Read the full original article here from Power Engineering International
Vuyo Ntoi, Co-Managing Director of the African Infrastructure Investment Managers (AIIM), describes the status of the African investment landscape and what international investors need to keep in mind when they consider investing in the African energy transition.
Can you describe the challenges and opportunities of Africa’s investment landscape?
Africa is an underserved market.
It’s underserved from the perspective of industrial production of goods, and from an infrastructure perspective. This means there is a lot of opportunity to fill the existing gaps.
The macroeconomic forecasts for the continent, in terms of both population growth and improved wealth, mean it’s increasingly a market that shouldn’t be ignored, and I believe that investors who are in that market sooner rather than later will be the ones who reap the best rewards.
Demographically, it’s where most of the young people in the world will be in the next 20 to 30 years, which presents a vast opportunity if this is a market that a product or service is targeting.
However, one of the challenges is that Africa is disjointed. The continent comprises many small countries which operate different policy frameworks, requiring investors to work their way around these country differences. This reduces the continent’s scale benefits.
Another key challenge is that governments’ planning horizons are not fit for purpose and tend to be short-term, targeting election cycles. There are some exceptions like Rwanda where longer-term planning is in place in some sectors.
Long-term planning, particularly from an infrastructure and development perspective, allows entities such as ours to establish themselves in the market and grow development and investment businesses. The ability to establish long-term investment businesses also allows us to invest in the resources to navigate and understand the disjointed nature of the continent by having teams on the ground in key countries.
Ultimately, the investment climate is positive in the sense that the demographics and macros show that it’s a market for the future, with significant opportunity, if you are pursuing it through an experienced African investor lens.