Local investment key to private equity growth in Africa - CNBC Africa

Local investment key to private equity growth in Africa

Insights

by admin 0

Globe with Africa in view. PHOTO: Getty Images

“The private equity landscape in Africa has been evolving, and has evolved considerably over the last 20 years. In the last 10 years, progress has been enormous,” Abraaj Group partner Sev Vettivetpillai told CNBC Africa at the 44th World Economic Forum in Davos, Switzerland.

“If you look at many of the countries in Africa today, [they’re] moving towards a more pro-business [and] pro-democratic process, which allows investors to take long-term decisions about investing in these markets [and] be secure in terms of the investments they make in these markets.”

Vettivetpillai added that a number of Africans that had left the continent for education or job opportunities overseas are now returning to their home countries. This is another positive sign for Africans and international investors.

[video]

“We’ve been investing in Africa for two decades, and we’ve invested from the start of the ‘90s. We’ve been through many cycles, many issues in the market, but an investor with a long-term view, with local talent on the ground, is key to investing in these markets. I think anyone who is willing to invest on the continent, they will not regret it,” said Vettivetpillai.

There have however been challenges due to the continent’s political landscape, and some countries have experienced political instability. Africa however continues to display promising returns on equity as it continues to develop.

“Challenges also provide opportunities at the same time. The question is how do you manage those challenges and make sure that you come out of it okay. Having local Africans investing in their own continent are the best people to understand this in depth. That’s one thing we’ve invested in,” Vettivetpillai explained. 

“These challenges are sometimes tough, sometimes test your patience, and sometimes test your ability to keep investing. Having done that for 20 years, we’ve been through so many cycles [and] one thing is clear: if you have teams on the ground, the risks and the issues that come up in this market, understanding that and investing, taking into account these issues, having people on the ground to manage those investments is a key way of managing those risks,” said Vettivetpillai.

Intra-Africa trade prospects can also increase private equity investment in the continent, and Vettivetpillai believes it’s a key component to the African growth story.

“Despite the shortfall in certain countries in Africa in terms of enabling that trade, business tends to find its way to do it. That resilience is what Africa is about. Those who are willing to take that hard road, take the initiative and do things, not waiting for hand outs or privileged access, you can do that,” he added. 

Comments