This blog is part two of a three part series. Read part one here.
With more U.S. workers retiring, pension contributions and returns on retirement investments are not keeping pace with payout needs. As institutional investors look to deliver returns, investment in critical African growth sectors offers an opportunity for U.S. investors to meet their pay out needs. Investments in infrastructure, telecommunications, food and agri-business, financial services, education, and healthcare, provide a mutual benefit for advancing the continent’s development goals, while also delivering good returns for U.S. investors.
In August, I traveled to South Africa with a delegation of U.S. investors, including pension investors representing Chicago public schools, Alameda County, California employees, and Texas teachers, among others. This is the fifth trip funded by USAID and organized by MiDA Advisors since 2017 – a critical driver of the Prosper Africa initiative.
We split our time between Johannesburg and Cape Town, meeting with partners on the ground, hearing pitch presentations from over 30 fund managers, and conducting site visits. We also connected with U.S. Under Secretary of State José Fernandez, who traveled with Secretary of State Antony Blinken for high-level discussions on South Africa’s Just Energy Transition. At meeting with our U.S. investor delegation, Fernandez reiterated the importance of private capital in transforming the investment relationship between the U.S. and African countries.
Tarrell Gamble, chair of the Alameda County Employees Retirement Association and a member of three past U.S. institutional investor delegations, highlighted how these investor trips help to change the narrative around Africa. “Despite all the challenges, there is significant opportunity on the ground that people either don’t know about or think it’s too soon to invest,” said Gamble. “The only way to turn that narrative around is to get people on the ground.”
By cultivating relationships with African counterparts, the delegates help African fund managers build their value propositions for an American audience. When they return to the United States, the delegates can serve as important ambassadors for investing in Africa. “I’m telling my colleagues that Africa is a place where there are opportunities to invest with risk-adjusted returns, and we should be looking at them,” Gamble said. “There are talented investors in Africa, so U.S. investors don’t have to know everything – we can tap into local expertise.”
Thanks to these relationship-building efforts, as well as behind-the-scenes transaction support provided by MiDA and other Prosper Africa partners, investor commitments are beginning to add up. Since beginning the institutional investor relationship work, the U.S. government has mobilized over $1 billion in two-way U.S. African institutional investment. Gamble’s Alameda County board, for instance, has invested more than $180 million on the continent through an emerging market fund strategy, primarily focused on South Africa, but also exploring other African countries.
At the upcoming U.S.-Africa Business Forum, we will convene U.S. investors and their African counterparts to explore new and expanded investment opportunities. Prosper Africa serves as the point of entry for U.S. companies and investors looking to do business in Africa. We mobilize services and resources from across the entire U.S. Government to provide businesses and investors with market insights, deal support, and financing opportunities.
By Cameron Khosrowshahi, Senior Investment Advisor, Prosper Africa