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Investing in Africa: Dispelling Myths and Unlocking New Opportunities

The investor delegation visited the Central Bank of Botswana to gain insight into the bank's role in promoting financial stability in the country.

This is the introductory piece of a blog series focusing on debunking misconceptions about African investments. Follow this series as we navigate through our Prosper Africa delegations’ journeys, spotlighting Africa’s remarkable investment potential.

The Africa continent is home to the world’s largest free trade area, growing economies, and an increasingly young, urban, and digitally connected population. The continent offers tremendous investment opportunities, yet persistent misconceptions and information gaps about investing in Africa often overshadow its potential, posing a roadblock to potential investors.

In the global economic landscape, African nations are carving out an increasingly substantial role, propelled by rising household incomes and consumption trends. The rapid rise in digital and mobile accessibility, the diminishing infrastructure gap, and Africa’s readiness for widespread industrialization are reshaping its economic profile.

The Prosper Africa Institutional Investor delegation trip visited the Botswana Digital & Innovation Hub, where technology-driven and knowledge-intensive businesses gain the skills and connections to compete in African and global markets.

Prosper Africa launched U.S. investor delegation trips to expose investors to a pipeline of investable deals, explore investment opportunities, and connect with top private equity and venture capital funds in Africa. The investor trips aim to break down investor perceptions of risk by introducing them to credible transactions, fund managers, and local co-investment counterparts.

Traditional investment methods have often relied heavily on white papers and reports, which while informative, can fall short of providing the full picture. “Gaining exposure to investment opportunities and experience on the ground forms the cornerstone of the Prosper Africa investor delegation trips,” said Cameron Khosrowshahi, Prosper Africa Investment Team Lead.

Organized in collaboration with the Institutional Investor Network (IIN) and MIDA Advisors, investors travel to various African countries to witness the continent’s potential firsthand. The delegations of U.S. investors managing trillions in assets are carefully curated, immersive experiences that bring investors face-to-face with the continent’s vibrant economic ecosystems.

Africa’s potential as an investment frontier is solidified by impressive statistics. By 2025, Africa’s consumer spending is forecasted to reach $2.1 trillion. As of 2020, the continent has six of the world’s ten fastest-growing economies and the rate of return on foreign investment is higher in Africa than in any other developing region. In the tech sector alone, African start-ups raised a record-breaking $701.5 million in venture capital in 2020, representing a 42.7 percent YoY growth. Additionally, six of the top 15 greenfield investment megaprojects (valued at more than $10 billion) announced in 2022 were in Africa.

At the Botswana Digital & Innovation Hub, members of the U.S. investor delegation learned more about how Botswana’s technology-driven businesses can develop and compete in regional and global markets.

These figures are a testament to Africa’s robust investment potential. Despite the immense potential, the business landscape in Africa remains intertwined with both actual and perceived challenges.
Investors are given the opportunity to interact with local fund managers, corporate stakeholders, and government officials, establishing relationships that can pave the way for future investments. The investors participate in pitch sessions, where they can evaluate the credibility and track record of managers with a concrete deal pipeline.

Through these delegations, Prosper Africa seeks to bridge the information gap and debunk the misconceptions that often hamper investment in Africa. And the efforts are already bearing fruit. To date, more than $1.7 billion in long-term investments have been mobilized from the delegations and subsequent transaction support from Prosper Africa.

Donna Sims Wilson, Chief Operating Officer of Kah Capital Management, holds a large polished diamond at the Diamond Trading Company Botswana. Anthony Griffith, Bank of America, Managing Director for Public Finance Group, Global Banking and Markets, looks on.

The continent is ripe for investment, and institutional investors are invited to look beyond perceived risks and explore the continent brimming with growth, innovation, and opportunity. As African economies grow, U.S. investors are also recognizing that they need to put their investments to work in a region that is least correlated with mainstream markets. This makes their overall portfolios more geographically diverse and balanced against risks.