Investors that finance local companies in African emerging markets are confronted with a myriad of challenges. Many of these bear little semblance with those usually confronted in other operating environments. Getting to grips with these unfamiliar realities requires assessing how local entrepreneurs address the changing environments on the ground, which are characterized by loose governance/regulatory frameworks and a platitude of risks.

Meanwhile, local African companies wanting to attract investments need to demonstrate that they have sound approaches to address risks and opportunities associated with their operations. This requires, inter alia, undertaking effective stakeholder engagement; or in other words, building solid relationships with individuals/groups who are affected or have an interest in their projects.

Effective stakeholder engagement in emerging markets is not ‘another tick in the box’. It is a vital process that can bring multiple benefits for companies (i.e., reduced legal, security costs and potential fines); and it can increase their competitive advantage (i.e., enhance corporate reputation; identify new markets and easier access to project finance; improve information about local distribution networks, inclusive growth and value chains).