Despite being the centre of world attention for its fast-paced economic progress and burgeoning business opportunities, investments in Africa still remain relatively low. This has got both African political and business leaders and other leaders interested in Africa trying to boost investor participation in the one billion strong emerging continent.
Paul Sinclair, the Event Director of The Global African Investment Summit, in this exclusive interview with Ventures Africa, tells of the amazing opportunities of investing Africa as well as the continent’s business stumbling blocks.
Ventures Africa (VA): Despite a well chanted gospel of Africa’s economic progress, the continent still isn’t attracting as much investments as it needs. Why is this so?
Paul Sinclair (PS): From our perspective the desire to invest in Africa is definitely there from investors all over the world. The narrative of Africa rising has been said and both investors and project owners (Public and Private sector) in Africa are ready to partner.
The issue I am seeing is that there is a distinct void between how European investors view a bankable project and how African project owners view the attractiveness of an investment. The world’s economies are becoming very competitive and I am seeing an investors market. The world isn’t awash with well-structured projects and for Africa to compete and see more investment and transactions we as a continent need to develop far more attractive investment conditions to ensure Foreign Direct Investors place funds across the continent.
In short the funds are there, the interest in Africa is there but the environment is not breeding confidence in investors. However, the investors who are already present on the continent are more positive than ever about the continent’s prospects yet those who are not are far less enthusiastic. I am constantly encouraged by the conversations I am having with governments who are showing a willingness to develop favourable investment environments. Uganda, Ghana, Tanzania and Rwanda are all featuring in The Global Africa Investment Summit based on the fact the governments are aggressively reforming the approach for the public and private sector to develop an economy that is more competitive than other nations as an investment destination.
VA: Are governments of African nations considered promoters or hinders of investment inflow?
PS: Africa rose for a very specific reason! African political stability and increased governance have become much better which is a key contributor to the interest investors place in any given economy. Not only did investors see a considerable improvement on political risk they also saw governments begin to create much more investor friendly frameworks and economies.
The environment international companies are asked to work and trade are a fair reflection to the work the governments have made in terms of developing global investment flow. We are seeing African governments becoming far more progressive and far more in tune to the needs of global investors. A key element of the Global African Investment Summit is to reinforce the message that Investors should begin to work in Africa rather than look at Africa based on the huge work that governments have done to develop investor friendly environments and bankable projects.
VA: What major policies do African governments need to focus on to boost foreign investments?
PS: I think the governments are showing a huge commitment to international investors. I think the frameworks and policies have been developed to create some of the most compelling investment destinations in the world. The hunger to develop ties with international investors has seen Uganda, Ghana, Tanzania, Nigeria, Rwanda and many more countries develop a fascinating opportunity for the world to do business safely, protected and with unprecedented returns. The question is how we become a global investment village with basic standardization when it comes to how projects are presented and packaged. If we all spoke the same language in terms of investment the policies would enhance the attractive nature of the deal.
It is my belief that once Africa, North America, Asia and the Middle East all work to a common understanding of what constitutes a well packaged and structured deal I think Africa’s growth will fly.
This is where I feel the Business Service sector can really develop new business and support with Africa`s growth. Project owners and governments need to invest in solid business service and advisory firms to put together products and projects that are deemed attractive to FDI. With the focus of the Global African Investment Summit focusing on transaction the business service and advisory community should be driving conversation and deals at the summit in 2014 supporting project owners and investors seek the correct balance and deal.
VA: There have been discussions about the need for stronger regional integration. Do you think Africa can replicate an EU model?
PS: One Billion Strong people in Africa says a story in itself. I had an interesting meeting in Nigeria only last week where a discussion took place regarding the size, scale and GDP of Nigeria alone. If Africa could capitalise on Value Addition and develop regional and domestic markets we as a continent would be in a very good place.
The East African Community is a good example of where regional integration is benefitting both businesses in the market and the consumer. The consumer markets in Africa are booming, the middle income status of many countries is either there or close. The continent needs to capitalise on the manufacturing and secondary sector as there is a true market in Africa itself.
VA: Nigeria, Africa’s largest economy is said to trade more with foreign countries than its West African neighbours. Is this a reflection of the continent’s present challenge?
PS: I don’t think anyone is in any doubt regarding the potential of a growing African Middle class and the scale of continents 1billion plus population. The affluent nature of Africa`s up and coming middle class indicates a huge need for Africa to begin harnessing its own wealth. I believe if we drive as much emphasis into value addition and not export we can develop a strong inter regional play that sees SME and mid-scale companies flourish.
VA: Where do you see trade and investment landscape in the next half-decade?
PS: Well in the next 5 years Africa will continue to grow and develop, that is almost a given. The question is at what rate and how can we merge the goals, ambitions and expectations of multiple economies, cultures, business styles and markets into a more cohesive understanding of what each other’s expectations are in brokering deals. Once this is understood I see few boundaries for deals to be done and investment landscapes that shout clearer opportunity.
The Global African Investment Summit, which Paul Sinclair represents, is a platform that provides a unique opportunity for companies to improve their brand awareness, better understand bankable projects to date, network with end investors, and secure more market share in some of the most exciting economies and markets in Africa.