Investors say Africa must fix its governance before more money flows

Africa’s biggest challenge is not attracting investment opportunities but creating the confidence investors need to commit more capital, business leaders told the fourth DLO African Women in Leadership Summit in Sandton on Wednesday.

The summit, themed “Connecting Capital to Opportunity Across Africa”, brought together investors, business executives, entrepreneurs and policymakers to discuss what Africa needs to unlock economic growth.

During a panel discussion Horatius Maluleka, investment executive at Ninety One, rejected the idea that Africa is “uninvestable”.

The message that came through repeatedly during the discussions was that the continent does not have a capital problem but it has a confidence problem. Maluleka said investors struggle to assess its risk because Africa is often treated as one market despite every country having different economic and political conditions.

“I don’t think the continent is uninvestable. The challenge is how we price risk consistently across the continent,” he said.

Capital flows to structures. If investors cannot understand how your business is run, they are unlikely to commit their money

—  Horatius Maluleka, investment executive at Ninety One

Maluleka said investors needed to understand that Nigeria’s investment environment was different from Rwanda’s, just as South Africa’s differs from many of its neighbours. He said attracting investment requires more than promising business ideas. Companies also need:

• strong governance;
• independent boards;
• audited financial statements; and
• transparent business structures.

“Capital flows to structures. If investors cannot understand how your business is run, they are unlikely to commit their money,” he said, adding that Africa already has strong entrepreneurial talent but many businesses struggle to attract funding because they are not structured in ways that institutional investors expect.

Maluleka said access to African markets remains limited for ordinary investors.

While institutions such as Ninety One already invest billions of dollars in the continent through carefully structured products, he said more work was needed to create investment products that allowed retail investors to gain exposure to African businesses and projects.

Also discussed was the challenges facing women entrepreneurs.

Maluleka said many women remain disadvantaged because traditional lending models rely heavily on collateral, which many women have had few opportunities to build.

He argued that financial institutions should rethink how they assess creditworthiness, saying women have consistently shown strong repayment records even when they lack assets.

“What needs to change is the way credit is measured,” he said.

The most successful businesses are not those that avoid risk. They are the ones that navigate uncertainty with clarity, resilience and conviction

—  Pontsho Mokoena, Dangote Industries’ chief risk officer

The meeting discussed industrialisation as one of Africa’s biggest long-term goals.

The chief economist of Dangote Industries Limited, Dr Hassan Mahmud, said African countries had spent decades talking about industrialisation but had made slow progress because governments and the private sector had not worked closely enough. He said investors need policy certainty before committing money to long-term projects.

“Industrialisation is a generational investment and it cannot depend on short election cycles. Investors need transparent, stable and predictable policies,” Mahmud said.

Mahmud said governments should focus on creating the right environment for investment by:

• maintaining stable economic policies;
• improving infrastructure;
• ensuring efficient payment systems; and
• providing clear regulations.

Dangote Industries’ chief risk officer Pontsho Mokoena said businesses needed to change the way they thought about risk. “The most successful businesses are not those that avoid risk. They are the ones that navigate uncertainty with clarity, resilience and conviction,” she said.

Mokoena said confidence was one of the biggest drivers of investment: “It attracts capital, and capital attracts commerce.”

Investors are increasingly looking for businesses with strong governance and leaders who deliver consistently, she added.

As the summit drew to a close, speakers agreed that Africa’s future growth depends on governments creating stable policy environments while businesses strengthen governance and transparency. They urged Africans to invest more confidently in their own continent instead of looking abroad.

TimesLIVE