Why Invest in Post Conflict Countries?

Enter at your own Risk

“Buy when there’s blood in the streets, even if the blood is your own” – Baron Rothschild

Post-conflict countries remain off the radar for nearly all investors, the images of violence and destruction are enough to scare off most people and that is before you even consider the dislocation, lack of economic activity and disruption that conflict brings upon an economy. But as we shall see the aftermath of battle can be the ideal time to invest from both your firm’s point of view as well as the country in question.

What are the advantages of investing in post-conflict states?

Superior returns: as countries recover from conflict they usually achieve strong growth through a “bounce back” effect, this is thanks to the reallocation of resources which were used in conflict being put back into productive means. Former soldiers go back to work, government spending goes on repairing roads and bridges rather than buying arms and people become more confident in the future as the fear of violence recedes.

This shift in economic activity creates an immediate boost to an economy, which often translates into high GDP growth rates. Countries such as Colombia, Cote D’Ivoire and Liberia have all recently enjoyed rapid growth following the end of prolonged strife. Of course dislocation remains, military spending often remains high thanks to a fear that conflict may return and work can be often hard to find in peace time for those trained to kill, but the rebound effect is very real and a company can ride that wave of fast economic growth.

Doing good: while it might seem perverse and somehow ethically dubious to be trying to make money in what was until recently a war zone – investment is exactly what a country that has been exhausted by conflict needs. An injection of capital and confidence in the business sector helps the country on the long march towards normality. New investment can provide much needed jobs, allow the government to receive taxes and of course bring about a feel good factor across the country as a foreign venture gives a vote of confidence in the local economy.

Lack of competition: this isn’t always the case, Iraq had US companies lining up to invest in its lucrative oil sector after the second Gulf war, but in many cases conflict zones fall off the radar of major companies leaving them to the brave, farsighted and entrepreneurial. Early entry to an open field can mean superior market share in the long run.

One classic example of this approach is Ecobank, a successful multinational bank headquartered in Benin which saw an opportunity in the poor and conflict afflicted Central African region – providing investment, corporate and domestic financial services the Bank has successfully expanded and grown in the region, including post-conflict countries like Sierra Leone and Burundi.

Which post-conflict countries offer the best prospects?

This is of course a hotly debated topic and many would wince at this list, but even the most miserable war torn regions can eventually enjoy an economic miracle. These three countries are all currently suffering from a conflict, but once the dust eventually settles offer good long term economic prospects.


Although thankfully this previously prosperous nation has not collapsed into civil war Zanu – PF’s political and economic path have hollowed out the economy by driving away foreign investors and unleashing hyperinflation at the same time as many parts of Africa have been experiencing a boom, but a new political landscape ( perhaps following the passing of Mugabe), could usher in a new start for what should be an African success story. The country’s natural resources along with a returning diaspora would create the conditions for a stunning recovery, but this is dependent on political change at the top.


Somalia remains volatile in terms of its security situation; in particular the fight against the Islamist group Al-Shabaab continues and food shortages pose huge development issues. But at the same time a steadily improving security environment offers massive potential thanks to an active diaspora, who if given the opportunity to return home en masse could energise growth and revitalise the country by bringing much needed skills, funds and fresh thinking. Somalia also enjoys significant oil reserves that could produce significant revenue and proximity to the Gulf States which could provide cross border investment. If Somalia can make peace within its borders then the “bounce back effect” as Somalians put their efforts towards rebuilding the country rather than living in fear of violence would be enormous.


The North African country remains in dire straits as rival factions vie for power and control of the country’s rich reserves of oil in what is now effectively a civil war. Despite this the country was and remains wealthy by African and Arab standards. The country has been governed under a socialist system for the last 30 years, but if it moved decisively towards a capitalist economy, it would create unprecedented new opportunities for investors.

Unfortunately the short term prospects are poor, the nation is divided between armed feuding tribal factions, with little sense of central control, in the south of the country the sparsely populated Sahara region is home to criminal gangs which are involved in smuggling arms, drugs and people. In addition there is a fantastic prize for whoever controls the country, the aforementioned oil reserves. This combustible mix of weapons, a lack of central authority and the oil reserves does not bode well for short term peace. However, if the country can stabilise then the longer term prospects look very good indeed, a rich country that can build trade and investment connections with Southern Europe and beyond could enjoy strong growth for years to come.

For more on doing business in these markets, check out one of my earlier articles here.

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