Institutional investors need to be on-site for African investments

Investment in Africa is a longer and more fruitful affair than anywhere on the globe. To gain respect and standing in the African investment market, you need to heed the interests of the opportunities. Along with the interests, Quantum Global founder Jean Claude Bastos de Morais suggests that the investment should serve everyone in the community.

Institutional investors are obviously worried about the risk. They can reduce it through large-scale infrastructural asset investments in the long run rather than short high-risk investments.

Africa lags behind in terms of infrastructure. It’s risk for institutional investors that they’ll have to take. World Bank statistics suggest that only 35% of Africa has access to electricity. In fact, there’s a shortage in every circle of resources, such as real estate, logistics, transport, and medical care. The question that bothers investors is — “is the risk real or is it exaggerated by the media and mediocre analysts?”

It’s hard to trust the data and sources as they’re not gathered for purpose of assessing risk. Most of the data is not collected, the reason why investors need to step on-site. A local presence needs to be built if investors wish to keep a sharp eye on the local environment.

Jean Claude Bastos de Morais says, “I have learned the importance of developing a sense of partnership, not least because it engenders trust on both sides. The economies of many African countries are also less stable so even in what may appear to be a good market; there are risks.”

On the other hand, Harvard Business Review’s Jonathan Berman believes that Africa is more stable than people think it is. African countries are becoming increasingly democratic. “Bad governments will continue to appear. Their appearance will be magnified by the media. Don’t be fooled by that magnifying glass. Keep your eye on the long-term trend.”

Jean Claude Bastos de Morais suggests the same. “Looking ahead, the investment climate is likely to improve. Politically, the direction seems to be invariably towards greater political accountability and the ejection of despots and corrupted leaders.” He adds, “Many African countries, particularly Angola, Botswana, Ghana, Mozambique, and Nigeria are undergoing rapid urbanization, which is underpinned by a major demand for infrastructure.”

Irrespective of what the risk is, there should be a good rapport between institutional investors, foreign state investments, and the national interest. There should be a good relationship between the governments and the private sector. Policies and initiatives that support progressive economic decisions need to be framed.