Private equity could end Africa’s aid dependency – WEF

Raising funds from private equity or the capital market is believed to be one of the surest ways of reducing Africa’s dependency on aid.

Private equity is also seen as the hope for financing Africa’s development, according to investors and policy makers at a high-level roundtable discussion held May 8, 2013 under the auspices of the Economic Commission for Africa (ECA) and the World Economic Forum on Africa.

Themed “Building Private Equity and Private Capital Markets in Africa”, the participants explore the promise and obstacles facing private capital investments in Africa, according to an ECA statement.

They are also navigated the complex world of private equity, which in recent years has shown increased interest.

According to the participants, “this could be Africa’s next development financing frontier and could mark an end to an aid dependency.”

They observed that African countries have the basis for developing capital markets that can finance the continent’s development.

According to the Executive Secretary of the ECA, Dr. Carlos Lopes, the bane of negative perceptions, which portray Africa as “a risky continent in which to do business”, must however be tackled since these perceptions hinder the growth of the sector.

Many industry players have raised concerns about working with the high cost of raising capital in Africa; the mix of regulatory systems; and low levels of skills in the area of private equity.

The participants underscored that harmonizing regulatory systems and deepening regional integration as a means to develop capital markets across boundaries, could bring about long-term investments that could bolster the continent’s development aspirations.

The ECA has hinted that its forthcoming study on domestic resource mobilization for Africa aims to demonstrate that the continent can harness enough resources to finance development by tapping into reserves held by African Central Banks and in remittances.

By Ekow Quandzie