Stears: New energy & infrastructure deals change balance in West Africa

In the ever-evolving landscape of African economies, private investors are navigating a more complex environment than ever before. Data from the Stears Africa Capital report indicates that in 2024, debt and structured financing became more prominent, with Southern and East Africa leading in deal volume. However, a significant shift is occurring in West Africa, particularly in new energy and infrastructure plays, which are changing the balance of investment opportunities in the region. Dumebi Oluwole, Senior Economist at Stears, recently joined CNBC Africa to discuss the report and shed light on the changing dynamics of private capital flows in the region. One of the key points highlighted in the conversation was the trend of West African economies embracing structural and institutional reforms to support their industries. This shift towards economic stability has caught the attention of private capital investors, who are increasingly funding services in the region. Countries like Cote d'Ivoire have emerged as bright spots in Sub-Saharan Africa, securing significant deals in sectors such as consumer goods and financial services. Cote d'Ivoire's targeted approach to industry support, regulatory stability, and low currency risk have positioned it favorably in the eyes of investors, leading to an increase in private capital inflows. Notable sectors driving investment in Cote d'Ivoire include agriculture, with the country being the largest cocoa producer globally. Government interventions and support have bolstered the agricultural sector, focusing not only on primary production but also on value addition through the cocoa value chain and other commodities like cashews. Additionally, investments and activities in the oil and gas sector are gaining momentum, with expectations of continued exploration and development. While Cote d'Ivoire shines as a beacon of investment opportunity in West Africa, Nigeria also remains on the radar for investors. Despite ongoing reforms around taxes and relative currency stability, investors are cautiously optimistic about the prospects in Nigeria. The government's structural reforms are viewed as favorable for attracting private capital, with the potential to continue driving investment inflows into the country. Investors are taking steps to enhance their returns, including exploring local currency investments and engaging in conversations with financial institutions to optimize their investment strategies. As the African economic landscape continues to evolve, private capital flows are reshaping the investment opportunities across the region. The delicate balance between opportunity and risk in navigating currency fluctuations, regulatory uncertainties, and global market unpredictability underscores the need for investors to carefully evaluate and adapt to the changing dynamics. With West Africa emerging as a hub for new energy and infrastructure deals, the investment outlook in the region is poised for further transformation.