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Is private equity the easy way to the sub-Sahara?

Gaining diversified access to the African growth story can be difficult when local capital markets are limited and illiquid. Private equity should help fill the gaps.

Investors are repeatedly bombarded with figures produced by sub-Saharan Africa enthusiasts eager to promote the region as the world’s next big investment destination.

Africa has a population of more than 1 billion. Some 15% of people globally are African. The median age in sub-Saharan Africa is just over 18. According to the IMF, Ethiopia, Mozambique, Tanzania, the Democratic Republic of Congo, Ghana, Zambia and Nigeria will be among the 10 fastest-growing economies over the next five years. Real GDP growth reached 5% for the region in 2013 and is predicted to reach 6% this year.

The statements read like an Invest in Africa pamphlet, but they are beginning to sink into everyday rhetoric. Investors are becoming more familiar with an African story where – to a large extent – demographic change is transforming the region. A growing middle class in sub-Saharan Africa is creating a burgeoning consumer economy powered by GDP growth and democracy.

Investors are beginning to see sub-Saharan Africa as a genuinely attractive investment destination, while a greater understanding and piqued interest has shaped the development of Africa-focused investment funds.

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