Africa Center Visiting Fellow Aubrey Hruby cowrites for the Financial Times on foreign investment in Africa:
Last month’s US-Africa Leaders Summit ushered in a new era in US policy towards Africa. Bringing together nearly 50 heads of state and over 150 CEOs from the US and Africa, the Obama administration announced $37bn in commitments in trade and investment from the private and public sectors. More importantly, the Summit highlighted a major shift in how US investors are starting to see the continent. Investors no longer ask themselves whether they should or shouldn’t invest in Africa. They are asking themselves how they should invest in Africa.
According to a recent Boston Consulting Group study, the number of CEO visits to the continent has tripled since 2008. But boardroom discussions and CEO trips do not a make a solid business plan. What’s missing is the granular information that can be fed into financial models and used to accurately assess risk.
Lack of accessible and reliable data is the chief obstacle to investment in Africa. Over half of all senior investment professionals agree that lack of information is the primary barrier keeping them from considering African companies as investment opportunities. If Africa’s markets were formalized and well regulated, traditional market entry and business development strategies used by companies in developed markets might yield success in African countries. But the markets are not.