Background: Investors are already pulling back from emerging markets because of growing concerns over political tensions, which likely contributed to sub-Saharan Africa’s absence on the 2018 A.T. Kearney FDI Confidence Index.

• Further exacerbating the political risk outlook, over a dozen high-profile elections are taking place in Africa this year, including the continent’s two largest markets, Nigeria and South Africa.

Yes, but: Investors’ perceptions of Africa's high political risk need to be put into perspective, assessed within the local context rather than generalized to the whole continent. Broad perceptions of political risk blind investors to opportunities in Africa, which hosts half of the world's fastest-growing economies. Over the next five years, 20 African economies are expected to grow at 5% or higher, outpacing the 3.6% rate for the world economy.

Moreover, political dysfunction has become a global trend. The U.S. just grappled with its longest government shutdown in history, while in the U.K. Theresa May has faced two no-confidence votes in Parliament, impeding her ability to pass her Brexit plan.

The bottom line: Perceptions of risk in African markets need to be better calibrated to global realities and cross-border uncertainties. Many African countries — such as Ethiopia, which is expected to grow by 8.5% this year, and Guinea, which is expected to grow by nearly 6% — remain promising places to do business and will continue to attract savvy investors with a nuanced approach to risk assessment.

Paulo Gomes is the founder of Constelor Investment, an investment management firm, and a co-founder of New African Capital Partners.

Between the lines: An African president would better understand the finance needs of Sub-Saharan Africa.

• Over the next three fiscal years, the World Bank has earmarked $57 billion for the region, with three-fourths of the funds coming from the International Development Fund (IDA), which is dedicated to the world’s poorest countries.
• Over half of IDA funds are expected to flow to Sub-Saharan Africa.

Why it matters: Economic growth in Sub-Saharan Africa, the world’s least-developed region, has especially great geopolitical implications. As long as economic opportunity remains scarce on the continent, Africans will migrate elsewhere, particularly to Europe. Rising migration levels have led to the rise of populist parties in Hungary, Austria, Germany and elsewhere, undermining liberal democracy and posing an existential threat to the EU.

In the years to come, demographics and climate change could further exacerbate migration flows:

• Africa’s population is predicted to surge, doubling in size to reach 2.5 billion by 2050, making it the youngest population in the world.
• Unpredictable weather patterns and environmental degradation resulting from climate change in the arid Sahel and Horn will worsen food insecurity and jeopardize livelihoods.

What’s next: The race for the World Bank presidency will be hotly contested in the coming months, with many donor and recipient countries rallying against a Trump appointee. Sub-Saharan African countries will push to advance a candidate who is receptive to their needs.

Paulo Gomes is the founder of Constelor Investment and a co-founder of New African Capital Partners.

Reality check:

• Chinese debt is not driving the vast majority of African countries’ indebtedness. Only 8 out of 68 countries in the world are potentially facing unsustainable debt levels because of Belt and Road Initiative projects. In Africa, only Ethiopia, Djibouti and Kenya fall into this category.
• Not all debt is created equal. Good debt fosters economic growth, thereby increasing the ability of African governments to repay their creditors. Spending to improve Africa’s poor infrastructure, for example, can be a good use of Chinese debt, as it drives future economic growth. Sub-Saharan Africa’s road and rail networks are some of the least developed in the world, and the region’s GDP per capita could increase by 1.7% if the quantity and quality of its infrastructure reached those of the world's median.

The bottom line: An effective development-oriented policy from the U.S. will require a more nuanced discussion of Africa’s debt and a recognition of the growth returns on infrastructure investment.

Paulo Gomes is the founder of Constelor Investment and a co-founder of New African Capital Partners.