Political and economic instability, weak infrastructure, and poor governance hinder foreign direct investment in Africa, causing high inflation, rising food and energy prices, and weaker currencies. Another significant deterrent to FDI is the possibility of contractual breaches leading to monumental capital and asset losses.
One such situation is the matter involving ARISE IIP, a leading developer and operator of world-class industrial ecosystems across Africa. ARISE IIP is allegedly facing opposition from high-ranking government officials in Sierra Leone, who are currently working with other investors to divert the terms of an already signed agreement, potentially jeopardizing a $400 million investment agreement between the government and ARISE IIP.
The Government of Sierra Leone earlier this year signed a lease agreement with ARISE IIP to develop, expand, and manage the Pepel Railway and Port, with President Julius Maada Bio in attendance. Based on these terms, the company had procured assets to fulfill their part, which are expected in Sierra Leone by the end of October, with work ongoing at the SIZ-Koya industrial zone, already creating employment for citizens.
However, while Arise IIP appears to be working extensively to improve sustainable development through its massive investments, indications are emerging of deliberate efforts by some members of the government to sabotage these efforts and thwart the lease agreement in favor of some Chinese government consortiums.
If the government's political machinations are successful, it will be a major setback for Sierra Leone's efforts to attract foreign investment and promote economic development. It will also send a negative signal to other potential investors, making it more difficult for Sierra Leone to attract the capital it needs to grow its economy.