March 5, 2015
Thomson Reuters Concludes 4th Trading Africa Summit in Cape Town
• Entrepreneurs in Africa should focus on the user interface to create wealth
• China is going to Africa at a high speed with a more cautious risk approach
• African governments have learned that good management is good governance
• Regulators should look at the transactional cycle of African markets to promote confidence
• Integration of African markets is possible even if a Pan African Exchange is not established
• 80 per cent of what private equity funds do is about reinventing the growth story in Africa
CAPE TOWN, SOUTH AFRICA - Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today concluded the 4th Trading Africa Summit in Cape Town, South Africa.
Speakers debated Africa’s high interest rates, moving from risky and illiquid to safe and liquid markets, doing business across the continent, as well as Africa’s economic fundamentals, growth performance and prospects.
Ken Olisa, Founder and Chairman, Restoration Partners and Non-Executive Director, Thomson Reuters, said: “The commodity boom is over and there is a high willingness for entrepreneurship in Africa. A mindset change is critical to deal with entrepreneurs and external parties have to understand the entrepreneurship story in Africa.”
Mr. Olisa spoke about creating wealth in the continent, he pointed out that entrepreneurs in Africa should focus on the user interface to create wealth.
Highlighting Africa need for the skill and expertise of China, Dr. Ross Anthony, Interim Director, Centre for Chinese Studies, Stellenbosch University, said: “From an educational standpoint, China is the largest partner and we need to start developing a better knowledge about its economy. It is really important for African states to realize the opportunities that this partnership offers.”
Kenny Chiu, Head of the China Practice Group, ENSafrica, said: “The Chinese companies operating in Africa now are different than those that started ten years ago. Consumer facing industries in Africa are becoming a real focus for the Chinese businesses.”
He added: “China is going to Africa at a high speed with a more cautious risk approach. China is now looking at an African partner in a different way and wants to help African governments open their markets. The communication style between China and Africa is really important to consider and that’s why dialogue is extremely important to foster understanding and build a trust relationship.”
Colin Coleman, Managing Director & Head, Investment Banking Division, Sub-Saharan Africa, Goldman Sachs, said: “We have done significant transactions with China. We need to invest our personal time to further explore China. Africa is on China’s agenda and there are massive opportunities across all sectors. It is important to keep in mind that China is administratively rich while Africa is administratively poor.”
Speaking about the government’s role in developing economies, Bashi Gaetsaloe, Managing Director, Botswana Development Corporation, spoke about Botswana’s government experience. “We have learned that good management is good governance. Furthermore, investment in the basics such as health and infrastructure is critical. Around 28 percent of our government’s budget was allocated to education including primary and secondary education. Investor friendly programs have also helped Botswana promote a free market spirit,” he noted.
Ian Bessarabia, Business Development Manager, SSA, Swift, spoke about the performance of the South African market at the third panel session titled: “Challenges of regulating Africa’s securities exchanges”
He noted: “In 1998, South Africa was rated the second worst market in terms of settlement. The market in South Africa has done well in term of cooperation during the past few years. In order to continue on this improvement path, we need to look at the whole transactional cycle which will eventually help promote investor confidence and mitigate operational risk.”
“Investor confidence in the operational side of the market will definitely contribute to the efficiency of African markets,” he added.
Donna Oosthuyse, Director Capital Markets, Johannesburg Stock Exchange, said: “Balancing the need of large investors and small investors has always been complicated. It is critical that regulators centralize the process so that clients can see what is happening in African markets. It is also important that we maintain good liquidity levels and provide proper disclosure to the marketplace.”
“We won’t see a pan African exchange in the short term, however, this doesn’t mean that the market cannot integrate in different forms,” she concluded.
Bola Onadele, Managing Director FMDQ OTC, Nigeria, said: “Technology in Africa can help liquidity across our market. A good example is a recent decision by the Nigerian Central bank to deploy an advanced security system. As part of its efforts to enhance transparency, the Nigeria Exchange also decided to launch an e-web disclosure system.”
Speaking about the state of Private Equity in Africa, Mike Williams, Head of Frontier & Emerging Market Real Estate Strategies, Investec Asset Management, said: “We have seen local players looking for partners who could take them to the regional level. What is key in the private equity area is a qualified partner with just the right skill set. Ongoing relationship management is always critical across African markets.”
David Cooke, Director, Actics, spoke about asset allocation. He noted: “During the last six year, the financial services, consumer, and health care sectors were heavily target. More than 80 per cent of what we do is about reinventing the growth story and backing high growth companies.”
“Fund raising has become very sophisticated across market. It is an intensive exercise that requires constant dialogue. We would love to raise more funds from local African markets which would be a healthy indication for the private equity industry,” he added.
John Bellew, Partner, Webber Wentzel, highlighted the attractiveness of the South African market which has become a real focus for large deals. “Few funds are focusing on the mid market space, while others are targeting various sectors such as Agriculture. We are seeing a real focus on healthcare and infrastructure including telecommunications, power, among others,” he added.
“It has been a challenge to broaden the base of South African institutions that invest in equity. Furthermore, there have been regulatory concerns about funds investing in private equity and several trustees are still trying to understand the asset classes. Unfortunately, we haven’t seen a flow of capital from local investors. Deals are relatively small, however, there are players who are managing pretty huge portfolios as well,” he concluded.
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