How Election Cycles Shape Business Risk in West Africa

Introduction

West Africa stands at a critical political juncture in 2025, with several nations preparing for pivotal elections that will reshape the region’s economic and business landscape. As democratic processes unfold across the sub-region, businesses operating in or with West Africa face heightened uncertainties that demand strategic foresight and careful risk management. This article examines the intricate relationship between electoral cycles and business risk in West Africa, providing actionable insights for investors, multinational corporations, and local enterprises navigating this complex terrain.

Understanding Political Risk in Business Context

Before delving into West Africa’s specific challenges, it’s essential to understand what political risk means for businesses operating in the region.

Definition of Political Risk

Political risk is defined as the risk to business interests resulting from political instability or political change. According to Washington State University’s Core Principles of International Marketing, political risk encompasses the potential for financial or operational losses arising from policy changes by governments, including controls on exchange rates, interest rates, prices, outputs, and currency restrictions. Political risk may also result from events outside government control such as war, revolution, terrorism, labor strikes, and extortion, affecting all aspects of international business from the right to export or import goods to the right to own or operate a business.

Political risk in West Africa manifests in various forms: sudden policy shifts, currency devaluations, contract nullifications, changes in regulatory frameworks, and in extreme cases, political violence or coups d’état. Understanding these risks is the first step toward effective mitigation.

The 2025 West African Electoral Landscape

The political calendar for West Africa in 2025 is particularly consequential, with several key elections scheduled that will influence regional stability and economic policy for years to come.

Key Elections to Watch

Côte d’Ivoire (October 2025): Côte d’Ivoire’s October presidential election stands out as a test of democratic consolidation in West Africa, with President Alassane Ouattara seeking a fourth term enabled by a controversial Constitutional Court ruling. The country’s history of post-election violence, particularly the 2010 crisis that led to civil conflict, makes this election particularly sensitive for businesses. Past elections in Côte d’Ivoire have been marked by significant unrest and violence, including when incumbent President Laurent Gbagbo refused to concede defeat to Alassane Ouattara in 2010.

Guinea-Bissau (2025): Guinea-Bissau’s electoral environment in 2025 is marked by turmoil and uncertainty, with President Umaro Sissoco Embaló seeking reelection against 11 opposition candidates, though the election has been overshadowed by the controversial Supreme Court exclusion of his primary challenger, Domingos Simões Pereira. The country’s history as a trafficking hub and political instability creates unique challenges for businesses.

Togo (2025): Togo’s 2025 presidential elections were effectively held in March 2024 when lawmakers in the National Assembly voted to adopt a constitutional change that eliminates citizens’ right to vote directly for the country’s leader, creating an uncontested path for President Faure Gnassingbé to extend his 20-year hold on power.

Recent Electoral Developments

The region has witnessed both progress and setbacks in democratic governance. Recent successful elections in Ghana and Senegal demonstrated progress in democracy in the region, with Ghana’s presidential candidates signing a “Peace Pact” and Senegal’s electoral observer missions highlighting the transparency of the process. However, between 2020 and 2024, there have been coups and attempted coups in Burkina Faso, Gabon, Guinea, Guinea Bissau, Mali and Niger, underscoring the fragility of democratic institutions in parts of the region.

How Election Cycles Amplify Business Risk

Elections in West Africa create a ripple effect across the business environment, amplifying various categories of risk that companies must navigate.

Economic Policy Uncertainty

Election periods typically bring significant uncertainty about future economic policies. The election outcome weighs on policy direction, as well as investor and market sentiment, particularly in countries heavily dependent on commodities like cocoa and gold. Pre-election periods often see governments implementing populist policies or delaying necessary economic reforms to maintain electoral support, while post-election periods may bring abrupt policy reversals.

Ghana’s Recent Experience: In Ghana’s 2024 election, many voters were thinking about the economy and their financial situations when they cast ballots, as the country defaulted on most of its $30 billion external debt in 2022 after the effects of years of borrowing were made worse by the global impact of the COVID-19 pandemic. This economic distress influenced electoral outcomes and created significant uncertainty for investors.

Currency and Financial Volatility

Factors like high inflation, weak currency, debt, and high policy rates are hindering growth in Ghana and Nigeria, with West Africa’s economic output limited by rising costs of goods and services leading to increased interest rates. During election cycles, currency volatility typically intensifies as investors adopt a wait-and-see approach, leading to capital flight and pressure on foreign exchange reserves.

Operational Disruptions

The political landscape in West African countries during elections is expected to be dynamic, with potential for localized unrest and disruptions that can affect office closures, site security, and workforce safety. Businesses must prepare for various scenarios:

Physical Security Threats: Protests, demonstrations, and in worst-case scenarios, electoral violence can damage property and endanger personnel
Supply Chain Interruptions: Civil unrest can disrupt transportation networks, port operations, and cross-border trade
Workforce Management: Employee safety concerns, restricted movement, and potential evacuations

Regulatory and Contractual Risk

Post-election governments may review or nullify contracts signed by previous administrations, particularly in extractive industries and infrastructure projects. Governmental authority in Guinea-Bissau often equates to control of patronage, running the gamut of narcotics trafficking, illegal logging, control of procurement contracts, and diversion of tax revenues, highlighting how political transitions can affect business relationships built on patronage networks.

Sector-Specific Vulnerabilities

Different business sectors face varying levels of exposure to election-related risks in West Africa.

Natural Resources and Extractives

The mining, oil, and gas sectors are particularly vulnerable to post-election policy changes, including:

Renegotiation of concession agreements
Changes to taxation and royalty rates
Nationalization pressures
Local content requirements

Financial Services

Banks and financial institutions face heightened risks from:

Potential changes in banking regulations
Currency controls and restrictions
Non-performing loans as economic uncertainty rises
Capital adequacy pressures

Manufacturing and Retail

Consumer-facing businesses must navigate:

Fluctuating consumer confidence
Supply chain vulnerabilities
Potential price controls
Changes in import/export regulations

Infrastructure and Construction

Long-term infrastructure projects face particular challenges:

Contract review or cancellation by new governments
Delayed payments due to fiscal constraints
Shifting priorities for public spending

Democratic Regression: A Growing Concern

Beyond individual elections, West Africa faces a broader challenge of democratic backsliding that compounds business risk.

The Coup Phenomenon

Democratic regression in Africa has been on the rise, driven by military coups, authoritarian rule, and the shrinking of civic spaces, as seen in growing restrictions on human rights and press freedom. This trend creates fundamental uncertainty about the durability of democratic institutions and the rule of law.

Regional Body Limitations: Shortcomings of regional organizations like the Economic Community of West African States (ECOWAS) and African Union (AU) have been spotlighted for their inability to hold governments accountable. While formal withdrawal proceedings from ECOWAS by some member states are expected to commence in late January 2025, ECOWAS leaders extended a six-month window for dialogue in case rapprochement is possible.

Implications for Business

The weakening of regional integration and democratic norms creates additional layers of risk:

Reduced predictability in regional trade agreements
Weakened enforcement of commercial contracts
Increased bilateral tensions affecting cross-border operations
Growing restrictions on media freedom limiting information flow

Risk Mitigation Strategies for Businesses

While election-related risks cannot be eliminated, they can be managed through proactive strategies.

Pre-Election Preparation

Comprehensive Risk Assessment: Companies should conduct thorough political risk assessments well before elections, evaluating:

Historical patterns of electoral violence
Economic policy platforms of major candidates
Institutional strength and independence
Regional and international dynamics

Scenario Planning: Develop contingency plans for multiple electoral outcomes:

Best-case scenarios (peaceful transition, policy continuity)
Base-case scenarios (minor disruptions, moderate policy shifts)
Worst-case scenarios (violence, major policy reversals, contract nullifications)

Stakeholder Engagement: Maintain relationships across the political spectrum to ensure business continuity regardless of electoral outcomes. Avoid being perceived as aligned with any particular political faction.

During Election Period

Enhanced Security Protocols: Organizations should review contingency plans including evacuation, relocation and stand-fast plans, undertake site security reviews and vulnerability assessments, and map out key locations relative to main flashpoints.

Cash Flow Management: Strengthen liquidity positions to weather potential disruptions:

Accelerate receivables collection
Defer non-essential capital expenditures
Secure credit facilities before uncertainty peaks
Hedge currency exposures

Communication Strategy: Maintain clear communication channels with:

Local employees and management
Government officials and regulators
International headquarters and stakeholders
Security and risk management teams

Post-Election Adaptation

Rapid Assessment: Quickly evaluate the new political landscape:

Policy intentions of incoming government
Key personnel appointments in relevant ministries
Signals about contract continuity or review
Overall economic strategy and priorities

Relationship Building: Establish connections with new government officials and decision-makers promptly, while maintaining ethical business practices and compliance with anti-corruption regulations.

Policy Advocacy: Where appropriate, engage in constructive dialogue about business-friendly policies through:

Business associations and chambers of commerce
Industry-specific advocacy groups
Direct engagement with relevant ministries
Regional business forums

The Role of Political Risk Insurance

Political risk insurance (PRI) provides a crucial safety net for businesses operating in West Africa during election cycles and beyond.

Coverage Options

Standard PRI policies typically cover:

Expropriation and Nationalization: Protection against government seizure of assets
Political Violence: Coverage for damage from war, terrorism, civil unrest
Currency Inconvertibility: Protection when governments restrict currency transfer
Contract Frustration: Coverage when governments breach contracts
Non-Honoring of Sovereign Obligations: Protection when governments fail to pay

Considerations for West African Operations

When purchasing PRI for West African operations:

Ensure coverage extends to election-related disruptions specifically
Understand exclusions related to pre-existing political tensions
Evaluate whether coverage includes sub-national violence
Consider standalone terrorism coverage given regional security challenges
Review waiting periods and claim procedures

Looking Ahead: Long-Term Considerations

Beyond immediate election cycles, businesses must consider longer-term political and economic trends shaping West Africa.

Economic Recovery Trajectories

The International Monetary Fund projects Ghana’s economy will grow 2.8% in 2024 and 4.4% in 2025, with a faster pace of recovery expected from 2025 onward driven by an anticipated decline in consumer prices. However, downside risks emanate from forthcoming elections, high inflation, and elevated interest rates weighing on private consumption and investment spending.

Regional Integration Challenges

West Africa and the Sahel continue to grapple with a confluence of political, security and humanitarian crises, affecting regional cooperation and economic integration. Businesses must monitor how electoral outcomes affect:

ECOWAS cohesion and effectiveness
Cross-border trade facilitation
Regional infrastructure projects
Security cooperation frameworks

Youth Demographics and Political Change

West Africa’s young and rapidly growing population will increasingly shape political dynamics. Understanding youth priorities around employment, digital economy opportunities, and governance reform will be crucial for long-term strategic planning.

Climate and Resource Pressures

The El Niño-induced drought that affected southern Africa in 2024 resulted in the loss of livelihoods and a rise in unemployment in countries like Malawi where 80% of the population resides in rural areas. Climate-related pressures will increasingly influence electoral politics and policy priorities across West Africa.

Conclusion

Election cycles in West Africa represent periods of heightened business risk, but also potential opportunity for companies with robust risk management frameworks. The region’s 2025 electoral calendar, combined with broader trends of democratic regression and economic stress, creates a complex environment that demands careful navigation.

Success in this environment requires businesses to:

Maintain sophisticated political risk monitoring capabilities
Develop flexible operational strategies that can adapt to political transitions
Build diverse stakeholder relationships that transcend political divides
Invest in comprehensive contingency planning and crisis management
Consider political risk insurance as part of a broader risk mitigation strategy

Ultimately, while election-related risks in West Africa are real and consequential, they are manageable for companies that invest in understanding the political landscape, preparing systematically for multiple scenarios, and maintaining operational agility. As democratic processes continue to evolve across the region, businesses that can effectively manage political risk will be best positioned to capitalize on West Africa’s significant economic potential.

References

Washington State University. (n.d.). 4.4 Political Risk – Core Principles of International Marketing. OpenText WSU. https://opentext.wsu.edu/mktg360/chapter/4-9-political-risk/
Africa Center for Strategic Studies. (2024, November). Africa’s 2025 Elections: A Test of Credibility to Uphold Democratic Norms. https://africacenter.org/spotlight/2025-elections/
African Elections. (2024). 2025 Africa Elections Outlook. https://africanelections.org/news/2025-african-elections-outlook/
The Centre for Joint International Development African Elections in 2025 Amid Democratic Regression. from https://thecjid.org/african-elections-in-2025-amid-democratic-regression/
Deloitte. West Africa Economic Outlook. https://www.deloitte.com/us/en/insights/topics/economy/emea/africa-economic-outlook-08-2024.html
International SOS.Africa’s 2025 Elections: Navigating a Dynamic Security Environment. https://www.internationalsos.com/insights/africa-election-2025-security-challenges
United Nations. Security and Economic Woes Plague West Africa, as Key Elections Loom. UN News. https://news.un.org/en/story/2024/12/1158441
Voice of America. African Elections: Some Ruling Parties Retain Power, Some Suffer Defeats. https://www.voanews.com/a/african-elections-some-ruling-parties-retain-power-some-suffer-defeats/7902194.html

Call to Action

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Tel: (+234) 802 320 0801, (+234) 807 576 5799

E-Mail: hello@businesscardinal.com

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