Meet Dr. Henrietta Onwuegbuzie – one of Africa’s leading Impact Investing Practitioners Training Impact Entrepreneurs in Africa

Dr. Henrietta Onwuegbuzie is an Associate Director at the Lagos Business School and one of Africa’s leading Impact Investing Practitioners . She has been training and guiding Impact Entrepreneurs in the continent for several years now.

It was a great pleasure for the CEO of Alliance 54, Ernest Okwudike to engage with her in a discussion recently to gain some insight and learn her views on the trends and development in the industry in Africa.

Private Equity in Africa Set to Present Significant Opportunities for Investors in 2016

According to the Search for Returns survey, 80 percent of the investors expect African private equity to outperform African listed equity over the coming decade. CEO of SAVCA, Erika van der Merwe, explains how the asset class presents a healthy opportunity for investors looking to Africa for private equity.

In the context of a global search for returns, investors eager to obtain exposure to frontier markets in Africa – one of the world’s fastest-growing consumer markets – are increasingly exploring the sub-Saharan African private equity market.

Erika van der Merwe, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA), says that, as private equity is still under-represented in sub-Saharan Africa, the asset class presents an opportunity for investors to invest in a region that is experiencing strong economic growth and which is generating robust returns.

According to the Search for Returns survey, 80 percent of the investors expect African private equity to outperform African listed equity over the coming decade.

Van der Merwe adds that the South African private equity industry in particular has delivered healthy returns for investors. She believes that the industry, which has a thirty-year track record of deal-making, exits and fundraising, and which now has an expanding regional reach, is set to play an important role in the continued growth of the asset class in other African markets.

The latest RisCura-SAVCA South African Private Equity Performance Report shows that, by mid-year 2015, the South African private equity industry delivered a ten-year internal rate of return (IRR) of 21.7 percent, up from 20.5 percent in March 2015. This performance compares with the 17.1 percent return from the FTSE/JSE All Share Total Return Index (ALSI) over the equivalent 10-year period.

Van der Merwe says that the South African private equity industry, representing more than R170 billion in assets under management, gradually is maturing. “This is demonstrated by the emergence of specialist funds, dedicated to focused sectors, as well as by the trend towards the establishment of funds with a multi-country focus, with many new South African-managed funds now having a mandate to invest outside South Africa. Both of these factors are characteristics of a more developed industry.”

She adds that South Africa also has a proven track record in exits, and has demonstrated to investors that there are a range of viable exit options in this market; and thus a way to realise returns. “With this track record, and the ability to attract funds from institutional investors from across the globe, the industry is becoming a notable role-player in drawing capital into the broader sub-Saharan Africa region. South African private equity fund managers are deploying capital for deals in Southern, West and East Africa, for instance, and moreover are providing the strategic, financial and operational support to their South African-based portfolio companies to expand into new African jurisdictions.”

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Eight Reasons to Invest in African Tech Innovation

Astute international investors are finding promise in the African digital renaissance, where a decade of rapid economic growth is cause for consumer spending to exceed an estimated $1 trillion annually by 2020, according to Forbes.

In Africa, the middle class is growing, populations are urbanizing, IT infrastructure is improving and cell phones and mobile payments are more widely used than in most of the world. All of this has combined into a recent technology startup boom that has international investors salivating for more.

The company I founded, 3G Direct Pay, is an online payment processor servicing the African market. And we have seen the result of the mobile payment technology boom firsthand. In a region where many consumers do not have debit or credit cards, mobile payment technology has undergone drastic development in recent years, and it is continuing to advance. With providers like 3G Direct Pay, along with M-Pesa, Airtel, MTN and Tigo, among others, it is clear that the mobile payment technology sector in Africa is growing, developing and becoming an integral part of society.

Not only mobile payment technology is on the rise. Technological developments in other sectors are also becoming stronger. There are eight main reasons why African technological innovation is a wise investment:

1.    POPULATION GROWTH

While other countries, most notably Japan and Eastern Europe, are seeing a decline in population growth, Africa is home to 1.2 billion people and is growing at more than 2 percent a year.

Six of the 12 fastest-growing countries in the entire world are in sub-Saharan Africa.

2.    ECONOMIES OF SCALE

Kenya, for example, has the third-fastest growing economy in the world, behind only China and the Philippines. Kenya accounts for 40 percent of the gross domestic product of the East African Communities (EAC), and its currency is the best performing one in the region. Its nascent economy is bolstered by a highly educated, English-speaking and youthful workforce. Some 60 percent of Kenyans are 25 years old or younger.

Another great example is Nigeria, Africa’s largest economy – even ahead of South Africa – boasting telecom companies and advanced banking options. The Economist reports that its economy has been growing at an average rate of around 7 percent a year over the past decade.

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