investment in Africa

1. Investment in Africa Africa is the best place on earth where investors will be able to make 'super' returns. Over time, GDP growth in Africa is expected to outpace that in most developing economies, including the BRICS (Brazil, Russia, India, China, and South Africa) countries. And the 'middle market' - where companies are usually too small to attract institutional investors and too big to be of interest to donor organisations - is growing faster than any other. So investment in Africawill gibe you wonderful returns. There was consensus on both these points at the inaugural Super Returns Africa 2010 conference, held in Fairmont Nile City, Cairo, Egypt, and attended by Limited Partners, including international institutional investors (pension plans, funds of funds, etc), Middle Eastern family offices and sovereign wealth funds, direct foreign investors, a wide spectrum of General Partners active on the continent (including pan-African and pan-emerging markets funds based in Europe, North America, and the Middle East), Africa-based specialist General Partners with a regional, country or sector focus, and South African buyout funds.

2. As pioneers in Africa's middle market during the past 15 years, we were delighted to see conference delegates realising that that's where creativity and the willingness to innovate are most evident. It's also the area in which the greatest impact can be made on job creation and skills development, thereby contributing to GDP growth, improving the relevant country's development and, in turn, attracting more investment. In other words, it's where investors can do best while doing the most good. There's a but, though. Capital isn't enough. For investors to achieve the phenomenal returns that are possible, they have to do some handholding of the portfolio companies. Talent has to be pro-actively nurtured. Skills have to be transferred. Any enterprise wanting to move into a bigger league faces challenges it's not encountered before, while still focusing on the fundamentals of business - delivering value.

3. In Africa, however, there are additional complications. These were highlighted by conference delegates asking pointed questions about political stability, nationalisation, the legislative environment, currency risk, exchange controls, ease of doing business, and exit mechanisms. They're valid questions. But, they do indicate the kind of traditional, first world approach to investment that isn't prepared to engage with Africa's realities and, therefore, won't be able to capitalise on the continent's potential for exceptional returns. To get those returns, investors have to do just a little more work than they're used to. Yes, traditional financial analysis is essential. It's also necessary, however, to approach each investment in Africa offers the opportunity and engagement with a set of guidelines that assesses the overall economic value added, and resolutely pursues answers to investment challenges in order to maximise the impact in value creation, profitability, and job creation. Aside from benefiting all the enterprises involved, the interwoven business relationships ensure that underprivileged children and hospital patients are fed.

4. That's the magic of investing in Africa. It makes a difference. Believing the skills could make more of a difference to a broader population if they applied them in the middle market in Africa, they have many years of track record of growing small to medium sized businesses that want to expand but are too big for donor organisations and too small to interest large investment firms.  Visit us at Panafricanvisions.com to know more details on investment in Africa.