Hubert Danso |
Tell us about the Africa investor summits
Africa investor will be hosting, in partnership with Thomson Reuters, 8th Ai CEO US-Africa Investment Roadshow. The summit will hold on September 24 and is designed to highlight and enhance Africa’s investment climate, trade competitiveness and job creation agenda, facilitate action and shed light on Africa’s investment success stories.
Africa investor will be hosting, in partnership with Thomson Reuters, 8th Ai CEO US-Africa Investment Roadshow. The summit will hold on September 24 and is designed to highlight and enhance Africa’s investment climate, trade competitiveness and job creation agenda, facilitate action and shed light on Africa’s investment success stories.
On September
25, Ai will then host the Ai CEO Institutional Investment Summit, which will
focus on facilitating transactional investment partnerships and co-investments
between select African and US institutional investors, and sovereign wealth and
pension funds, to invest in Africa’s fastest growing sectors and capital
markets.
Through
these summits, we are pursuing some very specific agenda, including the
mobilisation of new, non-traditional sources of capital for the development of
Africa’s capital market and infrastructure sectors. These sources include,
sovereign wealth and pension funds, as well as private equity firms. We will
use the summits to showcase the best in capital market opportunities to these
sources and other institutional investors, and facilitate a series of one-on-one
meetings around specific transactions, allocations, direct and co-investment
opportunities.
For Africa
to realise its economic potential, it is critical that long-term industries,
such as infrastructure, energy and transport, provide the groundwork for
capital market and private equity market growth and job creation in Africa.
Is it deliberate that the summits are holding
alongside the UN General Summit on the Sustainable Development Goals?
Yes, Africa
investor has a long-standing partnership with the United Nations, which draws
on our high-level convening power to bring together institutional investment
partners to dialogue and advise African Heads of States on major investment
themes, challenges and solutions.
These
summits form an important step in forwarding the African private sector’s
agenda in terms of the UN Sustainable Development Goals (SDGs), which will take
over from the UN Millennium Development Goals (MDGs). Africa will be crucial to
the global economy going forward and its private sector voice needs to be heard
in developing and implementing the post-2015 SDGs agenda, and importantly, in
ensuring African leaders are aligning global development commitments with
homegrown development agenda such as, the African Union’s Agenda 2063.
In which sectors are investment opportunities
more profitable?
Today’s investment climate is quite different from even a year ago; commodities and oil prices have tumbled and recent global factors have negatively affected Africa’s stock markets. The Africa investor (Ai) 40 investor’ Index, which tracks the performance of Africa’s blue chips, has fallen more than 25 per cent over the past year.
Today’s investment climate is quite different from even a year ago; commodities and oil prices have tumbled and recent global factors have negatively affected Africa’s stock markets. The Africa investor (Ai) 40 investor’ Index, which tracks the performance of Africa’s blue chips, has fallen more than 25 per cent over the past year.
That said;
there are many profitable investments to be pursued, especially, in the
infrastructure space in the transport and energy sectors. Trade and consumer
goods are an excellent sector, particularly in anticipation of the Continental
Free Trade Area (CFTA). Once established, the CFTA will offer a market of over
one billion people and a GDP of $2 trillion. The technology and ICT sectors are
booming and the US Department of Commerce, for instance, recognises the IT
sector as one of the fastest and potentially most profitable sectors in Africa.
Construction
and real estate should be noted too. With a strong economic growth rate and an
increasing urbanisation, more houses, offices, etc., will be needed. Financial
services also represent a great opportunity. 80 per cent of the continent is
still unbanked and the possibilities are endless, especially when you consider
that most of the population own mobile phones, which link back to technology.
These are just some of the many profitable opportunities on the continent.
What are the opportunities and challenges of
investing in Africa?
The
opportunities are endless. A strong economic outlook, a young and growing
population, a rapid rate of urbanisation, a growing middle class, an
opportunity to leapfrog technology, untapped resources, unused arable land –
all these are opportunities.
As for
challenges, there are also plenty of these but, the beauty, of course, is that
the challenges themselves represent opportunities. Africa’s logistics network,
for example, is poor, so goods may be more expensive to transport at the
moment. But it represents an unparalleled growth opportunity for logistics
developers, infrastructure investors, trade financiers and business as a whole.
Human
capital mobility is another challenge: we need to make it easier for Africans
to move goods, capital and staff across the continent and here a pan-African
business passport is a good starting place, as espoused by the Continental
Business Network.
There needs to be an unrelenting coming together of the public and the private sectors to address these challenges.
There needs to be an unrelenting coming together of the public and the private sectors to address these challenges.
To realise
Africa’s economic potential, African governments and development partners
should focus on making it easier to tap private sector human and financial
capital to accelerate procurement and approvals to implement projects.
Underpinning that is the urgent need to reform and simplify trade policies, regulatory
environments and intra-African investment and risk management rules for pension
and sovereign wealth funds investing in critical industries such as,
infrastructure and capital markets.
We need to
streamline and centralise the negotiation, approval and permitting process for
projects, which could cut the timeline for the financing and implementation of
projects by as much as 50-75 per cent of their current timelines.
Land rights
are also a big challenge to be addressed for both domestic and global investors
– especially in trade and transit-related transport infrastructure projects.
Rights and a predictable and transparent redress and enforcement of legal
judgments regarding claims must be decisively addressed.
However, the
right steps are being taken. The launch of the Continental Business Network in
pushing the Programme for Infrastructure Development in Africa (PIDA) agenda
was a vital step, and the Ai CEO Infrastructure Investment Roadshow was
essential in bringing project development to the fore.
What changes in private equity deals have you
seen over the last few years?
The sector has evolved; there is no doubt about that. It is much more mature. Ten years ago, there was a small field of generalist funds with relatively low levels of funding at their disposal. Today, the number of funds has grown in number and size, and many of them are now more specifically targeted in terms of region and sector (healthcare, real estate, agriculture, etc.). There are now also more local general partners entering the field.
The sector has evolved; there is no doubt about that. It is much more mature. Ten years ago, there was a small field of generalist funds with relatively low levels of funding at their disposal. Today, the number of funds has grown in number and size, and many of them are now more specifically targeted in terms of region and sector (healthcare, real estate, agriculture, etc.). There are now also more local general partners entering the field.
Private
equity is now also entering a space vacated by more traditional sources of
funding.
Africa’s
private equity industry is, however, still far from meeting its potential.
Large potential pools of African and global pension and sovereign wealth fund
capital are not being accessed, due to their inability to evaluate Africa’s
investment and fund manager risk profile. Professionalising a ratings culture
and making it easier for owners of capital and institutional investors to
assess and compare the risk profiles of custodians of capital in Africa, such
as African fund managers and brokers, is essential and the reason why we have
pioneered the Ai Fiduciary Ratings global methodology in Africa to assist
institutional investment allocators and gatekeeping consultants better assess
fund manager and government fiduciary risk and trustworthiness.
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