Growth of African economies: Where the opportunities are

Economies around the world are striving to recover from the impact of COVID-19 by implementing plans to stimulate growth. Both developed and emerging economies are witnessing a resurgence in private capital investment in infrastructure and food security. South African President Cyril Ramaphosa recently announced a massive infrastructure drive amounting to one trillion rand to be spent over the next four years. This initiative aims to reignite economic activity in the country and attract investors. To shed light on the current landscape of private equity investment in African economies, CNBC Africa interviewed Greg Swenson, the Founding Partner at Brigg Macadam. Swenson highlighted the positive momentum in the region, despite the challenges posed by the pandemic. He mentioned that private equity investors and development financial institutions (DFIs) have been actively deploying capital to support critical infrastructure projects. While COVID-19 has created some disruptions, the adaptation to remote work and virtual meetings have enabled the flow of investments to continue smoothly. Swenson emphasized the growing interest in sectors like agriculture, food security, water resources, and alternative energy, particularly solar projects, in East Africa. He also noted the significant involvement of US DFIs in financing infrastructure projects across the continent. When asked about South Africa's attractiveness to private investors, Swenson acknowledged the historical challenges faced by the country in attracting foreign capital due to political uncertainty and bureaucratic hurdles. However, he pointed out that recent reforms and efforts to improve the business environment have made South Africa a more appealing investment destination. Swenson emphasized the importance of reinforcing confidence among investors and reducing geopolitical risks to further boost capital inflows. Despite South Africa's existing economic ecosystem and well-established private equity funds, there is a growing need for external assistance to foster capital formation in the country. Swenson suggested that Western private equity firms and DFIs are increasingly looking towards South Africa for investment opportunities. In response to a query about the impact of the American election on foreign direct investment (FDI), Swenson expressed confidence that the outcome would not significantly alter the capital flows from the US to markets outside the country. He highlighted the increased interest of US DFIs in Sub-Saharan Africa, driven by initiatives such as the Prosper Africa program. Swenson noted that regardless of the election results, the commitment to strengthening economic ties with African nations remains steadfast. Overall, the interview with Greg Swenson provided valuable insights into the evolving landscape of private equity investment in African economies and the opportunities and challenges that lie ahead.