Panelists at the “Institutional Investors Dialogue” under the Africa Investment Forum in Johannesburg, South Africa, have called on African countries to invest in equity market and pension funds to attract the much needed foreign institutional investment into the continent.
They said, this is important, as the continent’s largest economies are leading that way, which the rest must follow suit.
Linda Mateza, Head of Investments at South Africa’s Government Employees Pension Fund, said “We sit on the management of about $120 billion, which is invested in the South African equity market, pension funds, and other portfolio invested in other parts of Africa,”
She said pension funds are also active in Nigeria and called for urgency in replicating this.
“So far, we have invested $25 billion in infrastructure private equity, housing, and pension funds”, said Dave Uduanu, Chair of the Africa Pension Fund Network, Nigeria.
“In terms of infrastructure financing, it is about the depth of bankable projects. The predictability of cash flows are significant to crowding in private capital like pension and equity funds.”
Africa sits on a vast amount of pension funds, insurance funds, and sovereign wealth funds collectively worth more than $1 trillion. But the continent is struggling to convince these funds to invest money that is desperately needed to close its infrastructure financing gap of between $68 and $108 billion.
Ritesh Anand, Executive Vice-President of Crown Agents Investment Management Limited, asked “Why aren’t we seeing more domestic pension funds investing in Africa. On average pension funds in Africa have less than 10 per cent invested. One percent of international pension funds and 10 per cent of pension funds in Africa will make a difference on the continent.”
Sub-Saharan Africa has the highest number of regulation reforms (107) in the world across all areas. One-third of all business regulatory reforms recorded by the World Bank’s Doing Business 2019 were in the economies of sub-Saharan Africa.
Africa is ready to do business, but there remain major stumbling blocks and “perceptions of risks and returns on equity and pension funds pose a challenge to institutional investing in Africa”, said Lerry Knox, Chief Executive Officer at Sovereign Infrastructure Group.
The Africa Investment Forum is seeking to help de-risk transaction, reduce intermediation costs, improve the quality of project information and documentation, and increase active and productive engagements between African governments and the private sector.
A total of 61 deals, estimated at more than $40 billion, will feature in ‘Boardroom Sessions,’ while another $28 billion will be showcased to investors at a marketplace Gallery Walk. The forum will curate from a total pipeline of 230 projects worth over $208 billion, across various sectors, such as energy, infrastructure, transport and utilities, industry, agriculture, ICT and Telecoms, water and sanitation, funds and financial services, health, education, hospitality and tourism as well as housing, and aviation.