Infrastructure Projects in Sub Saharan Africa, Sensitivity to Political Risk

Governments in Sub Saharan Africa are presently undertaking many infrastructure projects. However, many such projects face risks that often lead to project delays with significant cost overruns. One such risk faced by stakeholders operating in this region is political risk. Political risk is a generic concept addressing the risks to projects, investments and contracts in general from political change or instability. It is inclusive of various aspects, such as regulatory risk, nationalization of investment assets, legal risk, terrorism threat, and credit risks. This research work was done to develop a means and method by which risk can be better managed in projects in the electricity energy sector in Kenya and the Sub Saharan Africa region. This paper presents the System Dynamics model earlier developed through the research process, but specifically focusses on, and dynamically explores the effect that differing levels of political risk has on project delivery, by carrying out sensitivity analysis on the political risk model variable. The results show that more stable political environments devoid of political risk would reduce project tasks that remain incomplete at the project completion time, reduce rework and lead to better completion of project tasks in the region and on time delivery of projects. This should be useful to government functionaries, other project stakeholders and contractors in projects in Sub Saharan Africa and developing countries at large.