Global volatility is reshaping energy and infrastructure markets, with Africa increasingly exposed to shocks but also positioned as a potential reliable supplier in constrained global systems, according to Marsh executives.
“It’s not a demand challenge; it’s a supply challenge,” according to Spiros Fatouros, CEO of Marsh Africa, who said the region’s opportunity lies in aligning natural resources, policy direction and investment conditions to strengthen its role in pressured global supply chains.
Marsh is a global professional services firm spanning risk, insurance and consulting, structured across businesses including Guy Carpenter, Mercer and Oliver Wyman.
The firm generates about $27bn (R448bn) in annual revenue and employs more than 95,000 people in over 130 countries. It has operated in South Africa for more than 28 years.
In Africa, the firm’s strategy centres on building scale in key markets and expanding from regional hubs, with a focus on large-scale business-to-business risk linked to infrastructure, energy and construction.
Fatouros said this approach was shaped by a global risk environment defined by repeated shocks and limited supply chain resilience. He pointed to energy as a core pressure point, arguing that disruptions from the Russia-Ukraine conflict to tensions in the Middle East have exposed continued overreliance on concentrated supply routes.
“Many companies and governments haven’t really diversified that supply chain,” he said.
He added that cyber risk is also emerging as a structural concern, in which reliance on a few major technology providers can strengthen security standards but increase systemic vulnerability if those systems are compromised.
On South Africa’s energy transition, Fatouros argued that private-sector investment was increasingly central to addressing supply constraints and accelerating new generation capacity.
“I think there are lots of innovative ways that governments work with business,” he said, noting that companies were increasingly investing directly in renewable energy to solve generation shortfalls.
Marsh Africa MD and speciality growth leader Harry Doyne-Ditmas said this expansion outlook sat within a broader global environment defined by rising complexity and interconnected risk.
“The growing trend is that we’re seeing greater complexity, greater interconnectedness,” he said. “The crisis in the Middle East has laid that bare in a number of ways, particularly for Africa.”
He mentioned the World Economic Forum’s Global Risks Report as a key framework. Based on a global risk survey of 1,300 respondents and an executive opinion survey of 13,000, the report finds that the world has entered a phase of persistent volatility, where shocks are becoming continuous rather than isolated events.
The report shows that 68% of respondents expect a more fragmented and polarised global order by 2035, while only 6% of European and US business leaders are planning for risks beyond a seven-year horizon.
Doyne-Ditmas noted that while the report predates the latest Middle East escalations, recent shocks had only heightened the interconnected nature of risks.
He added that Africa had shown more resilience through successive global shocks than was often assumed. He said the continent had survived shocks such as Covid and the Russia-Ukraine conflict and had proved to be more resilient than perhaps it was credited for.
Energy remained the main transmission channel through which global shocks affected African economies, he said. Reliance on imports and fluctuating prices drove up inflation, food prices and pressure on government budgets, while governments were increasingly forced into reactive measures such as adjusting fuel-pricing tariffs, reducing tax and encouraging lower consumption.
Andrew Herring, speciality chair of global energy and power at Marsh, said these pressures reflected a broader shift in how global markets were pricing and absorbing risk. Despite geopolitical uncertainty, insurance markets continued to underwrite certain war risks.
“I think that’s reflective of the sort of risk appetite that exists around the world. Everyone recognises the risks and, instead of shying away from them, is looking to find solutions. That’s where the insurance industry can really make a difference,” Herring said.
He said Africa was well positioned to benefit from this transition, given its significant solar potential and proximity to European demand centres.
He highlighted growing investment in renewable energy projects, pointing specifically to Morocco’s southern desert regions as a site attracting capital for export to Europe, with the Dangote refinery on the Nigerian coast similarly positioned to supply markets including Europe.
He said the main barrier was not a lack of money but the need for insurance and risk solutions to make projects viable in politically complex regions.
Herring stressed that greater cross-border interconnection would be critical to improving energy efficiency and resilience, pointing to European electricity systems that balanced renewable supply across borders, depending on weather conditions.
Business Times
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