Sources and Methods for African Investing



Today I had the privilege of participating on a panel on investing in Africa which was part of the Ronald H. Brown African Affairs Series organized by the Constituency for Africa in Washington, DC. I was struck by the variety of methods for market entry and investment that were discussed. From franchising–an effective model for many types of business, to large scale infrastructure investing by pension funds and other institutions. From private equity investments in growing companies to sovereign wealth funds, there is capital available from various sources to invest in many types of companies and projects. One challenge is to match the right kind of investor with the right company or project.

I was also impressed by the caliber of professionals on the panel and in the audience. Among the panelists were two business attorneys offering creative ways to manage the risks and challenges investors face. There were advisors to growing African companies and sovereign investors, and an expert on municipal finance and infrastructure investing. These panelists represent a wide and deep pool of talent that the business community should rely on to manage the risks and maximize the opportunities that characterize investing in Africa.

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How to Trade with Africa–How Everybody Wins

A popular subject among American policymakers, business people, and Africa watchers is US trade policy for Africa. The discussion takes place in the context of the Trump administration’s tough stance on trade around the world, China’s emergence as Africa’s biggest trading partner, and signs that Africa is becoming a more attractive destination for trade and investment.

Let us consider a new approach—one that will promote true economic partnership between the United States and the nations of Africa, and strengthen our geopolitical alliances. We should not only look to increase trade with Africa, but also promote high value exports that play to our competitive strengths and foster growth and prosperity in Africa. Concurrently, US investors are wise to keep a keen eye open for profiting from strengthening companies engaged in African imports.

We are reminded of the urgency of this new approach by a recent opinion piece by Grant Harris, CEO of Harris Africa Partners. (He covers the same subject in a CNBC Africa interview). He discussed the threat by the US Trade Representative to take away from Rwanda some of the benefits of the African Growth and Opportunity Act. The sanction would be in retaliation for increasing tariffs on second hand clothes.

Mr. Harris is right to call the specific threat against Rwanda a mistake. Though the Trump administration is within the letter of the agreement, it is a classic example of “doesn’t mean you should just because you can.” The move against Rwanda is an example of the Trump administration’s simplistic and short sighted approach to trade policy. In their minds, any event that contributes to the trade deficit, no matter how minuscule is to be opposed. It does not matter how destructive this could be to the used clothes business and to Rwanda’s economic development, or to US relationships with Rwanda and other African countries in a similar situation. Meanwhile, the impact on the US economy is negligible.

A smarter policy would be to play a long game that focuses on strengthening partnerships with countries like Rwanda. In the trade context, that means promoting higher value industry—more processing and refining of raw materials, and more manufacturing, where US technology, management know-how, and investment dollars can yield significant long-term returns. This could be an effective strategic approach to competing against China and other leading trading partners with Africa.

Except for labor and raw materials, inputs for these industries will have to be imported, thus creating a market for US exports in industries in which Americans have competitive strength. The equipment and machinery needed to rev up African industry will bring considerably more export revenue, and produce better paying US jobs than the used clothes business.

At the same time we would be smart to encourage the development of African brands and respect the resulting intellectual property. By respecting African IP rights, we can create allies in global trade discussions against those who do not respect the concept of intellectual property.

This is an opportunity to make US equipment, methods, and quality standards the norm among African businesses. The United States can present a different development model from China and other economic rivals who ship large quantities of ready-made apparel into Africa.

The high value model of two-way trade applies to other industries. For example, in agribusiness there is demand for modern American farm equipment. If such equipment is made affordable to small farmers in Africa we can increase farm productivity and food security in Africa and open new export markets for the US.

Playing the long game can help the US build long term economic partnerships that will benefit American as well as African businesses.

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3 Takeaways from ATIGS2018


The African Trade and Investment Summit which concluded this week in Washington, DC was ambitious in scale and scope. The event was a comprehensive look at the current business climate in various parts of the continent. It was also an opportunity for business people to connect and to initiate or strengthen business relationships. Here are three takeaways:

  1. The entire African continent was well represented. Similar conferences in the US seem to feature the biggest economies plus a few high profile nations in the east and west. At ATIGS there were attendees and panelists from every region and language group. In addition, there were several country briefings allowing attendees to explore a specific market in more detail.
  2. Africa has the world’s attention. Naturally there was much discussion about strengthening trade ties between Africa and the US. Meanwhile, other parts of the world are deeply engaged in many African countries and industry sectors. China and India of course have a strong presence. There were also briefings and business forums on the Middle East, the European Union, Canada, and Latin America.
  3. ATIGS provided a useful networking opportunity. The sheer size of the event and the wide variety of industries and countries represented made it a great place to meet people and make connections. The attendees included entrepreneurs, bankers, business developers, advisors, government officials and NGO executives, and a small number of investors. Attendees took advantage of breaks in the schedule for impromptu meetings and introductions. The organizers also provided an online mechanism to schedule meetings prior to the conference. That these meetings happened set the tone for the conference as a place for business to be done.


ATIGS 2018 was an impressive event well worth attending despite a few logistical snags. The Labacore team has developed a strong network and displayed considerable prowess in marketing the conference. We look forward to their next project.

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Neglect is not an option!


A recent article in the Washington Diplomat entitled “Continent of Neglect” cites the need for increased engagement in Africa by the US foreign policy establishment. The gist of the article is that we are in an era when Africa has finally been recognized by mainstream Western business. Meanwhile our government is the least engaged in three administrations.

Some of the signs:

  • Budget cuts in the State Department, and in development assistance.
  • Undersecretary of State for African Affairs post remains vacant.

What can we as Africa focused  business people do in such circumstances?

1.  Seek private sector expertise to fill the void left by a less engaged government.

  • Fellow businesspeople including investors, operating companies and consultants with real world experience can provide helpful guidance.
  • Academia–universities and think tanks have a wealth of background information.
  • The African diaspora is well represented among our immigrant population. Nearly every region of the continent is represented and the diaspora is a source of on-the-ground expertise that can smooth the market entry process.

2.  Continue to engage with government and our political leadership to press the case for African countries not only as a foreign policy priority nut also as trade partners for mutual economic benefit.

One place where building partnerships with Africa will be top of mind is at the Washington DC stop of the African Investment Rising US Roadshow April 18-19. There the focus will be on public and private sector engagement in Africa. This is the first stop in a four city tour organized by the Initiative for Global Development to re-shape perceptions on doing business in Africa. For more information visit.


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Private Equity Investors Boost Value and Liquidity in Africa, Making Investments More Attractive

An important consideration in evaluating any class of investments is the ability to easily cash out of a position and lock in a healthy return. Among the elements required are liquid capital markets and a vibrant private secondary market for African equity and debt. The growing role of private equity in African finance has influenced the process of creating value and realizing attractive returns on African investments.

Now that private equity has been active in Africa for several years we are seeing more and better data on the performance of their portfolios. From this data we can draw conclusions about the experience of firms exiting their portfolio investments.

Some of the most respected work on African private equity exits has been done by Ernst and Young in partnership with the African Private Equity and Venture Capital Association. The 6th and most recent report—PE Exits in Africa 2017 covers the industry in 2016.

In summary, the report tells us that 2016 was a record year for the number of exits. The largest number were in South Africa but there were also several in Nigeria, Egypt, Kenya, and Ghana. We saw significant increases in the number of exits in West Africa and North Africa.

African stock market regulators are working hard to set the stage for greater liquidity in the markets, however, at present, most exits consist of sales to strategic buyers and an increasing number of financial buyers. The financial buyers are largely private equity firms buying out the previous financing round.

Stock Markets as an Exit Option

The good news is that African stock markets have been quite strong, largely due to stronger commodity markets which have spawned economic recovery in many countries. (See table below) The consensus is that the recovery will continue in the near term. Liquidity is still a challenge. All else being equal the expectation of strong stock markets could make listing more of an exit option than it has been.













Implications for US Financial Investors

  • The activity in African private equity and venture capital have in many ways contributed to an improved investment climate for American capital.
  • A PE firm’s value creation process often calls for partners or suppliers to join with their portfolio companies. This is an opportunity for US companies to enter African markets by engaging with those portfolio companies.
  • The US investor could buy out a PE firms equity position. This requires strong local knowledge that is often easier for a local firm.
  • The PE firm or another financial investor could be an exit for a current investor. The growing number of PE firms allocating funds to Africa makes the financial buyer an increasingly likely exit option.

With these possibilities in mind it behooves US investors to build relationships with key players on the ground in Africa including the financial community and government officials tasked with promoting and regulating portfolio and direct investment. US investors may find opportunities across all sectors, of the various economies and markets in Africa.

Darnley Howard is a partner at PAN Diaspora Capital Management. PAN Diaspora Capital Management  is an organizational partner with the Initiative for Global Development for the Africa Investment Rising campaign. A highlight of the campaign is the US Roadshow from April 18 through 28. IGD will visit four cities—Washington, New York, Des Moines and Houston in order to showcase opportunities in Africa and create a forum for American and African businesses to connect. For more inform, visit


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Spotlight on Cameroon

Things are looking up in the land of Bikutsi and Makossa.

The Africa Rising story often features a few high profile countries that have dominated investors’ attention: Ghana, Kenya, South Africa, Nigeria and a few others are where most of the deals seem to happen.

Meanwhile, flying under the radar is Cameroon. Lately we are seeing an increase in business and entrepreneurial activity in the public and private sectors that leads one to think that this market deserves a closer look.


The Republic of Cameroon is officially a democracy with executive, legislative and judicial branches of government. Paul Biya has been president since 1982.

Like most of Africa, the economy is based on natural resources, chief among them, timber, aluminum, agriculture (particularly, cocoa, palm oil), and oil & gas.

In addition there are hints of entrepreneurial activity that could lead to a larger private sector contribution to the nation’s economy.


Just this year we’ve encountered several examples of entrepreneurial ventures and development initiatives that could be attractive to investors:

  • Ovamba is a financial services company that uses an innovative lending model to provide short term capital to small and medium sized businesses.
  • An American entrepreneur has made a big bet on palm oil in Cameroon. His business produces substantial volumes and has strong support from the local community.
  • We have been made aware of a major initiative by government to improve the Cameroonian infrastructure. Contractors an financial investors can select from dozens of projects in several sectors including transport, agribusiness, and electric power.


Anglophone meets Francophone. Though mostly French speaking, Cameroon has a significant English speaking population, making partners, and staff available for both language groups.

Bridge to West and Central Africa. Cameroon often identifies and is identified by others as a Central and West African nation. For this reason, and due to its location Cameroon can serve as a base of operations for Central or West Africa.

On the verge of becoming an LNG exporter. Oil and gas are fields have been developed on and off shore on the West African coast. Cameroon is a part of the west coast African oil story. LNG reserves are large enough that Cameroon may soon become a gas exporter.


President for life? President Biya his held office for 35 years. The country seems stable so far, but one wonders about the succession plan and whether an orderly transition will occur.

Anglo & Franco living together. The combination of Anglophone and Francophone that is a source of strength for Cameroon can also be a source of division and instability. So far that has not occurred and we consider this to be a minor issue.

We would love to hear from other business people about their experiences and impressions of the business climate in Cameroon. Your comments are welcome.

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Risk Management for African Private Equity

PE investments in Africa generally fall into the alternative investments group. As such they compete for a share of investors’ allocation to the alternative investments category along with frontier market regions. Our challenge as Africa-focused fund managers, consultants, and advisors is to attract more of this capital to Africa, thereby contributing to Africa’s development, and the success of our enterprises. Ultimately we would like to see African deals shed the “alternative” label.

One topic we constantly confront is the risk—both real and perceived of deals associated with Africa. It is therefore important for us to provide sound risk analysis and risk mitigation strategies to aid clients, LPs and other investors in their capital deployment decisions. Risk can be classified as political, economic (e.g. currency), and operational (e.g. supply chain).

What is the best approach for risk analysis?

Several well known rankings of world economies are a starting point for risk analysis. (see table) These include:

  • World Bank Doing Business ranking,
  • World Economic Forum Global Competitiveness Index,
  • Transparency International’s Corruption Perceptions Index,
  • JLL Global Real Estate Transparency Index.

The highest ranked African countries are usually in the middle of these rankings.

While these rankings and the data within them are a good preliminary indicator, do they tell the whole story? How do we find the growing business based in a less attractive country, but positioned to expand into other markets? Is political risk really a deal killer or are there circumstances in which business will get done anyway? Are there industries investors should avoid even when macro indicators look promising? Our ability to address these issues should lead to more nuanced assessments of risk and guide investors to better results.

How do we mitigate risk to make deals bankable?

Can PE firms take a leadership role in risk management using a holistic approach that recognizes the link between legal, political and financial risks?

Can management teams be “coached up “ to make a deal bankable? There are a number of ways PE firms and consultants can add value to make deals more attractive. For example:

  • Improving accounting and financial management, process improvements
  • Access to training such as online compliance

Probably the most important risk mitigation tool Africa-focused PE firms have is their knowledge and experience in African markets. This local knowledge is obtained in a variety of ways. Obviously Africa based firms have local knowledge built in at least for their home country and usually for their region as well. Other firms can rely on African professional staff and on local partners on the ground who can provide useful market intelligence.

Some conclusions to share with prospective LPs and other investors:

  1. Several African markets compare favorably with other emerging/frontier markets in Latin America and Asia according to the rankings:
  • Transparency of Kenya’s real estate sector exceeds that of Chile and Ukraine.

  • Cape Verde and Liberia are less corrupt than Brazil or the Czech Republic

      2. PE firms and advisors are highly knowledgeable about the African business                    environment and have access to excellent market intelligence. This                              enables them to educate and guide the investor community in                                      making realistic assessments of risk. 

I would encourage practitioners to continue the discussion on how to improve          investors’ understanding of risk management in Africa. We welcome your                insights on this blog and elsewhere.

Your firms’ local knowledge, both in-house as well as in your networks on the ground make you the right people to guide LPs toward profitable deals.

















































































































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Strengthening Private Investment in Africa


Norton Rose Fulbright law firm was the scene last Tuesday for the Africa Alternative Investment Intensive. The forum was part of a series of conferences on the African investment landscape organized by Africonomie.

Investors such as Abraaj, Capri Africa, and Sarona Asset Management were represented. In addition, several important players in the African financial ecosystem were in attendance. These include PWC’s Mauritius office, IGD Leaders and PAN Diaspora Capital Management.

The AAII was a gathering of practitioners bringing their real world experience. It was an opportunity to share ideas and insights aimed at fostering a healthier African investment climate. Here are some of the topics:


Attracting American Capital to Africa

Obi McKenzie of Black Rock had constructive recommendations for fund managers. A fund’s track record is a big selling point. New funds without much of a record are encouraged to pursue funds of funds. A useful sources of leads is the National Association of Investment Companies.

Encouraging US pension fund managers to consider African investments

Donna Sims Wilson, president of the National Association of Securities Professionals gave a presentation on the NASP Africa Initiative. It is a USAID funded initiative known as Mobilizing Institutional Investors to Develop Africa’s Infrastructure, or MiDA. The goal is to expose US public pension plan sponsors to co-invest with African fund managers in Africa’s infrastructure.

Risk mitigation

Several times during the conference presenters pointed out various risks that must be managed either with insurance products or deal structuring. Currency risk was a topic of particular concern. Risk management in African investments will be address in more detail shortly in a subsequent post.

Startups & smaller deals

This is a segment of the market that the financial community has not really addressed. There were audience questions during the day about funding the “missing middle” deals of roughly $500k to $1 million. A panel on Smart Capital and the future Innovative Technologies in Africa identified several themes such as mobile technology.

Impact investing and ESG issues

Panels on ESG related risks and delivering sustainable energy addressed social an developmental impacts of investing. The very definition of ESG and how it is measured were among the topics discussed.

Last week’s Africa Alternative Investment Intensive continues the conversation and sets the stage for the next AAII gathering next month in London.


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Africa embracing alternative finance

This is one of a growing number of options becoming available to African entrepreneurs.

The Emerging World

A majority of businesses in Sub-Sahara Africa are small and medium-sized enterprises, also known as SME’s, and represent 90% of all businesses and produce 80% of all jobs throughout the continent.  Most of these enterprises lack access to finance stunting growth and business development.  The International Finance Corporation, IFC, estimates that up to 84% of SME’s in Africa struggle to get adequate financing from formal investment channels such as banks and other financial institutions, resulting in a credit financing gap of $140-170 billion annually. This has created a market need for alternative sources of financing.  Alternative financing platforms have stepped up to meet this need using crowdfunding and peer-to-peer (P2P) lending.


Let me first start out by explaining exactly what crowdfunding is. Crowdfunding raises capital for a project or a venture by collecting small amounts of money from a large group of people.  There are different types of crowdfunding opportunities. …

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