Table of Contents
- The story of investment in Africa
- Africa in markets
- How do Africa’s regions compare?
- Africa’s links to the globe
- Infrastructure development in Africa
- Africa’s institutional investors
- Pension funds and social security in Africa
- Insurance assets under management (AUM) in Africa
- Development finance institutions (DFIs) in Africa
- Africa’s listed equity
- African stock exchanges
- Investability of Africa’s listed markets
- Africa’s private equity (PE) markets
- Private equity fundraising over time
- Africa’s PE geographic focus
- Africa’s PE sector focus
- M&A activity in Africa
- Listed EV/EBITDA multiples
- Private equity multiples in Africa
Read the full report below.
Africa’s investors have become markedly more sophisticated in recent years. They understand that the continent is one of the world’s fastest-growing regions and that populations are young and urbanizing. They also understand that Africa is rapidly adopting technology, is increasingly connected, and is playing catch-up to the rest of the world in terms of living standards.
Investors looking at Africa today want to understand this exciting continent in more detail. They want to look past the headline GDP numbers, and understand what is really happening in the countries and regions within the continent, and how they interact with the rest of the world.
The stage of economic development, the reliance on commodities, and the state of physical infrastructure also play an important role, as does understanding the state of local investment, the depth of markets, and how market dynamics are affecting company valuations. Lastly, Africa’s investors want to know the most effective ways to harness Africa’s growth.
This report, the third edition of Bright Africa, seeks to answer some of these questions by providing insight into the drivers, enablers and managers of investment on the continent. The report explores the status of local pools of capital as a major driver of Africa investment, and finds that African pension fund capital has reached $330bn and is growing rapidly. Increasing adoption of insurance is causing insurance company investment portfolios to grow, and are now estimated to be around $270bn. The creation of these local pools of capital, and the advent of intra-African investment, means that Africa is now one of its own key investors.
In Bright Africa the continent has been divided into nine meaningful investment regions, taking into account culture, geography, language and historic trade links. We show key economic metrics for each of these regions, analyse the export and import makeup, and highlight Africa’s key trade partners around the globe. The report further analyses the state of infrastructure, a key enabler of growth, and benchmarks Africa’s road, rail and electricity against other parts of the world. The report demonstrates that the makeup of GDP is quite different to the makeup of exports, highlighting that trade links with former colonial powers remain largely intact and that China has become a major African trade partner.
It is important to recognise that Africa is not a single investment destination with a single set of standardised risk factors and homogenous potential for reward. Although some high-level similarities are evident, as one digs down into the specifics of certain regions and countries, it becomes clear that Africa is comprised of a range of distinct investment destinations; each with its own attractions, flaws, cultural differences and business practices. Investors looking at Africa for the first time may begin by identifying the largest economies by GDP or the largest cities by population. While it is certainly useful to explore country- and city-level detail, it may be more pertinent to start at a regional level by identifying groups of countries with similarities. By assessing Africa at a regional level, one can get a better understanding of the strengths and weaknesses of an investment destination by not only analysing the characteristics of the country of interest, but also the support that it receives from its regional partners. It also allows investors to identify the long-term potential of an investment by better understanding the potential growth areas into neighbouring countries. RisCura has identified these meaningful markets by analysing cultural connections, interconnectivity through trade blocs, sharing of expertise, good business relations, and relative ease of transportation, among others. These regions are displayed in the adjacent map, and table below.