Even when the pandemic would have, eventually, been under a form of relative control, the coronavirus would still pose a threat to many emerging markets.
These are markets from countries, with unequal governance, poor healthcare system, overpopulated urban slums, coupled with extreme poverty.
In some countries, there are indications of instability in the region’s politics, with civil unrest.
These and many more would pose many disadvantages to foreign investors, trying to dabble into these emerging markets.
Prior to the pandemic, the business atmosphere in the regions of these emerging markets, are already becoming unfriendly.
Now that the pandemic has taken its toll on a global scale, it will appear very difficult for ease of business navigation, especially, foreign investment.
With travel restrictions still in place, investors may find it difficult to get a piece of first hand information on their investment destination.
Some developed countries have flattened the curve, however, travelling to developing countries would still get restricted.
Some governments would not allow it and asides that, national health restrictions and also, the bankruptcy facing some airlines, would make the situation, much tenser.
Foreign investments would, eventually, have to secure strong, local partnerships, even though, each carries its own risks.
Local partnerships come a long way when foreign investment is making its way into an emerging market, as they can make a significant difference.
On the flip side, too much reliance on local partners, such that the investors would have less direct insight, can lead to unnecessary liability.
With the current physical distancing, businesses can get worsened and cultural differences can, also, get heightened.
Also read, Post Pandemic Recession: Strengthening Our Economy Through Diversification
Some business situations may lead to misconception and since the pandemic has made movement difficult, communication might, also, get affected; a situation that leads to cultural insensitivities.
Considering the weight of the pandemic, governments in emerging market regions may pose as a hindrance to foreign investments.
The system is already overwhelmed, with health challenges, an economic downturn from loss of jobs and foreign debts.
Even as some government officials try to self-isolate, the tendencies in attending to foreign projects may likely get affected as they have health-related issues to worry about.
For instance, in Africa and the Middle East, a significant number of the country’s leaders, are well over 60, a result that poses a COVID-19 related risk to them.
At this point, many of them are left with no option, than to stay back in their country, as they cannot carry out their usual medical tourism any longer.
This is a development that is not favorable, as a lot of awaiting projects for approval, would remain unattended to for long.
Crisis situations, like these, can overwhelm governments, in developing economies, investments will get stalled, money wastage will increase, as companies will battle over changes in government policies and priorities.
In all these, investors can still navigate business environments, through the following:
Reconsider your local partners
The capacity of a local partner would, definitely, have a direct effect on the risk option of an investor.
Consider their strength and weakness, also and if physical distancing has tied investors’ hands, in over-reliance on local partners, then, they should consider new training and capacity development for them.
Know the government’s current priorities
At this point, political connections are required to deal with this new situation.
You may have to reach out to some top government officials, or probably get engaged with local consultants, who can call for priority investment.
Consider the different human dimensions in the pandemic
Just like every other person, your local staff and partners will, definitely, have concerns over their health issues and the crisis ruining the economy.
The stress from the pandemic is enough, to cause government officials to get exhausted.
Investors should, therefore, reiterate their commitment to the country of concern, by supporting its recovery growth.
Emphasizing how the investment would help bring jobs for the local community.
Investors need to take a new look, at the effects of the pandemic, on their target country, in order to be well informed, of the eventualities that might work in their favour.
Featured Image: knowledge.wharton.upenn.edu