Global media often exaggerate risks about Africa, deterring investment, says report
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‘The Cost of Media Stereotypes to Africa’ study has found that biased media coverage, particularly during electoral periods, is a significant cost burden, with African nations paying $4.2-billion on debt servicing alone. The study found this ultimately deters foreign direct investment (FDI) on the continent, which is known for its low default rates and high returns in strategic sectors.
Conducted by Africa No Filter and strategic advisory firm Africa Practice, the research employed a combination of quantitative analysis and qualitative insights to explore the financial repercussions of media bias.
The research focuses on electoral processes in four African nations – Kenya, Nigeria, South Africa and Egypt – comparing media coverage with that of Malaysia, Denmark and Thailand, which are nations with similar country risk profiles.
To estimate the economic cost of biased media coverage, researchers calculated potential savings in debt servicing costs for Nigeria, Kenya, Egypt and South Africa. The study used academic estimates indicating that media sentiment can influence borrowing interest rates by up to 10%, with a 10% improvement leading to a 1% decrease in rates.
By comparing actual debt servicing costs with those adjusted for improved media sentiment, the researchers estimated potential savings of up to 0.14% of GDP per year. Extrapolating this to the entire continent, Africa loses up to $4.2bn annually due to unrepresentative negative media narratives.
To put this figure into perspective, $4.2bn
- could fund the education of over 12 million children in Africa – the population of Tunisia
- could provide immunizations for over 73 million children – more than the combined populations of Angola and Mozambique
- can provide clean drinking water to over two-thirds of the entire population of Nigeria, the most populous country on the continent at 220 million people
The findings underline the need for a recalibration of global media representations of Africa, urging for more accurate portrayals that reflect the continent’s diverse realities.
‘Current global media reporting often exaggerates the risks associated with doing business in Africa, contributing significantly to the premium that hampers investment,’ says Marcus Courage, CEO Africa Practice.
The study serves as a clarion call for stakeholders in both media and finance to work collaboratively towards fostering a more equitable representation of Africa. By addressing these biases, substantial investment can be unlocked.
As the African Union moves toward establishing its own Africa Credit Rating Agency to address the perspectives that currently inform the ratings, there is a growing movement to challenge the biases inherent in the global financial system and to examine the role of the media
The agency aims to provide a fairer, regionally based analysis of sovereign risk, moving away from the pessimistic assumptions often made by international rating agencies with limited local presence.
‘The scale of these figures underscores the urgent need to challenge negative stereotypes about Africa and promote a more balanced narrative,’ explains Moky Makura, executive director, Africa No Filter.
The report emphasises that while Eurobond debt servicing constitutes only 6% of Africa’s financing portfolio, further exploration into other financial inflows is essential to fully understand the extent of the premium affecting African nations.
- Africa No Filter is an advocacy organisation that seeksto shift stereotypical narratives about Africa through storytelling that reflects a dynamic continent of progress, innovation and opportunity’. It partners with content creators, artists, journalists and arts, culture, media and advocacy organisations ‘that care about how the world sees Africa and how Africa sees itself’
- Its research partners are are Facebook, AUDA-NEPAD, the African Union Commission and the Africa Centre in New York
- Get the report here
