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28 November 2020

Private Equity in Africa – Facilitating Investment: A Summary

Date Saturday 28 November 2020 Time Key Contacts

The overarching trope on the night; Africa is a nation of paradox. It has buckets of possibility and investment opportunity, and it is well on the path to achieving that full potential however if still faces a multitude of challenges.

As explored by speakers Afua Hirsch and Thalia El Chammah, and debated by the team of panellists, the ingredients that make up Africa’s governance, people, and economy, are very varied and complex. Byzantine elements exist within this complexity, and have delayed more big ticket investors from taking risks in Africa, compared to the ease with which they would invest in other, more regulated, countries.

This is not to say, however, that investment does not happen on the continent. Quite the contrary. Influences such as a growing middle class in Africa have sparked further economic advancement and have encouraged business to flourish. Environmental, social and governance considerations have also become a major focus of the investment community over the last decade, and investing in Africa provides such an opportunity to invest altruistically. As keynote speaker Afua Hirsch so eloquently put it; there is rarely truth in hyperbole and Africa is no longer the “hopeless” continent.

Although this has been largely a period of optimism, with record levels of investment, investors do, however, still want and need surety, as well as returns. Major concerns over exits and security still exist, and until this can be upgraded to the levels of protection experienced by investors in countries like the United Kingdom or the United States, there will always be cause for hesitation.

So how to improve on this lingering reticence? The panel discussion, moderated by Gail Mwamba of Private Equity in Africa, offered their insights as investors and private equity practitioners, talking through the current private equity trends in Africa. Sev Vettivetpillai of the Abraaj Group felt that Africa on the whole, is a “much better place from an LP perspective” compared to previous decades, but admitted that exits are still challenging. Fadi Bassir believed that there is an investment focus on countries such as Kenya, Ghana and South Africa, as popular investing destinations. All agreed that the regulatory environment must be improved. The overwhelming feeling, however, was that Africa is an increasingly worthwhile investment space, with untapped potential.

The focus of the second panel chaired by Bobby Console-Verma of MJ Hudson Fund Management Solutions showcased both fund and corporate offerings which demonstrated clear ways in which to contribute to improving the investment climate and assist Africa on a social level. Kwanji is a low cost and accessible B2B financial services that aims to help provide some of the 90% of SMEs across Africa who are under backed with funding. Mihai Florin of Helios LLP leads an Africa focused credit platform, providing diverse loans to public and private companies on the continent. Facilities like these will clearly have a positive knock on effect on the economy. Brixo Toys offers an interactive teaching toy that aims to change how science and engineering is taught. By bringing this to Africa, Gil Taran hopes to improve access to learning. Similarly, Elimu Capital wishes to address the education crisis and fill the investment gap of USD 0.8 – 1 trillion in primary schools in Africa as, for example, currently 30 million African children are not enrolled in primary schools. Initiatives such as these, plus the provision of safe and secure management of African portfolio holdings, as offered by Danny Ocean of Panda Connect, means that a future of increased protection and diverse investment opportunities, certainly looks more than hopeful.

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