Boosting Investor Interest In Africa

Simplified access to funding, currency stability and improved access to infrastructure can contribute to increased investment on the continent.

- Patrick Mamathuba

Simplified access to investment funding in Africa is needed to stimulate growth across the continent. While the fundamentals of key countries across sub-Saharan Africa indicate significant growth and investment opportunity, access to reliable financing is often a barrier for foreign and local investors.

Funding takes different forms including private equity and venture capital. According to the Preqin Special Report Private Equity in Emerging Markets, 12% of all private equity investors based in emerging markets are in Africa. This is ahead of Central and Eastern Europe at 7% but lags Latin America (13%), the Middle East (17%) and Emerging Asia (50%). Local and regional banks are another source of funding. Africa has an opportunity to increase its share of investment by creating transparent and effective regulatory frameworks and by overhauling physical infrastructure.

Studies have shown that poor road, rail and port facilities add between 30% and 40% to the costs of goods traded among African countries.

When only a quarter of Africa’s road network is tarred and only 38% of the African population has access to electricity, investment in infrastructure development is key to unlocking growth potential that will attract new investors.

Regulatory enablers, such as forward thinking initiatives by governments to attract foreign investment through transparent and consistently applied legislation is critical to enabling investors to accurately quantify risks when considering Africa-based development projects.

Economic growth and infrastructure