Less government red tape, more tech savvy and open data on minerals are some of the changes needed to making South Africa and its continental neighbours more amenable to US investment.
This is according to a panel discussion hosted by Washington DC-based think tank Hudson Institute’s Joshua Meservey last week.
Panellist Matthew Davis, co-CEO and chief investment officer of Renew Capital, said Africa's GDP could grow 4% or 5% if governments would not hinder companies. He believes there is a disconnect on the ground in Africa.
“I think the leadership is aligned. Leadership wants the country to advance, wants technology to be a part of the future. It’s just as that trickles down, that’s where things get into trouble,” Davis said.
He said leaders need to stress their determination to help the private sector grow, by making statements to say, 'that’s our future, let them grow.’
“I believe Africa’s future is going to be largely tech driven. Its private sector is going to mature, and AI is going to change so many things. It is one of the most exciting investment opportunities in history.”
The youth of the continent is an asset, he said.
“We have the young population coming into a workforce that has no jobs. They’re going to start their own businesses. A lot of those companies are not going to be big booming tech start-ups. I think they’re going to start on phones. They are going to be SMEs but they are going to be tech enabled. I think that is a huge opportunity, both on the continent and for us as the leaders of innovation and start-up.”
Tony Carroll, founding director of Acorus Capital, started his African journey 40 years ago in Botswana as a Peace Corps volunteer.
“In Botswana I was involved in attracting a textile company from the UK to relocate. Since then, I have been involved in Africa in everything from infrastructure, oil and gas, hospitality, mining, agri-processing and agriculture,” Carroll told the panel.
“It’s been an interesting ride. One that I hope to stay on for some time longer.”
Most recently, he has been involved with US investment finance partners.
“We’re looking at a range of investments, but right now we believe there is great growth in the luxury hospitality space. We signed a deal to take over a hotel in Addis Ababa for the Four Seasons group. We also have a project under way in Franschhoek near Cape Town. We’ve raised $300m in equity for those projects,” Carroll said.
“I want to visit the idea that I spend a lot of time on and that is critical minerals. Africa has a lot of critical minerals. Maybe 30 to 35% of gold and critical minerals are located in Africa. The idea to have bans on the export of unprocessed critical minerals is not helpful.”
The lack of open data in mining is a fixable problem, he said.
“There is a comparison between what happened with oil and gas and what is happening with mining.”
“About a generation or half a generation ago, oil and gas decided to make open data the norm in oil and gas exploration. So you would go into a data room in Houston, and you would get data on Côte d'Ivoire’s Petroci and what its offshore fields had. You could make an evaluation about, ‘We can go after that licence or not.’ That transferred the oil and gas industry to where it is today,” Carroll said.
In mining, and especially African mining, the picture is completely different.
“There are only two countries in Africa that have open data in mining — Nigeria and Malawi. So 52 countries in Africa still hold on to their knowledge of geographical information. If you’re an exploration company, you’re not going into a black box. Opening up the data is going to accelerate investment in that space.”
Carroll sees South Africa as a potential partner in some industries.
“When people say the US is not investing in mining, they are wrong. We are, but we are doing it through partners — Australians, Canadians and South African companies. I think we can do a lot more with South Africa in partnering with them in mining. We need to do that more often,” Carroll said.
Kurt Scherer, MD of C5 Capital, is bullish.
“There has never been a better time to be in business. And when you look at what’s happening in the world with the rate of change and the things that are happening, business can be such a force, such a power for good. And when we combine that — and we are learning how to do this better, but we are not quite there yet — combining with governments and the right ecosystems and policies, there is nothing that we won’t be able to accomplish,” Scherer said.
“Business loves certainty and business loves stability.”
He agreed with Davis about government not standing in the way of business, except in areas where they can create more certainty and stability.
“And there are several areas that are within the province of government to do that. Things like having regulatory certainty, identifying and having a plan to fill infrastructure gaps, security and currency volatility. All these things can be obstacles for someone who is looking to invest,” Scherer said.
“The next five years are going to matter so much. The term public-private partnership has been around for decades, but we almost have to come up with a new term because there is so much baggage associated with it.”
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