Reshaping risk mitigation: the impact of non-financial levers

Mohan Vivekanandan and Joel Barnor ()
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Joel Barnor: Development Bank of Southern Africa

Development Finance Agenda, 2022, vol. 7, issue 2, 12-13

Abstract: Scaling-up private-sector capital investment in emerging markets requires a renewed and concerted effort to address the barriers limiting investment flows to these jurisdictions. The decisions of private investors are hampered by their inability to adequately address risk issues associated with investing in emerging markets. Current approaches to risk mitigation have predominantly focused on deploying financial risk-sharing instruments to transfer part of the risk premium associated with specific transactions. While these mitigation products are being deployed more regularly in emerging markets, they impose a financial cost onto a transaction, which is invariably passed on to the end-user through higher tariffs. Adopting a broader, more comprehensive approach to risk mitigation is required to improve the attractiveness and business environment of countries, sectors, and projects for private capital.

Date: 2022
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