Risk and opportunity analysis of a major infrastructure initiative
A global financial institution was interested in investing in a large infrastructure initiative (by a government) spanning several countries in Africa, Asia and the Middle East, including ports, railways, roads, power projects and digital infrastructure
The mandate was to conduct a risk and opportunity analysis of the initiative in Asian countries (Vietnam, Malaysia, Singapore and Indonesia), 3 African nations (Kenya, Cameroon and Tanzania) and some countries in the Middle East.
This project was a mix of all the services – Market entry, Op risk management and Geo-political and business intelligence, executed at 3 levels:
- Local/Location level: Through extensive field work and primary intel collection, we assessed the specific projects of the infrastructure initiative on issues related to local community opposition, security threats, labor issues, delays related to required clearances, vested interests working against the project and local political sentiment. The aim was to identify any event/trend/risk that could have a disruptive impact on the project and on the bottom line and reputation of the initiative.
- National/Geopolitical level: We focused on any negative sentiment towards the companies of the country executing the infra initiative, geo-political and supply chain risks, the regulatory and policy environment and any external threats
- Opportunity and market analysis: We analyzed the impact of the projects on the local and national economy of the host country, the emerging market conditions and the growth potential of the projects
- There were some common risk themes across projects in varied countries:
– ‘Debt overhang’ leading to unfavorable political sentiment,
– local community issues due to environmental impact, imported labor and inferior technology
– Geo-political power dynamics impacting execution of the project
- The executing companies and local partners in some cases had compliance and regulatory issues that could have landed our client in a major regulatory probe/scrutiny
- If selected well – certain projects could create good opportunities for the global bank – in terms of better intra-regional connectivity, increased trade, a boost to local economies and enhanced power capabilities.