Africa is rising as a destination for investment, and it’s one of the priority regions that we are targeting at FinDev Canada.
With this in mind, we attended the Africa Investment Forum last November and witnessed a gathering of heads of state, heads of financial institutions, institutional investors, business leaders and more.
The AIF was a result-oriented event, focused on driving deals, investments and commitments. The result was indeed achieved: the Forum’s preliminary numbers account for 45 deals worth over US$32 billion securing investment interest.
FinDev Canada had the opportunity to sign a Memorandum of Understanding with the African Development Bank to further collaborate towards the achievement of the Sustainable Development Goals. Our team also conducted over 40 individual meetings with potential investees and partners.
These are some highlights of the presentations we attended:
The Inhibiting Effects of Africa’s Energy Deficit
Power generation in Africa has advanced considerably, but with deficits in transmission and distribution, Africa’s potential for development has not been fulfilled.
“Africa can’t develop in the dark” said Dr Akinwumi A. Adesina, president of the African Development Bank, summarizing how the lack of proper infrastructure and reliable power constrain development. This is precisely an area well suited for private sector solutions.
The AfDB’s Desert to Power initiative proposes to harness solar power to supply the Sahel with affordable, clean power. Others are looking into more efficient distribution via cross-border power sharing arrangements.
Blended finance as a tool to de-risk ventures in fragile states
The Africa Investment Forum served as a vehicle to discuss many topics, including blended finance. Different sessions highlighted both the p and limitations of blended finance.
One of the events we attended was a mixed panel with the African Guarantee Fund, Convergence, Allianz, KfW, the AfDB and the SIDA Guarantee Corp.
Among the key takeaways, the panelists pointed out how blended finance can help leverage commercial capital, grow the private sector and mitigate the perception of risk. Nonetheless, they caution against the use of blended finance as “a cheap source of capital.” Instead, they see it as a structuring tool that needs to work purely on a commercial basis.
Blended finance can be particularly useful in de-risking ventures in fragile states, but works best where an enabling policy and investment environment exist.
Africa: perception vs. reality
Barriers to investment in Africa have more to do with the global perception of the region than with the actual reality of conducting business in the continent.
This point was made time and time again in the Forum, particularly in a panel with Acha Leke, from McKinsey Africa, where the report Africa’s overlooked business revolution was presented.
The document highlights common misconceptions that range from the actual size of the continent compared to other regions; to the number of African companies that earn revenues over a billion dollars. Most surveyed participants guessed there were around 50, when in fact there are 400 such companies in the region.
The Africa Investment Forum left everyone with an optimistic sense about Africa’s prospects, with millions of dollars committed in investment projects in the region and projects moved forward as a result of the Forum.
For FinDev Canada, the Africa Investment Forum was a great opportunity to consolidate partnerships and further explore the dynamic and innovative entrepreneurship opportunities flourishing in the region.
Still, the global perception gap about Africa needs to be closed in order to attract more investment to the continent. How has your perception of Africa changed in the past years? Share your comments on social media using the hashtag #FinDevCanada.