Onshore 2 Offshore

* Venture capitalists discover Africa’s ‘virginity’







An army of over 300 fired up equity investors who are hungry for opportunities have hailed Africa as an ‘old virgin’ ready to be taken and have found Botswana a vital part of that virgin. This became clear at the two day annual Africa Venture Capital Association held in Gaborone from Monday. The venture capitalists were however at ease admitting that they tend to have ignored the opportunities that Africa presents.

Former Head of Strategy and Development at Africa Banking Corporation (ABC) Peter Hinton who now heads his own company hailed Africa’s prospects for investor opportunities.

“Sub Saharan Africa is at the tipping point of urbanization and industrialization,” said Hinton, who heads his British based Peter Hinton Group. “The growth of banking assets in African countries exceeds their gross domestic products,” said Hinton also a member of the Botswana International Financial Service Centre (BIFSC).
The conference concurred that only venture capitalists with a foothold on the continent would be poised to reap higher returns on capital.

Africa Managing Director of Switzerland Equity Fund Managers - SIFEM, cited institutional reforms undertaken by African countries and investor friendly government policies as some of the factors that make the continent more attractive. “Our Fund was set up by the government and has over US$300 billion, registering an yearly increase of 20 per cent,” said the SIFEM Managing Director, Claude Barras while expressing his company’s appetite to invest in Africa.

He said they began spreading their investment in the emerging markets-which currently accounts for a paltry 26 percent of their total investment portfolio investments- in 1999 and that includes Africa. Stressing the importance of investors finding their grip on the continent, he said while opportunities are visible in Africa, it is imperative to identify partners to work with. “We believe that we should have locals in any country who can help us identify opportunities,” said Barras.

The Director of Private Equity at FMO, Yvonne Bakkum, highlighted a grey area for equity investors eying Africa. She said outside investors should take local fund managers on board when arriving in a country. This, she said, is a sureway to avoid being labelled “parachuting investors.”

Yet another venture capitalist, Navaid Burney of Emerging Capital Partners said Africa’s strength lies in part on telecommunications, agriculture, transport, media and natural resources. He said the consistent rise in the number of entrepreneurs has also added to opportunities for venture capitalists whom he said count as their strength, ability to enter in even higher risky areas.

However the raving that Africa received, it was apparent too that the 53 nations continent has a long way to go to make sense to equity investors in the developed economies, including Asia’s aggressively rising economic giant - China. China Wang Qi, Managing Director of Development Partners in Hong Kong, revealed that while there is a lot of noise about China being out to invade Africa, the continent does not even fall within the top 10 of the Asian giant’s trading partners.

But Q, who went on to reveal that Botswana stands at position 37 of the list of African countries that China trades with, said his country, especially his company, is eager to invest in the continent. Jennifer Choi, the Director of Research at the Emerging Markets Private Equity Association (EMPEA) added salt to injury when she pointed out that even in developed economies, including USA where she is based, Africa is not a popular name.

She said the greatest disadvantage of Africa is that information about the continent is scare. “If you are struggling to get investors from Europe and America down here, you should know that they are also equally struggling to get information about your countries,” she said. She called on venture capitalists to find a way to make information about their companies and countries accessible to investors worldwide.

But before they left on Tuesday, the venture capitalists heard from Alan Boshwaen, the IFSC’s chief executive how attractive Botswana stands for wooers. He said the country has the second largest pension funds industry by value in sub Saharan Africa at P34, 3 billion; an annual Gross Domestic Product growth of 6,2 per cent and that in the previous financial year, foreign reserves have grown by US$2.3 billion to stand at US$10.2 billion – representing a 28 months cover of imports.

“We call on you to consider Botswana as a domicile for Pan African Investment Funds,” said the man whose singular quest is to mark Botswana as a financial hub.