Africa debate: Africa’s future is within reach


Elliot Wilson
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For investors, the continent is not the high-debt, high-distress place it was a decade ago. It has come a long way in a short time. Now it is 54 countries that are generally fast growing and with single-digit inflation.

Africa debate: Participants


• Africa should be the top investment priority of all emerging markets
• But for it to become a sustainable investment destination, countries and companies will need to get to grips with second generation reforms, modernize and become more transparent

• A lack of physical and electronic infrastructure will remain a hindrance to development but can also offer valuable investment opportunities

• Regional banks are underleveraged compared with their EM peers, so there are big opportunities in the financial sector

• Nigeria is driving the continent’s growth and will eclipse South Africa in the long term

Elliot Wilson, Euromoney
Where is the potential in Africa’s investment story right now, and where are the bottlenecks?

RH, Invest Africa It’s always better to invest where there’s a rising tide. The rising tide is in Africa and will be for the next 10 years. When you look at the emerging markets, Africa should be your top priority. But remember Africa is 54 countries, so as an investor you have to make a conscious decision where you want to invest. For me, the great locomotive for growth is Nigeria. South Africa remains an important country, even though it will be eclipsed by Nigeria’s economy in the long term. With the so-called secondary countries, we like Ethiopia, which should gradually open its borders to foreign direct investment. Ghana’s issues are temporary; the country generally has decent management and governance. We also like Senegal, Côte d’Ivoire and Zambia. And another country with huge upside is the Democratic Republic of the Congo (DRC), not just because of the population, but because of shining political lights like the country’s prime minister, Augustin Ponyo. Then further along the line you have Mozambique and Kenya, where the oil and gas finds in the northern provinces will drive their economies for decades.

VK, Nedbank Most African countries are still in the catch-up phase. Almost all are addressing infrastructure-deficit problems and have increased their share of public investment to GDP. But for Africa to become a sustainable investment destination, countries need to get to grips with second-generation reforms enabling them to modernize and extricate themselves from poverty. I’m bullish about the East African Community (EAC), whose integrated approach to cross-border infrastructure, opening-up of labour markets and removal of non-tariff barriers are advantages. One cannot ignore Nigeria, but I feel it could be doing more – reforms have stalled and that is a pity. Ghana, unless it gets to grips with its fiscal problems, will keep running on the spot. Mozambique can’t be ignored because of huge new gas finds. Gabon, Angola and the DRC are using surpluses to build infrastructure. The laggards are Malawi, Swaziland and war-torn nations such as South Sudan and the Central African Republic.

Euromoney Paul-Harry, are you an east Africa or west Africa advocate?

PHA, Ecobank I’m a pan-Africa believer. Ten years ago, investing in Africa was a risky bet. Today, not considering Africa as an investment destination is equally risky. The vast majority of African countries will see substantial growth in the future. In the shorter term, you still need to be extremely cautious and there are three factors to keep an eye on. The first is an economy’s resilience to economic shocks. Second, you must ensure that economic growth in a particular country is above the African average, so north of 5%. Finally, currency risk: is it increasing or is it diminishing? In the shorter term, Ethiopia, Mozambique and Côte d’Ivoire fit those factors, plus we also like Nigeria and Uganda. In terms of sectors to invest in, we see consumer-facing sectors outperforming, so you need to look at banking, real estate, which will be a real game-changer, and the retail market.

FA, Silk Invest East Africa is a very interesting region, where the digital revolution happening in countries such as Kenya and Rwanda is transforming the region with the use of mobile technology. With regard to sectors, agriculture remains a key growth driver. Another sector is tourism, which hasn’t been properly tapped. Southern and eastern African countries have led the charge, while western Africa has been slow to build up this sector. In terms of challenges, we believe there is an urgent need for infrastructure and finance to help foster economic growth. An average company in Nigeria has to contend with intermittent power supply and poor road infrastructure, which increase the cost of doing business.

BB, Chapel Hill Denham If Africa isn’t part of an investor’s outlook or strategy within the next five to 10 years, they would be making a very big mistake. The country that underpins Africa’s growth story remains very much Nigeria. In the next five to seven years, investors will come to view Nigeria’s importance to Africa in the same way they currently view China’s importance to Asia. The rebasing of Nigeria’s GDP, moving the base year from 1980, will demonstrate that it is Africa’s largest economy, and probably by as much as 30% to 35% larger than South Africa. If you then add in the fact that 50% to 60% of economic activity in Nigeria remains informal and unmeasured, you’re potentially looking at a top-20 global economy. One key reform that has the ability to transform Nigeria’s potential into a compelling reality is the power-privatization programme, which is the most ambitious the world has ever seen. Ten new plants built just under a decade ago are about to be privatized, well before the third quarter of 2014. Just that transition alone will attract much-needed investment capital to power and take generated capacity from 3,600MW to over 12,000MW by 2018. You will find that a hamstrung Nigeria with annual growth of 6.5% will begin to grow at 8% to 10%.

Euromoney Stuart, you sit outside the process to an extent. Do you see the Africa investment story as ‘Nigeria-plus’ or do you see a more diversified picture?

SC, Exotix Many outside investors view Africa as ‘just Nigeria’ because of its size and liquidity. But Africa is much more than that. Opportunities are twofold. First, growth, which should remain high because of convergence and catch-up. Look at IMF forecasts. There are around 20 realistically investable countries tipped to grow at more than 6% this year, around two-thirds of which are in sub-Saharan Africa. Second, investable assets. The region also has a full complement of capital market instruments. We have equity markets across a lot of the region, varying of course in size and liquidity. You have sovereign Eurobonds issued across the region, now from 13 issuers, which many investors look at first. And you have local-currency markets, which are developing fast. In terms of challenges, I see four main ones. Many investors see Africa as both expensive in terms of bond yields and price-to-earnings ratios and illiquid. Second, policy complacency – if you look around the region there are signs of this, notably in Ghana, as well as Kenya and Zambia. The third challenge is power. Shortages are a key constraint on potential growth; the ability to grow by high double-digit rates over the next 10 years is going to be constrained by power. Finally, poor public relations – the region suffers a bad image, which isn’t helped by western media. But policymakers themselves could be better at investor relations. If you ask them for a meeting, they don’t reply, don’t show up, leave you hanging, postpone at the last minute. This is stuff that is very easily fixed.

AD, Ecobank Themes for foreign investors are respect for the rule of law and contract rights, which are key for both foreign direct investors and portfolio investors – you’re giving custody rights for your securities to local partners, so if that relationship goes sour can you get those funds back? And a free media: we’ve seen countries like Ethiopia grow strongly, but a more vibrant media would help underpin growth. Kenya by contrast has a very free and open press, able to critique government policy. And allied to this is the move from a closed to a more open society, which is part of the vital shift of moving from Africa being a provider of raw materials to adding value. Look at Ghana: it has had gold mining and timber exports for centuries, but it now exports cocoa and oil, so it’s adding new strings to its bow. If Nigeria could do something similar, that could pay serious dividends to investors.

Euromoney Where is intra-regional trade strongest and weakest? Are there good examples of trade working well across borders within the region?

AD, Ecobank The Sacu [Southern African Customs Union] region [covering much of southern Africa] has currency convergence based on a single monetary policy, which has helped promote regional trade. The EAC is aiming to reduce tariff barriers and looking to create a common currency. In essence, it all comes back to the same problem, which is that if you have a giant in the group – Kenya in the EAC, South Africa in Sacu, Nigeria in Ecowas [the Economic Community of West African States] – it’s going to dominate that region and dominate policy.

VK, Nedbank Deregulation of trade is taking place, and tariffs are being reduced slowly but surely, but the real problem area is the non-tariff barriers – the processes at the customs areas, the poor roads between countries. In eastern Africa they have recognized the need to address non-tariff barriers.

RH, Invest Africa It’s not just about goods but also people. I can travel with my British passport more efficiently across the region than my African brothers. Flying around Africa is extremely difficult. There are artificial barriers, particularly with the aviation industry and the tight hold national carriers have on the sector. I’ve been following the story of FastJet, struggling to create the first multi-country low-cost carrier in Africa; against all the odds, it’s starting to work. They’ve flown successfully within Tanzania, and all the things you expect about Africa – people turning up late, bringing way too much luggage, not booking online – they have overcome. If you book a month in advance, you can fly from A to B for $20. If you buy a ticket on the day, you pay $200, and this thinking is starting to sink in. There is a huge revolution that could take place in Africa that could benefit regional integration, primarily by flying humans from A to B.

FA, Silk Invest Within Ecowas, we see stronger trade ties between anglophone Nigeria and Ghana than with francophone Côte d’Ivoire or Senegal. In southern Africa a different dynamic prevails, where a big player – South Africa – is responsible for a substantial portion of the regional trade. Growth is potentially hampered by the lack of willingness of leadership to harmonize policy and infrastructure planning to foster more cross-border trade. Road and rail networks need to be developed as well as flights connecting various African cities; it’s not enough to just have free-trade zones. Kenya, for example, has not built any new rail lines since independence, and the story is similar in the rest of Africa.

BB, Chapel Hill Denham If you get on a flight to go from, say, Lagos, Nigeria, to Dakar, Senegal, the plane will be full of Nigerians and other traders. They will have 10 bags instead of the usual one or two, full of goods they’ll sell, and then bring back other goods to sell at home – fabrics and so on. There aren’t many goods people are interested in on a pan-regional basis because Africa is really 54 diverse countries. We expect this to develop further over time as barriers are removed. The African businesses that are strong enough and able to trade regionally and globally are in the minority. There are very few well-developed regional and global businesses like [the Nigeria-based conglomerate] Dangote Group.

Euromoney What can we learn from the way that Dangote has done such a successful job of expansion across the region?

BB, Chapel Hill Denham Dangote provides a useful example of using a very large market as a hub to generate substantial cashflows and to build up your expertise and capacity, before chasing opportunities across other African markets. The whole Dangote story is founded on 19 million tonnes of cement capacity in Nigeria. Dangote announced two months ago a N9 billion ($55 million) investment in petrochemicals, and what was interesting with that financing was that nearly 90% of it was done by Nigerian banks or by foreign banks operating in Nigeria. The key story for me there is that if you are successful in a large market, you have the ability and capacity to take that beyond borders.

RH, Invest Africa It’s early days to learn from the Dangote Group as it is such a unique story. There are some fantastic South African companies that haven’t ventured north. But it’s coming. Over the next 10 years you’ll see pan-regional African companies developing.

VK, Nedbank There’s a need to guard against complacency. The one company I am thinking of is the South African retail chain Shoprite, which expanded earlier in southern and eastern Africa and is now in west Africa as well. But in east Africa, the Kenyan retailer, Nakumatt, has usurped Shoprite. Tuskys, which aims at the lower end of the retail segment, has also benefited from Shoprite’s complacency.

BB, Chapel Hill Denham The biggest retailers in Nigeria aren’t necessarily Shoprite – which has done very well since it launched in the country – but Indian and Lebanese-owned companies, such as Park ‘n’ Shop. They operate out of typically smaller shops, are very knowledgeable about local markets, and are doing well enough to be entrusted with the Spar brand in Nigeria. Many of our largest and very well run companies are privately held and as such unknown to international investors.

AD, Ecobank This creates an entry into the whole private equity business, as PE interest in that whole middle-Africa market is very strong, and if they can invest in and partner in some of these growing corporates, there’s a great opportunity to move these firms forward to the next level.

PHA, Ecobank There are two key issues that need to be addressed if we want to promote intra-African trade and investment. First, payments and transfers, in terms of being able to do this across countries, which is still a big issue facing Africa. If you are based in Ghana and have a customer in Côte d’Ivoire you often need to go through a western bank. Secondly, cross-border financing opportunities remain limited. It’s still hard for a Nigerian firm, say, to buy an asset in Ghana using a Nigerian bank to finance the deal. Usually, you have to use a local Ghanaian bank. You have pools of capital in South Africa or Nigeria, but being able to acquire an asset outside those countries is still a challenge in terms of financing.

VK, Nedbank Policy support also helps cross-border expansion. East Africa has harmonized regulations in the financial sector and implemented an integrated payment system. Eleven Kenyan banks have branches and subsidiaries in other EAC-area countries. Regional expansion is the way Kenyan banks believe that they can remain competitive. Across western Africa, Ecowas doesn’t seem to have the commitment to do this.

Euromoney What are investors looking for in the region – is it a drive for greater corporate governance and transparency?

RH, Invest Africa The growth of capital markets, which requires transparency and governance, is certainly encouraging companies looking for listings to get their act together. Younger, well-educated politicians are looking for investment and capitalism, and are looking for successful entrepreneurs. Even the old crocodiles within governments, who have been in place for 20, 30 years, are being swayed. Africans are fundamentally capitalists, business people and traders, a culture that will be transferable to capital markets.

PHA, Ecobank Let’s return to the misperceptions of Africa. EY carried out an investor survey on Africa some years back in which more than half said the biggest challenge to investing in the region was political stability. However, you should really compare Africa’s stability with other emerging markets. If you use all available sources, including multilaterals, you see that the risk profiles are similar to those of Brazil, Russia, India, China and South Africa, which are the top-five emerging markets.

SC, Exotix Is Nigeria ready to move from a PDP [the dominant People’s Democratic Party] government to something else?

BB, Chapel Hill Denham Until the opposition in any country including Nigeria can win an election, you don’t truly have a well-developed democracy. If things change in the 2015 election, I don’t think investors will be that concerned. There is very little ideological difference between the PDP and the opposition APC. Domestic and international investors who really know Nigeria are getting on with business and investment commitments. No one is sitting on the sidelines waiting to know who will be president as it does not matter.

PHA, Ecobank What is critical is ensuring that every administration in the region is pro-business. Most of them now have that transformative, pro-business agenda. One of the main reasons that we have this in Africa today is that, within the system, you have people with strong international experience and exposure, but who understand local realities.

SC, Exotix It’s not policymakers I’m necessarily concerned with. It’s what the people on the ground do that matters. When you’ve had a strong government that’s been in charge a long time, with vested interests that will be lost if someone else wins, that is an internal threat. Of course, there is the risk of populism that can stem from that. It’s a key test of transition.

VK, Nedbank We’re now moving on to the next stage of growth. Across the continent, there is a consensus on economic transformation, and so the political debate will shift toward better governance. 

FA, Silk Invest We’ve observed some positive changes from companies in the region – in Nigeria a decade ago, obtaining a publicly listed company’s annual report required one to physically go to the company’s offices to get hold of the information. Nowadays, companies have quarterly conference calls to update investors on their results and provide complete and lengthy annual reports, but that’s only because shareholders started demanding it and the companies came to a realization that change was needed.

Euromoney Can we say that institutions within the region now have the level of governance that they need and that global investors demand?

RH, Invest Africa Most companies in Africa could not be listed on the London Stock Exchange. But those with the best governance are those [based in countries with] vibrant stock markets: Nigeria, South Africa, Kenya.

BB, Chapel Hill Denham
In most parts of the world, you expect there to be clear delineation between, say, the functions of the treasury and the central bank. That’s not always true in Africa, where sometimes central banks have had to take on significant developmental responsibilities.

Euromoney The infrastructure gap – should we see it as a problem, or as an investment opportunity?

BB, Chapel Hill Denham That’s a big issue for non-Africans looking at Africa. Many investors come with a risk paradigm and only see risk when you talk about the infrastructure gap. There are very few people who see opportunity. Those who see only risk won’t get involved. The ones who see opportunity, will.

Euromoney Where are the investment opportunities in Africa, in terms of infrastructure?

VK, Nedbank There’s a lot going on in infrastructure, and it will continue to be important. Across Africa, governments are building roads, airports and rail lines, and upgrading port facilities. A lot of this is being done by the Chinese as they come in with a bilateral package and get things done quickly.

RH, Invest Africa With the Chinese, they ask: "What is your laundry list of requirements? OK – bus depot, road, airport, value $300 million, we’ll do that." But in return they get great trades on mining or timber resources. These are very clever trades, as the Chinese are giving African governments what they need. But this is temporary. The Americans will invest heavily in Africa – they are just waking up. I see a tsunami of money ready to roll in. I like the real estate sector, particularly in terms of affordable housing. There’s going to be a huge drive toward urbanization. In the energy sector, anything goes. This is the big brake on growth. And then in the financial sector, the most exciting area isn’t so much retail banking as the whole capital markets side. We need to find ways to fuel Africa through more structured debt financing. The mortgage market can help, as can funding smaller enterprises.

SC, Exotix We think there are big opportunities in financials. Regional banks are relatively underleveraged compared with their emerging market peers, and now there is a wider range of sovereign Eurobonds and a greater effort to tap into private capital internationally. It’s possible that the banks can start raising the capital to expand their balance sheets to start lending, which is what they need to do. There are only a handful of outstanding corporate bonds in sub-Saharan Africa, most of them issued by Nigerian banks, but we expect that market will grow.

VK, Nedbank The emergence of pan-African banks will help in terms of raising money on the capital markets because they are bigger. A Ugandan bank would be too small to be able to issue debt on the international capital markets.

PHA, Ecobank The reality is that banks in Africa today are in dire need of capital. That is a constraint. If you want to see increased capability in terms of lending, we need to see a significant push in terms of raising capital and structured finance. Most banks in Africa don’t have an originate-to-distribute business model. They tend to lend and keep it on the balance sheet until maturity, which is a model that no longer exists in any banking system anywhere in the developed world.

Euromoney How can we get closer to the ideal situation?

PHA, Ecobank I don’t think the main focus should be looking outside Africa to raise money. There are substantial local pools of financing that banks can tap. One thing that needs to be done is working out how to allow pension funds in Nigeria, say, to invest in a bank in Ghana or Côte d’Ivoire. Today, it’s not possible. South Africa recently took a bold decision to allow its pension funds to invest outside the country. Doing that, they can deploy a huge amount of capital, something like $15 billion to $20 billion, that they can invest in middle Africa over the next few years. Such countries as Nigeria should follow suit. That’s how you build pan-African champions and create intra-African trade.

BB, Chapel Hill Denham Nigerian pension funds have grown from a standing start in 2006 to $28 billion in assets under management now. Nigerian pension funds can deploy up to 10% of their assets outside the country.

PHA, Ecobank
But we’re not there yet. Even now, if you advise Nigerian pension funds to invest in equities, you get a negative reaction.

BB, Chapel Hill Denham
I beg to differ and I’ll tell you why. In the last two Eurobond issuances involving Nigerian institutions, in one deal around 30% of the book was sold to Nigerian pension funds. Around 80% of Nigerian pension funds’ money is invested in Nigerian government bonds, treasury bills or money markets. So when they go outside Nigeria, they aren’t going to take massive risks and that is the issue. If there is a good-quality Eurobond being issued by GT Bank or First Bank, you’ll see very substantial participation by Nigerian pension funds.

PHA, Ecobank We don’t believe that Eurobonds should be the solution, either from an issuer’s or an investor’s perspective. Investors don’t make great returns from Eurobonds. We need to promote local-currency financing and to enable governments to make large-scale issuances more effectively and efficiently in local currencies. You’ll see huge growth there in the future.

BB, Chapel Hill Denham I agree, and I see domestic issuance in local currencies becoming an important Nigerian theme. We raised $1.7 billion for the Lagos state government over a four-year period. In December 2013 we priced a $550 million local-currency bond in Lagos, sold 100% to Nigerian investors with a three-day roadshow. So depth is possible in the domestic markets, but it’s probably only Nigeria and South Africa that have that capacity on the continent.

AD, Ecobank There are two issues I see here. First, local-currency financing has to increase as capital markets are constrained on the supply and demand sides. Demand for local-currency bonds is strong – bonds can be oversubscribed by 150% or more. Second, the sometimes limited pools of capital available to African governments. Former colonial partners are pulling back due to fiscal constraints at home, so bilateral funding is likely to diminish. What is interesting is the expansion of Eurobond issuance, and once you build a track record – as with Ghana, which is coming back for a third Eurobond – it’s easier to raise money as investors have greater comfort. And then there’s the diaspora: African governments aren’t tapping into these remittance flows as successfully as they should be. Kenya and Nigeria have had varying success with diaspora bonds, and that’s an area we expect will continue to grow.

VK, Nedbank Diaspora bonds have only really worked in Ethiopia by drawing on national patriotism, then investing that capital directly into infrastructure. But it’s a great idea and definitely worth pursuing.

What about diversification? How can we get private capital flowing into sectors where capital is most needed? Are some countries more welcoming of private-sector funding?

VK, Nedbank Everyone sees this is a problem and is moving into this area collectively. You have DFIs [development financing institutions], regional multilaterals and global and regional commercial banks working collectively to address this problem by providing differently priced tranches and a blended cost of financing. There are models of this appearing with such institutions as the African Finance Corporation.

RH, Invest Africa Most of the big infrastructure projects we analyse offer rates of return of around 12% over very long periods. I’m not interested in these deals, nor is any nimble private investor. I’m looking for smaller, more compact investments, like a rapid on-off loading terminal within a port: something that’s infrastructure focused yet has a high impact. I can get 15% returns investing in the US, so why invest in a slow-burning mid-yield project in Africa?

VK, Nedbank Governments also have to decide which projects they will use donor funding for and which ones they are going to seek private-sector funding for.

AD, Ecobank
Part of the problem Rob highlighted is the maturity of these projects. Building a road can take several months, but it’s the whole financing term of the structure that needs to be looked at: it can be 15, 20-plus years to finance a road, and you need a secondary market that’s liquid if the original investor wants to exit. That’s not there and that’s part of the problem, which is why you’ll rely on this multilateral-bilateral long-term low-cost financing and the private sector will remain quite reluctant to finance it.

BB, Chapel Hill Denham There are very few infrastructure projects that the private sector can really do in Africa. Perhaps airports. The other one that’s possible is captive power plants, but we don’t believe global private capital really has much of a role to play in the majority of African infrastructure projects. The opportunities for private capital are around manufacturing, agriculture, building materials, retail and financial services. Then there’s the whole entertainment segment – there’s scant private capital in fast-growing sectors such as films, media, television, sport.

Euromoney Stuart, where would you like to see more capital flowing in productively to African investment opportunities?

SC, Exotix The banking sector is one area into which capital should flow. That finance will have to come from somewhere, domestically or internationally. One doesn’t want another build-up of unsustainable debts, so what you need to ensure is that project selection, cost-benefit analysis and technical capacity are there in order to deliver the best returns on investment. People have been concerned about the Mozambique and Zambia Eurobonds – either raising funds in opaque transactions or having little to show for the money. It’s all very well being able to raise the money from international sources, but you need to use it wisely.

Euromoney Paul-Harry, you were talking earlier about the importance of enabling payments to be processed cross-border in order to facilitate regional trade. How important is this?

PHA, Ecobank It’s a game changer in our opinion. Once again, it comes back to banking capacities in Africa: whether or not lenders can put in place systems that will allow companies to trade with each other.

SC, Exotix
In terms of raising money, there is scope for governments to be able to borrow sensibly. The other element of that is domestic resource mobilization – essentially, widening the tax base and more efficient tax collection.

RH, Invest Africa
And privatization – sell off assets. There are a lot of good and bad businesses controlled by governments that should be privately owned – that process would help attract global private capital.

Are we at the stage where governments across the region can accept the premise of selling off state assets?

BB, Chapel Hill Denham Yes, of course. Many African nations have continuing privatization processes. I advised on Nigeria’s first five privatizations in 1999, and the nation has had a sell-off programme in play since then. Look at the list of banks, cement companies and oil marketing companies that used to be partly state-owned. Power assets are gone now, more or less, sold to private firms. The real challenge is getting around Nigeria’s phobia for putting transportation assets into private hands. That’s the one place they’ve been reluctant to sell. Finally there are the upstream and mid-stream oil and gas assets.

AD, Ecobank What you see in frontier and emerging markets tends to be that privatization is a long-term programme. In Nigeria’s case, there are a lot of refineries with vested interests attached to them, which cost the state a lot of money to continue to operate. Look at the refineries scattered across the country, which still don’t operate at full capacity.

BB, Chapel Hill Denham Few if any of the refineries have worked at full capacity in years.

AD, Ecobank And you see these assets actually deteriorating in value to the point where you have Dangote building his own refinery, so the government has lost the chance to generate immediate short-term fiscal revenue.

BB, Chapel Hill Denham I grew up in the midst of the UK’s privatization programme [from the mid-1980s] and you always end up with assets that government can’t get rid of: legacy or rump or vested-interest assets. But you ensure that you get the majority of state-owned assets out of the clutches of government, and those you can’t sell are commercialized or closed down. And invariably what changes the whole discourse is private ownership. If a government airline isn’t working, and private carriers are, and people prefer flying the private airlines, people’s preferences will determine who wins.

Euromoney What final messages would you give global and regional investors about Africa’s investment opportunities?

FA, Silk Invest It’s no longer about importing technology from developed countries, but about building home-grown technology that works for Africa. In Kenya we’ve had success stories like Equity Bank and M-Pesa tapping into the millions of unbanked people still across the region. If M-Pesa, the mobile banking system, can be used across all African countries, we’d see rural areas benefiting, and that will help create more inclusive growth. And then there is the SME sector, which is still largely undeveloped in Africa. The opportunity is there, it’s available. The risks are still exaggerated, and opportunities more than compensate for the risk, although investors need to understand Africa first.

PHA, Ecobank The main issues are how to make Africa more competitive relative to other emerging markets. First, the reduction of capital and foreign exchange controls. Secondly, the fragmentation of Africa: we need to reduce barriers and boost intra-African trade. Thirdly, how to harmonize banking regulations. Another message to share with non-African investors is that the continent is no longer a commodities story; these days, it’s a consumer story. Annual consumer spending is $350 billion to $400 billion; in Russia it’s $560 billion. In five years, we’ll be close to Russia in terms of consumer spending power. So the main investment theme in Africa in the future will be how to leverage that consumer story.

VK, Nedbank There has been a generational change between the 1960s and now in the size of the educated workforce, their level of education and their international exposure. African workers and leaders are better educated than they have ever been, and that will help in terms of sustaining growth.

RH, Invest Africa Africa needs to create a better business environment than other emerging markets. All the fundamentals are there, but we mustn’t be complacent. Just because we’ve had 10 years of growth and a big consumer market, we mustn’t say: "You’ve got to invest in Africa or you’re going to miss a great investment opportunity." Other investment opportunities will pop up all over the world and investors will lose interest. The country I’m following really closely is the DRC. I believe Katanga province has the potential to be a fantastic investment destination. And with the new DRC government, which I have met and whose members are very professional and welcoming of international investment, and with South Africa’s determination to make the DRC work, that country will fly. The upside there is immense.

AD, Ecobank Africa is at a tipping point. We’re seeing the fruits of the institutional changes and reforms that started to take place from the late-1990s onwards. But there is still too much capital flight. We need to see African institutions strengthen and develop their economic policy environment and capital markets. And then there are the changes in the monetary policy environment driven by events in the US. Africa remained relatively insulated from the global crisis, but moving into a period of normalization, rising interest rates in the US might affect some of the more globally linked countries like Nigeria and South Africa. On the other hand, vibrant countries like Kenya haven’t and aren’t likely to be much affected by the emerging-market sell-off or events in the US.

SC, Exotix For investors, one of the headlines is that Africa isn’t the high-debt, high-distress continent it was even a decade ago. It has come a long way in a short space of time. On a positive note, we have high growth, and generally single-digit inflation, and that’s a positive story in terms of policy orthodoxy. However, the message for policymakers is that you can’t be complacent. In my opinion, complacency is the region’s biggest risk, and policymakers need to continue to drive forward reforms.

BB, Chapel Hill Denham We believe that Africa needs more ‘patient capital’. For the first time in 25 years, Africans are planning on a medium-term to long-term basis across all African countries. People are taking a far more long-term view, and that needs to align with the capital chasing regional investment opportunities. Africans are also realizing not only that they have to compete for capital, but also that Africans must build Africa. A final message is that over the next 10 to 15 years, every serious global business and investor will need an African strategy and Nigeria will be central to that strategy and thinking.