Africa struggles to attract private capital – report

A new report released by Rwanda Finance Limited has shed light on the ongoing challenges that Africa faces in attracting private capital. The report, which surveyed professionals across the continent, revealed that Africa continues to struggle in comparison to other emerging markets when it comes to Foreign Direct Investment (FDI). However, the report also highlighted areas of growth and opportunity, particularly within the private equity and venture capital space. Michelle Umorongi, Senior Strategy and Policy Analyst at Rwanda Finance Limited, discussed the findings with CNBC Africa's Julius Busimongo. The report indicated that while Africa may lag behind other regions in terms of FDI inflows, there is a significant uptick in investment in sectors like Fintech, mining, and agriculture. Umorongi pointed out that countries like Nigeria, South Africa, and Kenya are among the top recipients of private capital due to their large economies, high growth rates, and advanced financial sectors. These countries have been able to instill confidence in investors and maintain consistency in their regulatory frameworks, key factors that attract foreign investment. Despite challenges such as political instability and corruption in certain African countries, investors are still drawn to these markets due to the potential returns and growing populations. Umorongi stressed the importance of aligning African standards with international norms to build trust and attract more investment. She highlighted the efforts of the Kigali International Financial Center to establish a robust legal framework and provide a compliant jurisdiction for investors. One of the key issues identified in the report was the reliance on external expertise by investors looking to enter African markets. Umorongi emphasized the need to dispel misconceptions about the availability of skilled professionals and resources in Africa. By showcasing the capabilities of African entities and promoting local expertise, the aim is to encourage investors to engage more with African service providers. Looking ahead, Umorongi expressed optimism about the future of the Kigali International Financial Center, noting a growing interest from investors. She acknowledged that building a financial center takes time but expressed confidence in the progress being made towards establishing Kigali as a premier destination for African investments. Overall, while challenges persist, the report highlights opportunities for Africa to leverage its strengths and attract more private capital in the years to come.