Risk Management in Unstable Markets: Lessons for Fund Managers

By RightShore Research Team

The investment landscape for African markets between 2024 and 2026 has been characterised by a paradoxical blend of structural resilience and acute volatility. As the global community navigates the aftershocks of monetary policy tightening, geopolitical hostilities, and the accelerating climate crisis, the role of the fund manager has evolved from a steward of capital to a sophisticated analyst of intertwined risks. Understanding these dynamics is not merely a matter of regulatory compliance but a prerequisite for driving sustainable, transformative growth. The current era demands a fundamental shift from reactive information gathering to strategic foresight, necessitating a "mindset reset" regarding the perceived and actual risk profiles of African economies.

The Macroeconomic Landscape of 2024 to 2026

The global economy demonstrated a sluggish but steady resilience in 2024, with growth reaching approximately 3.2%. For Sub-Saharan Africa, the growth trajectory has been more ambitious yet fragile, with projections indicating an expansion of 4.1% in 2025 and consolidating at 4.4% in 2026. This performance positions the continent as the second-fastest-growing region globally, trailing only Asia.

The Currency Labyrinth: Lessons from Nigeria and Ethiopia

The most acute challenge for fund managers in unstable markets remains the management of foreign exchange risk. Recent events in Nigeria and Ethiopia provide a stark case study in the complexities of currency unification and flotation. Both nations adopted exchange rate flotation strategies aimed at achieving trade balance and fiscal sustainability. However, the outcomes have been mixed, revealing that flotation in an undiversified economy can increase vulnerability to global shocks.

In Nigeria, the unification of the exchange rate led to unprecedented levels of "abnormal volatility." Analysis reveals a significant asymmetry where negative shocks (bad news) have a far larger impact on volatility than positive shocks of equal magnitude. For fund managers, this means that shocks are not transient events but structural features that must be priced into the risk premium of any Nigerian asset.

Equity Markets as a Beacon of Resilience: The 2026 Rally

Despite macroeconomic headwinds, 2026 has emerged as a landmark year for African equities. By February 2026, the Nigerian Exchange (NGX) had posted a 33.5% return year-to-date, making it the fastest-growing frontier market in the world. This rally was driven by a surge in market capitalisation to $92.4 billion, up from $69.2 billion at the start of the year.

Regulatory Transformations and Risk Governance

Africa is entering a major regulatory transformation cycle in 2025 and 2026, raising expectations across capital adequacy, cybersecurity, and climate risk. The shift from manual processes to automated risk management is now a survival requirement. Key priorities include the adoption of Basel III standards and mandatory climate risk disclosure under ISSB IFRS S1 and S2 standards.

Priority	Focus Area	Jurisdictions
Basel III	Capital & Liquidity	SA, Egypt, Morocco, Mauritius
Climate Risk	ISSB Reporting	Nigeria, Ghana, Kenya
RegTech	Automation	Continental

ESG Integration and Technology

ESG integration has moved from a secondary feature to a central pillar of risk mitigation. General Partners are transitioning to digital ESG platforms to ensure audit readiness and provide real-time monitoring of portfolio performance. Additionally, the "quantum leap" of Artificial Intelligence in treasury is improving forecasting accuracy and automating routine tasks, with RegTech reducing compliance time checks by up to 70%.