2024-11-03 23:13:00
Roads, power lines, schools or health centers, Africa needs private investment. In 2023, foreign direct investment was stable on the continent – while it plummeted in other regions of the world – reaching around $48 billion according to the United Nations Conference on Trade and Development (UNCTAD). If the statistics do not yet meet the needs, the signals nevertheless seem to be green. A renewed interest of investors towards the continent seems to be confirmed.
The rating agency Standard & Poor’s recently upgraded the rating of Ivory Coast to BB. A signal for Stanislas Zézé, head of the African rating agency Bloomfield, that the assessment of risk on the continent is evolving. “ The reason people had a hard time coming or were a little skeptical was because of how they assessed the risk, not the actual risk, but the perception of the risks that they had. And this perception is changing significantly », Analyzes this finance specialist.
For him, other factors come into play. “ There is extraordinary potential because there is everything to do here. So, obviously, development is increasingly rapid, growth rates are among the highest in the world and risk is better controlled today because it is better understood. Even in terms of reimbursement, the Africans are not the least credible. This is all that creates a real investment dynamic on the continent. », he adds.
Also readS&P upgrades Ivory Coast’s public debt rating to “BB”
Give good signals to investors
Another event, Ecobank’s fundraising on the London Stock Exchange. This has not happened for an African bank since 2021. The markets have thus invested 400 million dollars. Proparco, a subsidiary of the French Development Agency, was positioned as a referent for this operation. “ As these financial markets were wait-and-see and somewhat closed, it was agreed that investors would need to anchorthat is to say reference investors who have worked with it for a very long time – therefore who know the bank well, who appreciate its impact and its solidity -, that its investors can send a bit of a signal to the markets in advance to say : we trust this bank », explains Emmanuel Haye, head of the financial institutions department.
So what Proparco and other partners did. “ Very quickly, we were able to announce that we were going to invest $20 million alongside other investors anchorand so that certainly allowed investors to find this operation interesting and to subscribe to it », Adds Emmanuel Haye.
For Stanislas Zézé, there is no doubt that investing in Africa is profitable. “ If you look at the $400 million that was borrowed by Ecobank, it’s at 10%. I don’t know where in Europe you will make an investment with a 10% return, he insists. That would surprise me. So obviously, the continent is becoming more and more attractive. »
Also readEconomic projections for sub-Saharan Africa revised downwards
Upcoming installation of JP Morgan
Foreign investors, one of whose bridgeheads, JP Morgan, has just announced that they want to set up in the near future in Ivory Coast and Kenya. « What we see today is in fact with the fall in rates, the return of sovereign states to international markets, and this is what JP Morgan is targeting, which will arrange the raising of resources for these Sovereign states or very large companies », confirms Emmanuelle Haye.
Among the operations noted this year and which seem to confirm the renewed interest of investors for the continent, the return of Côte d’Ivoire and Benign on international markets.
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**Interview with Stanislas Zézé, Head of Bloomfield – Insights on Foreign Direct Investment in Africa**
**Interviewer:** Welcome, Stanislas Zézé! Thank you for joining us to discuss the recent trends in foreign direct investment (FDI) in Africa. It seems there’s a growing interest from investors in the continent despite global uncertainties.
**Stanislas Zézé:** Thank you for having me! Yes, indeed, 2023 showcased a stable level of FDI in Africa at around $48 billion, even amidst declines in other regions. This suggests a renewed confidence among investors.
**Interviewer:** You mentioned that perceptions of risk are changing. Can you elaborate on that?
**Stanislas Zézé:** Certainly. Historically, the perception of risk has deterred many investors. Now, with improved understanding and the management of risks, that perception is shifting. Events like the recent upgrade of Ivory Coast’s credit rating to BB by S&P reflect this changing landscape.
**Interviewer:** What other factors do you think are attracting investors to Africa?
**Stanislas Zézé:** There’s extraordinary potential here! Rapid development and some of the highest growth rates globally make Africa uniquely appealing. Additionally, repayment credibility among African entities has improved, creating a dynamic investment environment.
**Interviewer:** There’s also been noteworthy financial activity, like Ecobank’s recent fundraising on the London Stock Exchange. Why is that significant?
**Stanislas Zézé:** Absolutely, it’s a significant milestone. This was the first such fundraising by an African bank since 2021. It indicates investor confidence and willingness to engage with African financial institutions. The involvement of strong partners like Proparco helped to reassure other investors.
**Interviewer:** With Ecobank’s interest rate of 10% for their funds, how does that compare to other global markets?
**Stanislas Zézé:** That’s a critical point! A return of 10% is hard to find in developed markets like Europe. This illustrates the investment opportunities available here, further emphasizing Africa’s attractiveness for foreign capital.
**Interviewer:** What does this mean for Africa’s future in terms of infrastructure and development?
**Stanislas Zézé:** It’s clear that private investment is crucial for infrastructure development—roads, power lines, schools, and health centers are essential. Increased investment can catalyze growth and ultimately lead to a stronger economy across the continent.
**Interviewer:** Thank you, Stanislas, for sharing your insights! It sounds like a promising time for investment in Africa.
**Stanislas Zézé:** Thank you! I believe we’re on the cusp of major growth, and it’s exciting to see more investors recognizing Africa’s potential.
