A different approach to PE in Africa
Small is beautiful
Kofi’s central argument was that PE firms in Africa might need to tweak their investment models. He believes that too much money is flowing into too few sectors. As an example, Kofi says that as much as 50% of PE investment in Africa goes into the energy sector, oil and gas and related industries. These tend to be mature businesses that have already established themselves.
Early stage investment
But what about the smaller and medium sized African companies in sectors like health, education and entertainment? Companies that serve a clear consumer need. Investments in small companies operating in these sectors are more likely to have a direct and positive impact on local communities than big one-off investments in mature industries like oil and gas. And it is a profitable strategy too. Investing in businesses at an earlier stage will, over the long term, creating much bigger uplift in returns. In the words of Kofi:
“More time needs to be spent growing businesses and creating giants.”
Mobilise local savings
Kofi also talked about the sources of investment too. He argued that the best way to benefit African communities in the long term was to mobilise domestic savings. Garner money from local sources and use it fund investment vehicles that support local SMEs.
Are Governments holding back business?
However, the greatest challenge to the growth of African domestic business is the macro-economic backdrop. African governments hold far too much debt. And burdensome budget deficits tend to be funded by yet more borrowing. It might be ok if government spending was channelled towards investments that promoted economic growth. But it doesn’t seem to be. The only real impact of all this borrowing is higher interest rates, which are bad for business.
So maybe governments should ‘step out the way’ and borrow less, so the continent can attract the capital it needs. Capital that can then be directed towards investments in businesses that innovate and promote inclusive and sustained economic growth.
I’m really looking forward to discussing these issues, and more, at our panel next week. I hope to see you there!
Rosalind Kainyah, MBE, Founder and Managing Director
What we are up to & News
Joël Rault joins Kina’s Advisory Board
We are thrilled to have Joël Rault, Chairman and Founder of Hermès Advisory, join our Advisory Board. Joël has previously served as an Ambassador Extraordinary and Plenipotentiary for the Government of France and has extensive experience in administration and the management of private companies. He is also an emerging leader of the Harvard Kennedy School. We are looking forward to having his advice and guidance as we forge ahead with advising companies operating in Africa on Sustainability. For our full press release, ‘click here’
Invest Africa Ltd’s Webinar On Renewable Energy Solutions in Africa
Join our Managing Director, Rosalind Kainyah MBE, as she moderates Invest Africa’s webinar on Renewable Energy Solutions in Africa – Covid19, Sustainability & the future of the continent with Jennifer Boca of Lekela Power, Mansoor Hamayun of BBOXX and Scott Mackin of Denham Capital. They will be looking at whether investment bodies will have to pivot away from renewable energy assets in light of COVID-19; how renewable energy operations have been affected by the virus; the multilateral funds such as AfDB’s SEFA play in renewable energy developments across Africa; and the importance funds should place on ESG standards in the investment decision?
Date: Wednesday 6 May 2020. Time: 12:00-13:00 BST
Kina Advisory is proud to be an event partner of DLA Piper – Africa Week 2019
On the 28th November, Kina Advisory is proud to be an event partner of DLA Piper – Africa Week 2019. The theme for the day is“Africa: the future of trade and investment” and will be facilitated by Lanre A. editor of Nurmara and former editor of This Is Africa at the Financial Times and African Business. Our MD Rosalind Kainyah MBE will be moderating a session in the afternoon on: “Developing sustainable energy and natural resource projects: Implementing ESG in practice” | The panel will be made up of Jack Cunningham – Sustainability, Policy & Risk Director, Gemfields, Rhys Davies – Partner, DLA Piper, Chris Goodwin-Hudson – Founder, Watchman & Carla McRoberts – Managing Director, Veracity Worldwide | For a full breakdown of the day click here:
Rosalind Kainyah MBE will be chairing the 5th Africa Oil Governance Summit
Rosalind Kainyah MBE will be chairing the 5th Africa Oil Governance Summit on the 22nd & 23rd October 2019 & facilitating the 1st panel on “Value addition to petroleum resources extraction through industrialization: The possibilities and the challenges”. For a full break down of speaker & agenda, click here.
Africa | Attracting a New Wave of Investors
Rosalind Kainyah our Managing Director will be moderating a panel discussion for Invest Africa & DLA Piper on Wednesday 25th Sept 2019. The Topic: Attracting a New Wave of Investors: Corporate Governance and Meeting International Standards | For the full details of who’s on the panel and focus points, click here.