Investors unpack Africa’s top opportunities

URBANISATION is creating greater demand for packaged food in Nigeria. How we made it in Africa asked a handful of private equity investors to identify untapped business and investment opportunities on the continent. Here are some of their responses.

1. Facilitating cross-border trade in Namibia. Ekkehard Friedrich, a partner at private equity firm Eos Capital, believes Namibia is well positioned to serve the Southern African region as a logistics hub and act as a gateway to nearby landlocked countries such as Zambia, Zimbabwe, the Democratic Republic of Congo and Botswana. “The Walvis Bay port has been massively upgraded and Namibia has some of the best roads in Africa. There is already a shift to using the port of Walvis Bay for copper exports from Zambia rather than the ports of Durban or Dar es Salaam. There are a lot of opportunities here to facilitate cross-border trade,” he explains. Click for more information on Namibia’s business and investment opportunities.

2. Industrial warehousing for Africa’s burgeoning e-commerce industry. “We invest in industrial warehousing and I think the growth of e-commerce interplays well with these investments,” notes Charlie Tryon, CEO and co-founder of investment holding company Maris. “I anticipate there will be fairly substantial growth in online retailing, with a progression from routine retail towards either big-box retail or e-commerce and distribution platforms (like Amazon) on the continent in the years ahead. It’s only a matter of time.” From agriculture to real estate: Charlie Tryon shares insights on opportunities in Africa.

3. Private education in Nigeria and Ghana. “We think the education space is extremely interesting,” says Danladi Verheijen, managing partner and co-founder of Verod Capital Management, a Lagos-based private equity fund manager. “Families prioritise educating their kids to the best extent possible and will send their children to as good a school as they can afford. Historically, the best schools were government-run although, over the years, the quality of public-sector education has declined. There have always been private schools in Nigeria but most were linked to religious institutions; now there’s a growing number of for-profit schools. Nonetheless, there is still a deficit of quality educational facilities in Nigeria and Ghana, with demand for good schools far exceeding supply … We’re also interested in investing in vocational training schools but have not yet found any investible players operating in this space in Nigeria or Ghana. Learn more about Verod’s education investments.

4. Manufacturing in East Africa. David Owino, founding partner of Ascent Capital Africa, is bullish about the manufacturing sector in East Africa. The firm has invested in Kisumu Concrete, which manufactures building products such as ready-mix concrete and concrete blocks. It is the largest player in western Kenya and enjoys little competition given the difficulty and cost of shipping building blocks from Nairobi or other locations. Ascent has also backed Metro Plastics in Kenya, which produces PVC and PPR pipes as well as gutters and wastewater removal products. “These are not products that are going to make the front-page news but they are essential if you’re going to construct a building or collect rainwater, which is very important in this part of the world. These types of businesses that serve consistent local demand and are considered somewhat ‘safe’ from potential threats of imports are generally attractive to us. For example, it’s not cost-effective to ship pipes from China to Nairobi – they are light but take up a lot of space,” he says. David Owino discusses investment opportunities in East Africa and highlights the sectors he would stay away from.

5. Regional digital banking platforms. “I’m completely sold on the idea of regional digital banking,” says Zain Latif, CEO of TLG Capital. “There is a phenomenal opportunity to create a mobile-based digital bank that offers customers an account where they can access savings, loans, other financial services such as insurance, as well as the ability to transact in various currencies. However, it needs to be a regional platform as most of Africa’s countries are too small. — HowwemadeitinA

frica.com