The Senior Vice-President of the African Development Bank, Frannie Léautier addressed the first day of the 14th Annual African Private Equity and Venture Capital Association (AVCA) Conference on Monday, April 4, 2017, in Abidjan, Côte d’Ivoire. The African Private Equity and Venture Capital Association is the sole pan-African industry body for private equity in Africa and has over 130 members.
Interviewed by Runa Alam, co-founding partner and Chief Executive Officer of Development Partners International, Léautier ranged broadly from the uniqueness of Africa’s investment story to the impact of global geo-political risks on Africa’s economic growth, to the role of the Bank in addressing the youth unemployment crisis in Africa. She also told the audience how the African Development Bank supports women entrepreneurship and the role of trade and regional integration in boosting economic growth and private sector development on the continent.
Léautier highlighted the peculiarities of the African investment story, Africa’s high urbanization rate, the role played by the financial sector, the rising middle class, and the innovations that arise as a result of shortages of infrastructure, particularly in the area of mobile payments, with 84% of registered users that use mobile payment services in Tanzania and 68% in Kenya.
On the dip in the prices of commodities and the exit of the United Kingdom from the European Union (Brexit) and other geo-political issues, including the populist governments in the US and some parts of Europe, Léautier stressed that Africa remains a resilient continent. Its expected GDP growth rate for 2017 is 3%, compared to about 1.8% for the OECD, 2.5% for the USA and 0.3% for the UK, she said.
Africa is home to three of the ten fastest-growing economies in the world – Côte d’Ivoire, Tanzania and Senegal. In addition, Private Equity Investment inflows into Africa amounted to roughly US $35 billion over the last decade, and Africa is the second most attractive destination for Foreign Direct Investment (FDI). Annual FDI inflows have risen from US $10 billion in 2000 to about US $67 billion in 2016.
Léautier also told Africa’s investment community about the Bank’s Jobs for Youth in Africa initiative. She reiterated the need for the investment community to come up with innovative mechanisms to help the millions of Africans who are unable to get formal employment upon graduation. She noted that boosting youth entrepreneurship, vocational skills training and training in Science, Technology, Engineering and Mathematics are essential for enabling Africa’s youth to be adequately prepared to take part in the global economy. She gave examples of Bank-financed projects and programs that support youth entrepreneurship across the continent, including Boost Africa, ENABLE Youth and the Rwanda Skills Employability and Entrepreneurship Program.
She noted that women occupy over 12.7% of board membership in publicly listed companies in Africa, higher than all other regions in the world, although more work remains to be done. She stressed that women in Africa still have challenges in accessing finance, and so the African Development Bank is providing targeted investments that support women-owned businesses such as the Alithea Identity Fund. In addition, the Bank is developing Affirmative Finance Action for Women (AFAWA) – a new and bold initiative with the goal of creating an enhanced financial environment for women-owned businesses.
On the impact of trade and regional integration on economic growth, Léautier highlighted the Tripartite Free Trade Agreement (TFTA) that was signed in June 2015 regrouping the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA), with a total GDP of US $1.5 trillion and a combined population of 600 million (roughly 60% of Africa’s GDP and total population, respectively). This grouping is expected to facilitate trade and business across the continent.
She highlighted several cross-border infrastructure projects that the Bank has financed, such as the Kazungula Bridge Project, built on the border between Zambia and Botswana, which is part of the North-South Corridor project in the SADC region; the Mano River Union Transport Facilitation Program in West Africa; the Chinsali-Nakonde Road Project, which links Zambia, Democratic Republic of Congo (DRC) and Tanzania; the Yaounde-Brazzaville corridor, which links Cameroon and Congo; Sharm El Sheikh Airport in Egypt; the Jomo Kenyatta Airport in Kenya; and Kokota International Airport in Ghana. These investments have reduced transport costs, reduced the cost of doing business, improved cross-border trade and competitiveness in the sub-region.
The African Private Equity and Venture Capital Association was launched in Cameroon in 2003 and has held its annual conference in several countries, including Botswana, South Africa, Ghana, Nigeria and Ethiopia.