Foreign capital inflows to Africa to reach $3bn by year-end

…Nigeria among top destinations

Optimism about investment opportunities in Africa is on the rebound as venture capital flows doubled this period in the previous year, and is set to reach a record $3bn by the end of this year, according to FBNQuest.

Investors at Africa Connected, a one-day conference held in London on Thursday, October 21, 2021, expressed their confidence based on uptick in the amount invested in Africa so far in 2021.

Egypt, Kenya, Nigeria and South Africa are projected to receive an estimated 80 percent of the investments.

According to African Private Equity and Venture Capital Association (AVCA), during the first half of 2021, the total value of private equity (PE) deals in Africa reached $2.1bn which is $1.4 billion higher than the previous year.

North Africa and West Africa attracted the largest number of PE deals, 23 percent respectively, while companies in multiple regions across the continent saw the highest amount from PE deals (50%).

Financials, consumer discretionary, industrials and information technology sectors attracted 72 percent of the PE deal volumes. While financials, industrials, utilities and communication services were the top sectors accounting for 78 percent of the total deal value in the first six months.

The previous president of the African Development Bank, Donald Kaberuka during the Africa One Connected conference, identified some grounds for Afro-optimism. He was impressed by the early output from both the African Continental Free Trade Area (AfCFTA) and the Addis-based Africa Centres for Disease Control, notably the steps towards the first vaccine production in the continent.

Africa’s growing youthful population despite other limiting factors also creates a viable market for investment in the continent.

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Edem Adzogenu, the co-chair of Afro-champions, during the panel discussion, in the conference, pointed to some features favouring Africa, particularly the combination of its youth and digitalisation.

The CEO of the Ghana Investment Promotion Centre, Yofi Grant, during the lively panel discussion said one of the reasons for foreign direct investors Afro-optimism is because Africa has world demanding resources and more uncultivated arable land that could draw more investments to her continent.

“Africa has 90 percent of the world’s reserves of cobalt and platinum, 50 percent of its gold and 35 percent of its uranium. It also has substantial reserves of lithium and coltan, two minerals currently in high demand,” he said.

“Africa could theoretically feed the world,” Yofi added.

Attention was also drawn to the emergence of large African corporates within the continent.

Slimn Feriani, a former industry and energy minister in Tunisia, drew attention to the emergence of large African corporates, with south-south and international aspirations, already realised in some cases.

“Morocco’s Attijariwafa Bank and Tanger Med, a logistics agency which has helped to transform the economy and not just the automotive sector, but also Kenya’s Saraficom and Ethiopian Airlines. We could add several Nigerian firms to the list”, FBNQuest said.