It is said that it is difficult to attract project funding because of the "perceived and actual investment risk in Africa." Can you list some actual and perceived risks to investment in projects in Africa? Consider the paper: Sweerts, B., Dalla Longa, F., & van der Zwaan, B. (2019). Financial de-risking to unlock Africa's renewable energy potential. Renewable and Sustainable Energy Reviews, 102, 75-82.

The investment risk in Africa can be divided into perceived risks such as corruption and political instability, and actual risks including fluctuating exchange rates and lack of skilled labor. These risks pose challenges to the development of the renewable energy sector. Addressing these risks can pave the way for realizing Africa's renewable energy potential.

Explanation:

The investment risk in Africa's projects, particularly within the renewable energy sector, can be categorized into perceived and actual risks. Perceived risks might include stereotypes or misconceptions about the African continent's business environment, such as corruption, political instability, and lack of infrastructure. This can deter potential investors who may internally over-estimate these inherent risks.

As for actual risks, these are legitimate investment barriers that include issues like fluctuating exchange rates, lack of economic stability, limited expertise or skilled labor, and regulatory or policy inconsistency. Significantly, the regulatory framework for renewable energy can be uncertain or evolving, which poses an actual risk for investors looking into this sector.

A combined approach that offers reliable information to dispel misconceptions, while also addressing and minimizing actual risks, can better unlock Africa's renewable energy potential.

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