Private equity as a financing alternative for Africa's development

Johannesburg, 29 October 2013 (ECA) - As investors look for lucrative opportunities in emerging markets due to the economic slowdown in developed countries, private equity offers opportunities for African entrepreneurs to enhance their growth, according to a senior UN Official.

Speaking at a private equity meeting held in Johannesburg this week and attended by private equity entities and African investment representatives, Mr. Stephen Karingi, Director, UN Economic Commission for Africa (ECA) said that private equity has emerged as an alternative for financing development.

“Africa's fast growing economies need funds to face the challenge of financing rapid urbanization, demographic dynamics and growing demand for improved infrastructure,” he said and added that growth capital provided by private equity is good for Africa because it can benefit SMEs and allow them to grow their business and create employment and uplift society in turn.

The meeting this week follows a discussion between the ECA Executive Secretary, Mr. Carlos Lopes and the President of Cote d’Ivoire, Mr. Alassane Ouattara on the need to promote private equity as one of the means of financing Africa’s development agenda. ECA has thus developed a paper that will come up with appropriate policy recommendations aimed at promoting private equity in Africa. In this regard, Mr. Ouattara is slated to champion the initiative, including presenting the findings to the upcoming African Union Heads of State Summit in 2014.

Based on past performance, the future outlook for private equity is difficult to predict. However, opinion based research by global industry bodies such as Emerging Markets Private Equity Association rank Africa as the currently most sought after merging market investment destination.

The meeting discussed, among other issues, the need to improve the legal and regulatory environment to foster the continued growth of private equity. Discussions also pointed out that as the industry is still nascent in Africa, there is a need to increase the talent pool of fund managers.


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