Africa is desperately short of investment. Infrastructure alone needs $90 billion a year.\u00a0 Many of the normal routes by which capital gets into economies are blocked in Africa.<\/p>\n
Only private equity has a direct route.\u00a0 Private equity raised $4 billion for Africa last year, building toothpaste factories and providing modbile phone service.\u00a0 Handing cash to pioneers in Africa is often seen as less risky than putting money in underdeveloped pubic markets.<\/p>\n
Private equity has been warmly welcomed in Africa.\u00a0 But Africa needs more than these funds can provide. Often they want to sell the firms they buy in five years. Long term investment is needed.\u00a0 Uganda’s privatized electric grid gets a state-guaranteed return of 20% a yaer on all dollars invested in the grid.\u00a0 African economies have grown 5% or more over the past decade.\u00a0 The continent’s mddle class is projected to triple (one billion people)\u00a0 by 2060.<\/p>\n
Capital restrictions are in place in the rich world which prohibit long-term illiquid investments, such as ports, railways and roads.\u00a0 African governments are also to blame.\u00a0 Investors have not forgotten the natioanalizations across the continent in the 1960s and 1970s.<\/p>\n
Rich counties need to change their regulations to get capital flowing freely.\u00a0 African governments need to set up large regional stock exchanges to provide liquidity, security and ease of access.\u00a0 The conitnent is ripe for investment if the right climate prevails.<\/p>\n
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