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21 December 2011 | Adam Leach
Systemic corruption, inconsistent laws and unreliable regulation make the southern African republic of Angola one of the most risky places in the world to do business, according to a report.
The Legal and Regulatory Environment Risk Atlas, by risk analysts Maplecroft, looked at issues of corruption, corporate governance, supply chain complicity, rule of law, respect for property rights and regulatory framework in 173 countries. Each of the six areas was attributed a risk rating and then a total risk rating was given. After four ‘extreme risk’ and two ‘high risk’ ratings, Angola received an overall rating of ‘extreme risk’. It was one of nine countries to get this label; the others included Myanmar, the Democratic Republic of Congo, Turkmenistan and Eritrea.
Angola was deemed the highest risk country in the southern Africa region. However, Lesotho, Mozambique and Swaziland were all classed as ‘high risk’, while Namibia, Botswana and South Africa were classed as ‘medium’.
Speaking about Angola, an analyst at Maplecroft told SM: “Foreign investors are at risk of violating anti-corruption laws, such as the UK Bribery Act, due to pressure to pay bribes or as a result of the corrupt behaviour of local partners. Investors also risk reputational damage if perceived to be complicit in the corrupt actions of officials, which inhibits the redistribution of wealth and constrains the wider populations from accruing the economic benefits of the country’s resource wealth.”
Maplecroft CEO, Alyson Warhurst, said: “For the legal and regulatory environment to be conducive to investment it requires well constructed regulation, transparency and effective implementation.”
Russia and Mexico were considered at extreme risk of corruption and China was deemed high risk.
Last month, Transparency International released the 2011 Corruption Perception Index. The study ranked 183 countries in order of perceived corruption in their public sector. New Zealand was ranked 1st, indicating that it is the least corrupt country in the world while Botswana emerged as the highest ranked country in the Southern Africa region in 35th place. Other countries in the region were ranked as follows: Namibia 57th, South Africa 64th, Lesotho 77th, Swaziland 95th, Mozambique 120th and Angola 168th.