PARLEZ-VOUS FRANCAIS?

It’s time to learn French if you’re a private equity investor in Africa

Quartz africa
Quartz africa

How do you say deal in French? Well it’s time investors learned this and more in order to take advantage of the economic opportunities in Francophone Africa.

There is a growing frustration among entrepreneurs and innovators across French West Africa. The region is showing all the signs of sure investment, and yet attracting much-needed private equity is proving very difficult because of the linguistic biases in the current investment environment.

Emerging market investors have historically and continue to focus on Anglophone Africa, according to Tom Flahive and Abdoulaye Touré, both of the frontier market consultancy firm CrossBoundary.

English-speaking Africa is home to many of the continent’s commodities-driven economies, like South Africa, Nigeria and Zambia. But the recent unpredictability of these economies should be enough to encourage investors to look beyond their usual markets.

After two years of currency fluctuations in these three countries, the shared West African franc, the CFA, should be looking more attractive to portfolio managers, said Flahive and Touré argued on the Brooking Institute blog. The currency is shared between the eight members of the West African Economic and Monetary Union and used by over 100 million people.

Pegged to the euro, it is the only single currency system in Africa, and has survived the wobbles of the European single-currency. Despite criticisms that the CFA maintains France’s post-colonial power while holding on to rigid policies that hamper development, the currency seems determined to forge ahead into the future, recently introducing a digital version, the eCFA.

The lack of competition in the region is another reason investors should get in early, sad Flahive and Touré. Between 2010 and 2016, there were 167 private equity deals in Anglophone East Africa alone (Kenya, Ethiopia, Tanzania, Rwanda and Uganda), according to data quoted from the African Private Equity and Venture Capital Association.

During the same period, Francophone West Africa saw a third of that. More than 30% of that has gone to Côte d’Ivoire.

The country is quickly returning to its position as an economic hub in the region. The African Development Bank’s return to Abidjan after years in Tunis signaled renewed confidence. The two researchers see Côte d’Ivoire as a gateway economy into the region. On a list compiled by Quartz Africa, four of the five economies to watch in 2017 were in Francophone West Africa, top of that list was Côte d’Ivoire.

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