DAKAR, SENGAL – The Private Equity & Venture Capital Association (AVCA) says Africa made a record of $7.4 billion in private capital 2021. This is more than double in the year previously. However, while the continent offers full possibilities for investors, it also gives challenges from climate change to instability. Investors discussed several trends in AFCA’s conference at Senegal this year.
Over 500 people from 50 countries are clarified in and out congress room at Dakar’s Radisson Hotel Tuesday for Day 2 of AVCA’s annual meeting.
Africa has a rich environment both for local and international investors, said the attendees. That is due to the youth population and consumer market are significantly growing.
According to Alexia Alexandrapoulou, the research manager at AVCA, investor interest in Africa has been largely influenced by the attraction or financial technology manufacturers. There are sizeable infrastructure deals also help much in the continent’s investment growth.
Alexia noted that those infrastructure investments were emphasized on renewable energy, communication and transportation services. They provide supports for African governments to fill the gap of infrastructure on the country. She expected to find more of those trends which continue in the years to come.
Senegal is one of African governments that have successfully invited the international investment in these recent years. In 2019, Senegal became the second African country that passed a “start-up act” which eases regulations and provides tax breaks for finding new business innovation.
Here, according to AVCA, venture capital activity comprised 80% of total reported deals in 2021. It was up from 6% between 2016 and 2020. But investing in Africa manufacturers also gain challenges including the small national economy, currency volatility, limited access to finance and political unrest as well as banking services.
According to Walid Cherif, the managing director of BluePeak of Private Capital, the issues can be overcome obviously if you have a long-term view and if you are differentiated. He added, there are many chances available in the world, giving allowance to many great businesses to grow. Make sure you put the tools in them and provide them with a lot of support and assistance so you can definitely help them to strongly grow businesses.
Climate change is another major interference. It is expected that Sub-Saharan Africa to suffer disproportionately from extreme weather events like drought and floods. This is quite disrupted to businesses especially those in the agricultural sector.
Some investors have started to set climate goals.
Clarisa De Franco is the managing director of British International Investment. Last year, her manufacture set a goal to have 30% of their investment devoted toward the addressing climate change.
De Franco pointed out that they would have to own the specific mandate of addressing climate from an adaptation, resilience or mitigation viewpoint. The way to achieve the goal is not only from view point but also from a new commitment. That is something needed to explore a bit more.
Potential investment might include the plantation sectors and renewable energy. De Franco added. And, the AFCA conference keep on having meeting in Dakar on Friday.