CONFLICT IN AFRICA: Conflict gets the Coverage, Opportunity gets the Return

Understanding Conflict as a Risk—and Opportunity—for Investment in Africa

23 April 2025

Africa, often oversimplified in global discourse, is not a single uniform entity. It is a vast continent comprising 54 unique nations, each with its own cultural, political, and economic dynamics. Therefore, it is critical to move beyond sweeping generalisations when considering conflict as a factor in investment decisions. Such an approach has historically led to the misconception of the risk level of investing in Africa, without accounting for the complexity and relative stability of most nations. A more granular, localised perspective is essential for accurately assessing risk and identifying opportunity.

Diagram: Map showing different ethnicities and country borders, Africa, 2015

The Historical Context of Conflict in Africa

The borders of many African countries were drawn during the colonial era, guided more by European powers’ interest in mining and resource extraction than by local cultural or historical realities and differences. This legacy has contributed to tensions that have the potential to erupt into conflict. However, these are often confined to specific regions rather than engulfing entire nations. For example, the unrest in Northern Nigeria or the volatility in Eastern DRC are significant, but they do not define the investment climates of their respective countries.

This localised nature of conflict means that while some areas may be unstable, many remain viable for investment. Even within zones experiencing conflict, businesses that have established themselves ethically and have strong local ties can often weather turbulent periods. These companies may need to rebuild relationships or adapt operations, but they can frequently preserve capital and maintain their presence.

Why Conflict Zones Can Be Investment Opportunities

Investing in conflict or post-conflict regions can be high-risk, but it also has substantial upside for those who understand the terrain. One key reason is the undervaluation of assets—risk (whether perceived or actual) tends to depress market value, giving knowledgeable investors an advantage. Fewer competitors are willing to commit capital under such circumstances, which means more favourable terms and stronger bargaining positions for those who do.

The post-conflict phase presents massive investment opportunities. As regions emerge from conflict, they require significant rebuilding, particularly in infrastructure. This phase often attracts donor funding and international support, which can amplify the impact of private investment when coupled with sound local governance.

Conflicts also tend to disrupt existing economic monopolies, opening up space for new market entrants. With fewer players and more flexible conditions, innovative businesses can take root and flourish. Furthermore, the socioeconomic ripple effects of investment in these regions are often profound, driving employment, stimulating local economies, and contributing to broader stability.

Importantly, investments can also act as stabilising forces. In many African countries, political and economic power are deeply intertwined. Injecting capital into economically marginalised regions can help balance power dynamics and contribute to long-term peace and development.

How Investment Thrives in Complex Environments

Constraint breeds innovation, and Africa is a testament to this. Across the continent, entrepreneurs and companies have developed creative business models and leveraged technology in resourceful ways, often with limited budgets but deep local insight. This has created fertile ground for investment in scalable solutions tailored to local needs.

Moreover, non-governmental organisations (NGOs) often play a pivotal role in these ecosystems. NGOs can be invaluable partners with their extensive grassroots networks, political connections, and data access. Many are also open to co-financing ventures, particularly those with substantial developmental benefits.

Key Considerations for Investors

Investing in Africa requires a long-term vision and a nuanced approach. Due diligence must go beyond financials to include local political affiliations, socioeconomic dynamics, and the broader context of the country where a company intends to invest. Strategic partnerships with local actors who understand the landscape can significantly enhance the likelihood of success.

Patience is crucial—returns may not be immediate, and diversification is essential to manage risk. However, with a well-informed strategy, investors can achieve significant financial returns and contribute meaningfully to development.

Africa offers more than just a market—it provides a chance to make a lasting difference. The potential rewards are financial and transformative for investors willing to look beyond the headlines and engage with the continent’s rich complexity.

What is Frost & Sullivan Africa’s vision for Africa?

The stereotype of conflict must evolve to move past being a blanket of risk and unfruitful investment. By redefining how investors view conflict as a risk to investment, resilience becomes a catalyst for prosperity. This is because, by prioritising the opportunities that conflict can give rise to, resilient and patient investors stand to be a part of strong and ethical economic development. Ultimately, the scars of historical conflict must inform innovation and equitable growth to ensure that African people are a part of bold and ethical investments on the continent. Therefore, by encouraging investment from inside and outside Africa, conflict need not be perceived as a barrier to Africa’s growth path.