Risk Analysis in Post-Conflict African Countries: Sierra Leone as a Case Study

[摘要] ENGLISH ABSTRACT: Political risk analysis is considered one of the essential ingredients in decision makingprocesses when investing abroad. The Iranian Revolution and the oil crisis in the 1970saccentuated this need as investors increasingly felt the need for a proper assessment of therisks involved in establishing a business in other countries.Negative images of African countries combined with conventional risk models which are notable to accurately assess the political risk realities of post-conflict African countries, may beone of the reasons for why African countries struggle to attract a substantial amount of FDI.This study suggests that alternative risk models which are more African-orientated may aid inimproving this situation.This study has analysed the political risk of Sierra Leone using a conventional risk model, andan African-orientated political risk model. The aim of this study was to assess whetherconventional political risk models need to be adjusted to be able to more accurately assess thepolitical risk of post-conflict African countries. The main research question guiding this studywas: Are conventional risk models able to objectively rate the political risk of post-conflictcountries in Africa?The conclusion of this research was that African-orientated political risk models are able tomore accurately assess the political risk of a post-conflict African country such as SierraLeone. This is mainly due to the soft variables used in a political risk model and also therelationship between the variables included in the models. The African-orientated politicalrisk model needs to be analysed further, but this research has made clear the need for a reevaluationof existing political risk models to be better equipped when analysing post-conflictAfrican countries. This will not only benefit African post-conflict countries in improving theirrisk ratings, but also provide foreign investors with a more accurate identification of thepotential political risks facing an investment in post-conflict African countries. It wasacknowledged in this study that the political risk analyses of Sierra Leone were not conductedby someone who has inside information of the political risk models used which is a limitationiiifor the results of this study. It is, however, possible to detect potential weaknesses with eachpolitical risk model and possible areas of improvements.

[发布机构] Stellenbosch University