Monthly Archives: September 2017

Strengthening Private Investment in Africa

AAII1

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.

Piattaforme-di-crowdfunding-in-Africa

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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