providers matter most to UAE investors:

• MIGA: the World Bank Group’s guarantee agency said in May 2026 it would more than double its Africa guarantees to USD 6.4 billion a year over the next 3.5 years. Its instruments include political risk insurance, credit enhancement and portfolio guarantees, and its 2025 guarantees included expropriation cover.
• ATI: African Trade and Investment Development Insurance, based in Nairobi, has 24 African member states. They include Kenya, Nigeria, Ethiopia, Ghana, Tanzania, Senegal, Côte d’Ivoire, Rwanda and Angola, but not Egypt, Morocco or South Africa. It offers political risk, trade credit and surety cover.
• Etihad Credit Insurance (ECI): the UAE’s federal export credit agency (ECA) committed USD 500 million of credit insurance to the Africa Green Investment Initiative in September 2023 to reduce risk for private capital.

Arrange cover before the money moves, since insurers price on the facts at entry. Ask a broker to compare quotes against your register.

Compliance risk shows up when a bank delays your payment or questions your counterparty. It turns on the country’s Financial Action Task Force (FATF) status, sanctions screening and, for gold, the origin of each shipment.

In October 2025 FATF removed South Africa, Nigeria, Mozambique and Burkina Faso from its grey list of jurisdictions under increased monitoring. Algeria, Angola, Cameroon, Côte d’Ivoire, the Democratic Republic of the Congo, Kenya, Namibia and South Sudan remained on it, which means enhanced checks by banks on payments and account opening.

Anti-money laundering checks start with the beneficial owners of every partner, the source of funds and the banks in the payment chain. Screen each counterparty against UAE, UN, US, EU and UK sanctions lists, and repeat it before major payments.

Gold needs particular care. SWISSAID, using UN Comtrade data, counted 748 tonnes of UAE gold imports from Africa in 2024, more than half the UAE total. It estimated about 405 tonnes of undeclared African gold in 2022. Trace every shipment to the mine of origin and apply a recognized responsible-sourcing standard.

Political change, from an election to a change of government by force, is a planning variable in every market. Build it into your structure and contracts rather than trying to predict it.

In recent years, military governments have taken power in Mali, Burkina Faso, Niger and Guinea. Investment treaties bind the state rather than a government; the UAE’s BITs with Niger and Guinea are in force, while its BIT with Mali is signed but not in force. In November 2024 Sudan’s government canceled a 2022 port memorandum with AD Ports Group, linking the decision to its accusation that the UAE backs the Rapid Support Forces in the civil war.

Elections and social pressure count as well: Kenya shelved a 2024 tax package after protests, and its next elections are due in 2027. Investors plan for political change in four ways:

• Build relationships with institutions (agency, regulator, line ministry) rather than one office holder
• Write stabilization, force majeure and termination compensation clauses into concessions
• Bring a development finance institution (DFI) or MIGA into the deal, since a government weighs its standing with them before acting
• Keep a security plan for staff and a scenario plan for each election

Environmental, social and governance (ESG) risk decides whether a project keeps local support and its lenders. In agriculture, mining and infrastructure the main exposures are land, community consent and permits.

Land is the most sensitive. BMI and the Land Matrix counted 56 signed UAE land deals plus 14 in the pipeline in early 2024, mainly in Africa. Elite Agro’s Mauritania project (October 2026) covers about 8,900 hectares. At this scale, customary claims, grazing routes and water uses matter as much as the title deed.

Community consent means consultation before decisions, fair resettlement and compensation, and a grievance mechanism that works after construction starts. Permits rest on an environmental and social impact assessment, and DFIs apply standards such as the International Finance Corporation (IFC) Performance Standards. Prepare both to that level from the start and document each step.