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GUEST COMMENT: North Africa, Sub-Sahara and Saharan Africa – the future?

6 October 2008

Andrew Pringle

Whether you call this a ‘downturn’, a ‘readjustment’, or on the verge of ‘depression’, is neither here nor there. The sentiment is the same: Europe is struggling. There are still some exceptions to the rule: mezzanine finance, debt origination (well, if you can raise it people want it) and private equity are taking up the slack.

But where should you be looking if you really want the opportunities? Dubai? Sovereign states generally? We have found that although the market in UAE, Oman, Qatar, etc. is very strong and the rewards pretty high, the real excitement is in Africa.

Why? Africa is the Middle East five to 10 years ago. There is an extensive array of opportunities, some with high socio and economic risks attached, but others with relatively low risk and stable business environments in which there are minimal financing abilities.

These are the areas our clients seem really to be looking at seriously: the players in these markets now will be the established players there in five to 10 years' time. The old-school businesses with a big aversion to risk are avoiding this area, so now is the time for small and middle-tier players to make a name in the market.

The field is open. There are established players who have been there for several years, but the really exciting businesses are those making four to five times returns on investments. These are the new players who are driving from the front with a different attitude to investment (several businesses actually invest with a concern for the environment and the people!).

These ideas are what will differentiate them from the competition in Africa and give them a better name than their UK counterparts in the private equity field, let alone the traditional investment banks.

So now is the time to get in, before the investment banks (with one or two notable exceptions) realise that they should be in there too.

Andrew Pringle is director of CircleSquare Consulting.

Comments (20)

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• Africa? What weed were you smoking last night ?

  Jingalalala 06 Oct 2008

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• As a matter of fact, Africa is a continent of interest to more than one area of Financial Services. Many Private Banks are looking at Africa with an increasingly attentive eye and factoring this market in their growth strategies.
  It is, however, a very complex continent and lumbering this variety of markets and economies under one name is misleading.

  Rodolphe Mortreuil, MKMC 06 Oct 2008

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• I'd agree. I was in Africa earlier this year and shocked at the number of ex-pats out there working with large US & Eurpean firms. There may not ne as much wealth (or opportuinities) as the middle east at the moment. But the ex-pats seem to be living a much more enjoyable lifestyle than some of their peers in other countries

  Sital Ruparelia, 6 Figure Career Management 06 Oct 2008

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• This has to be one of the most thoughtful and intelligent articles I have read on efinancials in a long while. At last a journalist on efinancials who actually reports whats going on in the world of finance & trade.

  KWM 06 Oct 2008

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• How much were you paid to write that KWM?

  whatever 06 Oct 2008

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• Bloomberg news channel featured a British lawyer who moved from Dubai to Tanzania due to the high cost of living in Dubai. There may be no tax, but foreigners have to pay a levy on gas and electricity bills that is basically as high as income tax. The place seems overrated.
  
  The Chinese seem to be having their way in Africa at the moment!

  John 06 Oct 2008

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• So by virtue of not being Europe, America, Middle East, Latam or Aspac Africa must be the next big thing in finance? And not one actual company name mentioned. Somewhat suspect.

  Davros 07 Oct 2008

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• How about a few examples?

  CMCM 07 Oct 2008

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• Guys, how much Russian Renaissance Capital paid you? It is the only bank that looks at that region. I have no objections against Africa, but you guys, i mean the article is pathetic.. btw you know what Rencap tells its staff? Since GS and MS have become regulated banks, they are the biggest investment banking group (with broker dealer) in the world! lol! I like their optimism you know, especially that they had to sell a stake at a firesale price recently.. they also claim following Lehman collapse bankers became cheaper to get. Is this right thing to tell? cheers

  Rencaper 07 Oct 2008

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• That's all very well....if RenCap survives to the end of this week... looking more and more unlikely I'd say

  An Observer 07 Oct 2008

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