Brigg Macadam’s Greg Swenson sees opportunities for African economy despite pandemic shocks

The year 2020 has been tumultuous, marked by the unprecedented impacts of the COVID-19 pandemic on economies worldwide. As we approach 2021, there are discussions about the potential for recovery and growth in the African economy despite the lingering challenges. Greg Swenson, Founding Partner at Brigg Macadam, shared insights on the prospects for the continent in an exclusive interview with CNBC Africa. Swenson acknowledged that while the effects of the pandemic have been significant, there is cautious optimism for the African economy in the coming year. He highlighted that certain regions, such as oil exporters and those lacking critical infrastructure, may have experienced more severe setbacks in 2020. However, he projected a turnaround in 2021, with an expected GDP growth of approximately 3%. One key factor that played in Africa's favor during the pandemic was its younger population, which proved to be less vulnerable in terms of fatality risk. Despite some South African companies scaling back their investments in other African markets due to perceived risks, Swenson emphasized that the continent still holds vast opportunities. He emphasized the demographic advantages, including a growing workforce and an optimistic labor force, as strong pillars for future economic growth. Swenson also pointed out that the pullback in foreign direct investment due to various factors, including oil prices and the pandemic, could create opportunities for patient capital and private investors. Brigg Macadam's current exposure to the continent spans various sectors, with a focus on critical infrastructure projects in countries like Uganda, Malawi, and Mozambique. Noteworthy examples include Total's substantial investment in a natural gas project in Mozambique, indicating a ripple effect of follow-on investments in the region. Agriculture, telecommunications, and consumer products are also areas of interest for investment, leveraging population growth and urbanization trends. The potential for increased foreign direct investment in Africa is further bolstered by initiatives like the African Continental Free Trade Area agreement, expected to facilitate greater capital inflows into the continent in the medium term. Swenson highlighted the attractiveness of the investment landscape in Africa, emphasizing that the lower competition for capital could translate into better returns for investors. While there are risks to consider, such as ongoing COVID-19 uncertainties and fluctuations in oil prices, Swenson suggested that challenges in credit markets are more perceptual than actual. With global monetary stimulus supporting emerging markets, credit markets have remained relatively stable. Despite some liquidity challenges in private markets, Swenson noted that patient investors stand to benefit from higher returns and well-structured transactions. In conclusion, Swenson's outlook for the African economy in 2021 remains positive, underscoring the resilience and adaptability of the continent amidst global uncertainties. With strategic investments, a favorable demographic profile, and a growing appetite for private capital, Africa is poised to unlock its economic potential and pave the way for sustainable growth and development in the post-pandemic era.