Three key themes for the future of investment in Africa
As recently as two years ago, a typical conversation with a multi-national company looking for investment in Africa would be peppered with questions around corruption, political stability and sustainability – all reflecting a weight of negative stereotypes that we seemed unable to shake off. These questions were not particularly difficult to address, but they did demonstrate the hurdles left to clear before “business as usual” became the norm.
Fast-forward to the past six months, and a very different picture emerges. The old contradictory clichés about Africa and investment in Africa, as either a hopeless continent or a hopeful continent are finally giving way to a more nuanced, realistic perspective.
At a macro level, hazy intentions to invest in Africa have turned into real commitments and actions. A good example here is the number of ring-fenced Africa funds run by private equity houses. Recently the Carlyle Group, one of the largest global asset management firms, specializing in private equity, closed its maiden sub-Saharan Africa Fund having attracted investment of around $700 million – about 40% beyond its original target. This has followed the closure of a number of similar Africa funds at anywhere from $350 million to $1 billion. According to industry norms, these funds will have to be invested in African assets within the next couple of years.