Experts call for greater local participation in private equity in Africa

Representatives from pension funds, insurance companies and other long term investors from Kenya, Rwanda, Uganda and Tanzania attending a two day roundtable in Nairobi, Kenya,to discuss ways of promoting investment in private equity, have called for greater local participation in the sector.

The participants also noted the limited awareness about private equity as an investment option, as well as the opportunities available in the industry, and called on organisations such as the Commonwealth to continue doing advocacy work to create greater understanding of private equity as an asset class, why it is important, its role increasing investment, supporting viable private enterprises and in creating jobs and improving livelihoods.

The meeting, which started on 18 May 2010, at the Nairobi Serena Hotel is organised by the Commonwealth Secretariat, African Development Bank, African Venture Capital Association and Aureos Capital.

“The biggest challenge we all have is to unleash the liquidity (funds) that are lying under-utilised in many pension institutions in Africa. That is the big elephant in the room. Why is it that this money is not invested in private equity on the continent,” asked one participant.

“Whilst we welcome the inreased participation of foreign funds in African private equity, the ultimate test is in unleashing the wealth of funds available in Africa to be invested locally. What we know for sure is that there is money in pension schemes on the continent,” another participant remarked.

Drawing on various experiences of successful African Private Equity funds, participants noted that there is need to step up awareness efforts, build relations and trust amongst various stakeholders, and to debunk myths surrounding the risks of investing private equity. Whilst acknowledging that these risks do exist, participants noted the superior returns offered by private equity in comparison to other investments.

“There is need to communicate better the achievements and opportunities of investments which have worked successfully, and to share experiences of both the risks and challenges,” said Martin Poulsen, the Chief Private Equity Officer at the African Development Bank.

Mr Poulsen said that AfDB is committed to continued support to the development of private equity sector on the continent.

David Ashiagbor, an economic adviser responsible for private equity and capital markets at the Commonwealth Secretariat noted that while Sub-Saharan Africa is one of the biggest growth stories in emerging markets private equity, a lot more needs to be done to encourage local investors to enter the sector.

Mr Ashiagbor said that the Nairobi meeting is first of a series of other sessions that will be organised at regional levels in Africa, as part of raising awareness and advocacy.

Related Websites:

• African Development Bank
• African Venture Capital Association
• Aureos Capital