Where to Invest in Africa

FINANCES

“Over the past three years, some African governments have had to implement deep and painful budget cuts, announce multiple currency devaluations, and adopt hawkish monetary policy stances – all as a result of a significant drop in traditional revenues”, says RMB Africa analyst and co-author of Where to invest in Africa, Celeste Fauconnier.

Despite the continent’s bid to establish a balanced economic growth, it is yet to take advantage of the relationship between the financial sector development and sustainable levels of development.

The author of the report concludes that “access to financing is perceived as a far greater challenge to doing business in Africa than the threat of corruption or absence of infrastructure”.

Furthermore, Africa’s financial systems are slowly evolving beyond traditional banking, which is presenting a number of viable funding opportunities for corporates and investors alike.

Capital markets are globally considered to be a primary source of funding, but tend to be overlooked in Africa due to their lack of scale and liquidity. Although Africa boasts 29 active stock exchanges, only a handful are valued at more than US$30bn when measured by market capitalization.

INFRASTRUCTURE

“To project what Africa’s infrastructure path will be like over the next 10 years, it is important to understand the roles of government historically in terms of their budgetary support and the sectoral focus of their allocations. If these provisions have been optimal, are we seeing the fruit in terms of economic growth? Or is there a need to consider alternative solutions?” the report sought to ask.

Majority of the regions in Sub Saharan Africa are putting extra efforts into expanding their transportation networks. East Africa is leading the way

with about 60% of their budgetary allocation channeled in that sector. On the contrary, Central Africa allocates about 20% – which is the reason why part of the continent is less paved. This has hindered economic development because different parts of the region aren’t easily accessed.

According to an RMB survey, 75% of the respondents affirmed that infrastructure development over the past five years has been slow yet progressive.

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