Great reads on investing in Africa
Africa’s Tourism Set to Boost Economic Growth, Create New Jobs, and Now Outpace Other Regions for New Tourism Investment
Worldbank
Sub Saharan Africa’s tourism industry is set to spur more economic growth for the continent and directly employ 6.7 million people by 2021, according to a new World Bank report released earlier.
The report—Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihoods—says that tourism accounted directly or indirectly for one in every 20 jobs in Sub Saharan Africa in 2011, and is one of the few industries on the continent in which women are well represented as employees and managers. Sub Saharan Africa is outpacing other regions in tourism growth.
The report cites successful examples of countries including Cape Verde, Kenya, Mauritius, Namibia, Rwanda, South Africa, Tanzania and others, who have simplified their tourism policies, liberalized air transport and diversified tourism while protecting their communities and environments, which created a positive investment climate for tourism development.
Tourism is increasingly attracting regional and international investment, and returns on investments in the sector remain among the highest in the world. Global hotel chains are expanding across Africa, recognizing investment potential and committing millions of dollars in new projects over the next few years to meet increased demand from both international tourists and the continent’s own fast-growing middle class.
If developed effectively and managed efficiently over time, tourism has the potential to accelerate Africa’s economic growth and job creation. It can also help accelerate the reforms needed to improve airline and road transport as well as other key infrastructure, besides raising the incomes of young men and women, who form a high percentage of the job holders in the sector.
This report is the first to comprehensively examine tourism in Sub-Saharan Africa at a regional level and to recommend practical evidence-based measures that could create an economic transformation by leveraging the tourism industry to help create jobs, stem poverty and diversify economies.
Read the full article here.
The Landscape for Impact Investing in East Africa
GIIN
The Global Impact Investing Network (GIIN), in partnership with Open Capital Advisors, published the full release of The Landscape for Impact Investing in East Africa, a “state of the market” analysis of the impact investing industry in the region. The most comprehensive study of impact investment activity in East Africa to date, the full report includes detailed chapters for five countries—Kenya, Uganda, Tanzania, Ethiopia, and Rwanda—plus chapters on six additional countries in the region.
The report analyzes an active impact investing market across East Africa. Development finance institutions (DFIs) are a significant player in the market, having deployed nearly $8 billion in impact capital to date. However, many other types of investors—including VC/PE funds, foundations, family offices, commercial banks, and angel investor networks—are increasingly active, with these non-DFI impact investors having deployed over $1.4 billion to date in the region through more than 550 deals.
Read the full report here.
A sub-Saharan scramble
The Economist
Private-equity investors are getting hot for Africa. Businesses there need all the capital on offer, and more.
When Paul Kavuma began approaching private companies in Africa a decade ago to suggest investing in their businesses and improving the way they were run, he was often shown the door. “They were offended, asking if I thought they were broke,” says the founder of Catalyst Principal Partners, an east Africa-focused fund manager. Even when, after hours of explaining the merits of private equity, Mr Kavuma changed business owners’ minds, many still struggled with the idea that within a few years he would sell the stake he had bought. “When we exited, some people thought we had lost confidence in them, rather than that we’d finished what we’d come to do,” he says.
Today, much has changed. African entrepreneurs now boast about being approached by one of the many private-equity investors scouring the continent for opportunities. And it is the financiers, or at least those from beyond Africa, who are having to adapt. Money managers on Wall Street and in the City of London are taking crash courses in Swahili and learning to find Ouagadougou on a map.
A decade ago, African countries were among the beneficiaries of a broader boom in investment in emerging markets worldwide. The financial crisis of 2007-08 put paid to that. Now, many private-equity funds are making Africa a primary target, and record amounts are being raised to invest in businesses there (see chart 1). On January 12th Helios Partners, a London-based firm, said it had raised the first Africa fund worth more than $1 billion. Abraaj, a rival, is expected to follow suit soon.
In some respects it is no surprise that Africa has become such a popular destination for business investment. It certainly needs more capital—an extra $90 billion a year for infrastructure alone, the World Bank reckons. Consumer demand is growing, and industries are being liberalized. A few years ago people would ask “Why the hell are you in Africa?” says Robert van Zwieten of EMPEA, an industry body. Now they ask “Why the hell aren’t you?”
Read the full article on here.
Africa’s Macroeconomic Prospects
African Economic Outlook
This chapter looks at macroeconomic conditions in the different regions and countries of Africa, as well as in the continent as a whole. It highlights how weaker oil and commodity prices, uncertain global conditions and domestic political uncertainties are affecting many African economies and explores how their governments are responding to these challenges. It examines Africa’s recent economic growth and prospects for 2016 and 2017 and important driving forces on the demand and the supply side, as well as headwinds from adverse developments in terms of trade, which also affect fiscal positions and current accounts.
Africa achieved impressive economic growth over the past 15 years with the average gross real domestic product (GDP) rising from just above 2% during the 1980-90s to above 5% in 2001-14. In the past two years, growth has been more moderate; this trend is expected to continue in 2016, but strengthen in 2017. Africa’s growth is adversely affected by headwinds from weaknesses in the global economy and price falls of key commodities, but is supported by domestic demand, improved supply conditions, prudent macroeconomic management and favourable external financial flows. The AEO forecast assumes a gradual strengthening of the world economy and the slow recovery of commodity prices. However, given the fragile state of economic recovery and the high volatility of commodity prices this forecast is uncertain.
Growth remained highest in East Africa, followed by West Africa and Central Africa, and is lowest in Southern Africa and North Africa. Assuming gradual improvement in international and domestic conditions, growth is projected to accelerate in all regions in 2016/17. In West Africa, the Ebola epidemic has abated with Guinea, Liberia and Sierra Leone recovering gradually. Monetary policy stances diverged as countries faced different inflationary and currency pressures.
Monetary policy tightened in countries where current accounts and exchange rates came under pressure and imported inflation increased, however some countries reduced interest rates as inflation declined due to lower energy and food prices. As fiscal pressures intensified governments generally followed prudent fiscal policies. Measures were taken to limit spending and broaden the revenue base.
Download the full report here.