Over the last few months, I’ve been covering the West Africa security situation in great detail. Investors need to be informed about potential geopolitical developments that could negatively affect their investment portfolios. It is the responsibility of individuals within the retail investor community to help warn each other about the increasingly extreme danger, when the information isn’t forthcoming from the industry itself.
So, let’s talk about West Africa and the rise of terrorist-led incidents over the last few years. I am thinking particularly of SEMAFO, but as you will note from my other articles, one from January and one from earlier in February, this is far from an isolated incident.
So, what’s happened in the last few days? The UK government has officially recognised the further deterioration in Burkina Faso, due to terrorist activity.
Foreign and Commonwealth Office (FCO) travel advice in January:
FCO travel advice as of 7th February 2020:
Burkina Faso is now a no-go zone according to the FCO. The surrounding West African countries are expected by most news outlets to be at great risk. Countries that used to be perceived as high-potential, unexplored safe havens, like Ghana, Cote d’Ivoire, Togo and Benin suddenly don’t look as appealing.
In light of such advice, would you travel to Burkina Faso? Next question: would you send your money there? Investors can choose to do as they wish, but at least make the decision armed with all the information. You don’t want to end up like SEMAFO shareholders.
If you are happy to invest in volatile jurisdictions, where the company you are invested in could experience brutal, large-scale disruptive violence, one has to pose the question: do you really care about your money? If you can afford to put your hard-earned cash at risk, then that is your choice. If not, you should seriously consider if the risk to reward ratio is worth it. Is ‘out of sight, out of mind’ really the way forward?
Investors create a lot of the artificial draw factor for mining companies to chance their arms in such volatile regions, but it is the employees that can sometimes pay the price.
Investors need to work out what kind of investor they are. The one thing all investors should insure is that they are aware. The worst thing an investor can be is oblivious. I’ll keep track of this situation as it continues to develop and check in with you soon.
Opinions expressed are solely of contributor, Curious Investor, and do not express the views or opinions of Crux Investor. Do your own research.
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