Tanzania's reduced political risk fuels investment and consumer spending
- How did Magufuli’s tenure as president affect FDI and consumer spending in Tanzania?
- How is President Hassan’s style different to Magufuli’s?
Political risk looms large for businesses operating locally and internationally. It is the risk an investment's returns could suffer due to political changes or instability in a country. Examples of these are changes in government, legislation and regulations, wars, terrorist acts, or diplomatic conflicts. Political risk can also manifest in the form of protests and strikes. It is now one of the leading concerns for top management of global firms. In the Allianz Risk Barometer, a yearly global survey of risk managers, changes in legislation—an aspect of political risk —emerged as the fourth most important risk factor for 2024.
A politically unstable environment hurts consumer spending, preventing households from planning for the present or future. In a civil war or even in the lead-up to pivotal elections, major spending decisions are put on hold or cancelled altogether, hurting consumer demand and the wider economy.
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