You are ready to invest on the continent – but you may be one of the many who simply wonder exactly how to invest your money in Africa….
We follow media outlets featuring amazing opportunities in Africa and highlighting amazing returns on investment (ROI) reaching well above global average. At around 15-25% ROI – sometimes even more than 30% – as compared to a global average of around 5-10%, Africa seems to be the place to put your money in. In fact,Forbes states that according to the 2014 release of Dalbar’s Quantitative Analysis of Investor Behavior (QAIB) in the US, “the average investor in a blend of equities and fixed-income mutual funds has garnered only a 2.6% net annualized rate of return for the 10-year time period ending Dec. 31, 2013.” Hmm, not a very exciting outlook one has to confess, especially when you are just getting started.
So Africa is a little like a full pot of honey, and a lot of bees are flying around it, but they are not quite sure where to land. You don’t want to get stuck in sweet promises, right?
The media at large is highlighting opportunities, but you hear little about how to go about your investment plans, whom to contact, and how you can ensure your contacts are reliable.
You guessed it, this is where I come in, and I thought a quick list including some of the best avenues and contacts may be of help to your endeavours.
Local investment agencies
This one needs to be on your list. Local investment agencies are relevant if you are planning to invest medium to larger amounts, so in the region of $50,000 all the way up to several millions US Dollars. These are usually government-owned or partially government-owned agencies, such as KenInvest in Kenya for example or the so-called Investment Promotion Centers (names vary slightly from country to country). The benefits are huge: The service you get is often absolutely free, opportunities are up-to-date, and projects listed with the local investment agencies are managed by overall reliable and professional companies on the ground.
If you are interested in investing into tech or online businesses Africa’s local tech hubs are your gold mine. They are packed with ambitious, talented, young African tech entrepreneurs and start-ups, many of which are regular members at those hubs. Just think JoziHub in South Africa, iHub in Kenya, kLab in Rwanda, of Co-Creation Hub in Nigeria. And there are many more! This avenue is usual of benefit for you if you want to make a small to medium-sized investment into a promising tech start-up.
Crowd funding & renowned online platforms
There are several professional and renowned Africa investment platforms online that allow you to make an investment from afar into projects that have been carefully selected by those leading and managing theses platforms. Among those for example fall the crowd funding site Venture Capital for Africa (VC4A) andHomestrings.
There are several entrepreneur-start-up accelerators professionally run by local companies and institutions. The benefit for you to access promising start-ups via these accelerators for investment is that those entrepreneurs who made it into the accelerator program usually went through an intensive selection process. So you know these are start-ups with great potential. Start-up accelerators are often looking for investors, so that those who went through the program are able to leap-start and grow their business. This avenue is best for small to medium sized investments.
Another way to get linked to investment opportunities is to visit your respective embassy or your country’s local chamber of commerce in the African country you would like to invest in. You may feel at home and this may be a good avenue for someone who steps into the country for the first time and needs a bit of added support in this regard. On the downside however, you are not approaching the investment opportunity through local native stakeholders, and you usually need to pay for those services.
African stock exchanges
Several countries in Africa have a national stock exchange, 29 in total, but that option is still widely overlooked by Africans in the Diaspora or foreign investors. Stock exchanges list often just a very limited amount of companies, having said that the dynamics are visibly increasing in fast growing markets with more companies making public offers. Stock exchange in Africa can be lucrative and some are so popular that it is difficult to get your hands on shares.
Oh yes, one of my favourites, yet largely overlooked. You have the local chamber of commerce, the export promotion councils, and industry-specific associations such as manufacturer association, agricultural association or a chamber of mines, which are usually happy to help. They have trusted members who are at large well known to these associations. Give these associations a visit, possibly attend one of their networking events, and you will get many concrete tips, contacts, and leads for investment opportunities in a particular industry of interest.
You see, I am giving it all away….now go out there and make it happen! I wish you all the best for your Africa Business endeavours and feel free to contact me for a private 1-hour consultation if you want to discuss your specific endeavours further to get the much needed clarity before making your next move.