The numbers coming out of the Global Emerging Markets Risk Database are quietly rewriting the story of African investment risk. The database, known as GEMs, pools data from all the major multilateral development banks and development finance institutions, covering more than 40 years of lending across emerging markets and developing economies. The latest annual publications, released in October, offer one of the most detailed pictures yet of how borrowers actually perform on the continent.
The conventional wisdom has long painted Africa as a higher-risk destination than most other regions. That perception has real consequences, shaping how global capital flows and where it refuses to go. But the GEMs data is beginning to chip away at that narrative with hard evidence, not argument.
On defaults alone, Africa's average private-sector default rate sits at 4.7%, roughly one-third of the 13.8% sovereign default rate suggested by S&P. That gap already tells a different story. Still, default rates are only part of the picture. What matters most to investors is how much money is actually lost when a default does occur, and that is where the data gets even more interesting.
This conversation has found fresh urgency following the 7 October launch of the Africa Credit Rating Agency, and renewed calls at the IMF-World Bank Group Annual Meetings in Bangkok for global financial institutions to rethink how they measure African risk. The message from development finance circles is clear: changing risk perception requires evidence, and the evidence is now on the table.
Originally published by African Business.