Understanding Africa’s investment landscape

African economies have long been exposed to global shocks that continue to hinder the continent's development goals. However, amidst these challenges, there are opportunities for growth and development that are being explored. Osaruyi Orobosa-Ogbeide, Senior Vice President of Project Development & Investment at Africa Finance Corporation (AFC), shed light on the investment landscape in Africa in a recent interview with CNBC Africa. Orobosa-Ogbeide highlighted the infrastructure sector as a key area for growth in Africa. He emphasized that investing in infrastructure not only creates opportunities but also drives sustainable growth and productivity in African countries. While many countries in Africa have experienced economic growth, the focus should be on fostering development, which can be bridged by investing in infrastructure. He pointed out that measuring productivity is essential as it determines the multiplier effect and the level of growth in a country. The perception of the infrastructure sector as a risky investment was also discussed. Orobosa-Ogbeide debunked the notion that Africa has a high default rate, citing studies that show low default rates in project finance on the continent. He emphasized the importance of sectors like energy and transport in driving growth and interconnectivity across countries. Addressing the issue of currency fluctuations, Orobosa-Ogbeide acknowledged that it poses a significant risk to investors in Africa. Devaluation can erode profitability over a short period, raising concerns among investors. He suggested that domestic sources of capital and mobilizing local financing could mitigate the risks associated with currency fluctuations. Building confidence and political stability are vital in attracting investment and safeguarding against currency devaluation. The interview also delved into the role of inter-regional collaboration in deepening African markets. Orobosa-Ogbeide highlighted the need for regional currencies and cross-border investments to foster economic growth. He stressed the importance of creating an African financial hub to attract capital and reduce dependence on international markets. In navigating challenges related to infrastructure and logistics, Orobosa-Ogbeide mentioned mechanisms for cross-border transactions, including using a common currency denominator and credit enhancements to facilitate deals. While there are tools available to mitigate risks, he acknowledged that security and credit enhancements can delay infrastructure projects' implementation. Regarding AFC's priorities in expanding renewable assets, Orobosa-Ogbeide underscored the importance of critical minerals for renewable energy production. AFC has been actively investing in natural resources, transport, and logistics, and promoting beneficiation to create sustainable markets and job opportunities in Africa. Overall, the conversation with Osaruyi Orobosa-Ogbeide highlighted the potential for growth and development in Africa's investment landscape, particularly in the infrastructure sector. Despite challenges such as currency fluctuations and perception of risk, there are opportunities for investment that could drive sustainable growth and development across the continent.