Hi, Quartz Africa readers!
[insertSponsor]
*Apologies for the late delivery of the Weekly Brief due to a technical hitch.
Private thoughts
This was a good week if you’re into poring over analyses on Africa’s economic promise. In particular, McKinsey’s in-depth Lions on the move II report was insightful on the prospects of Africa’s large companies (see below, Chart of the week).
With the best will in the world, major corporations are often only as good as their access to reliable funding. Most capital markets on the continent are still undeveloped reducing the options for businesses compared with counterparts in more developed markets. This made it worthwhile diving into another report, Why Africa remains ripe for private equity, from Boston Consulting Group.
BCG is particularly bullish, describing the continent as still being one of the greatest growth opportunities for investors. This is despite fears of a private equity bubble created by too many funds chasing too few prospects even as many countries suffered from crash in energy and commodity prices.
The problem wasn’t that there too many funds, quite the opposite. It seemed to be that private equity firms haven’t been very flexible in their approach or in how they define investment prospects. But that’s set to change.
As the role of development financing diminishes and large pension funds and others come seeking growth, private equity firms should be “casting a wider net” in looking for investment bets. They need to go beyond the usual large companies doing the infrastructure, telecoms and big bank type deals. BCG says the continent is “awash in opportunity”. There are thousands of mid-sized companies across the continent that could benefit from private equity’s partnership and expertise.
PE assets under management are approximately 1% of GDP in western countries, it’s just 0.1% in sub-Saharan Africa, says BCG. And while Africa accounts for 3.1% of global GDP, just 0.9% of global private equity funds that are raised focus on the continent.
To fix these anomalies requires a certain amount of market expertise and local knowledge. It seems obvious to say it, but PE firms should be recruiting and developing talent on the ground to be able to help find the best mid-sized firms and promising startups to develop the right types of relationships.
Whichever way you cut it private equity’s involvement on the continent is only really just getting started and will have a meaning impact on the continent’s growth. Be ready.
Yinka Adegoke, Quartz Africa editor
Stories from this week
Angela and the iconic Afro. Civil rights activist and academic. Angela Davis was welcomed with the kind of rapturous applause usually reserved for rock stars as she delivered this year’s annual Steve Biko lecture at the University of South Africa in Pretoria. Davis called on her audience and young activists to challenge their heroes. Quartz Africa’s Lynsey Chutel was in the audience.
African governments aren’t open for business. More and more African countries are enacting open data policies, telling citizens they can access information relatively easy. But as Joshua Masinde writes, this opening up in the guise of transparency and accountability often serve far more mundane purposes and may not be the data that citizens want.
How Safaricom went after millennial customers. For the past year, the Kenyan telecoms giant Safaricom has been transforming itself into a consumer-led company, writes Lily Kuo. See the full Quartz ‘Perfect Company’ series here which includes in-depth stories on how leading companies like IBM, Muji, and Safaricom are approaching design, communications, research, customer service, remote working, diversity, and supply chains in new and effective ways.
Visa is taking on M-Pesa. The credit card company has launched its mVisa app that allows users to make purchases or transfer money on their cellphones in Kenya. The app is not exactly like M-Pesa, which could stand both as a drawback or a boon.
Nollywood, it’s time for your close-up. Eight Nollywood movies were screened at the Toronto Film Festival this week in a nod to the industry’s rapid growth. Local filmmakers have been making higher quality movies and that’s helped their international recognition, explains Yomi Kazeem.
Tanzania is jailing more people for insulting the president online. As president John Magufuli faces growing opposition, his government has been using a cybercrime law to charge people for making comments on WhatsApp and other social media platforms. This week, five people were charged, and if convicted, face hefty fines and time in prison.
Chart of the Week
Africa’s large firms are doing well. Despite the drop in oil prices and the sociopolitical instability that followed the Arab Spring, a new report from McKinsey shows big economic opportunities ahead for Africa, writes Abdi Latif Dahir. Large companies across the continent have become drivers of economic growth, contributing not only to wages and taxes but also to innovation and technology dissemination. South Africa’s large companies currently dominate the continent.
Other things we liked
Welcome to a world of restricted travel. In a post-Brexit world, British citizens might have to apply and pay for a permission to travel to other parts of Europe. But as Chibundu Onuzo writes in The Guardian, for many Africans, the idea of restricted travel, of applying for visas or getting hassled at airports, is a daily reality.
Top 10 TED Talks on Africa. Dozens of African speakers at TED events have over the years shared their perspective on a broad range of issues about Africa. A new list, curated from watching 100 talks on Africa or by Africans, captures the essence of how the continent is a place for diverse, innovative and bold ideas.
Why Zimbabwe’s military sticks with Mugabe. The recent protests in Zimbabwe have highlighted the public’s dissatisfaction with president Robert Mugabe’s rule. Yet the governing ZANU-PF party’s close relationship with the country’s armed forces helps solidify its rule, and undermines the calls for reform. As Philip Martin writes in Foreign Affairs, the military’s loyalty to the party is a product of deep ideological, personal and institutional ties. (paywall)
Keep an eye on
US-Africa Business Forum (Sept. 19 – 23).
The US Department of Commerce and Bloomberg Philanthropies will co-host the
in New York. The forum is hosted on the occasion of the 71st UN General Assembly, and will focus on trade and investment opportunities from across the African continent.
South Africa Innovation Summit (Sept 21–24).
The SA Innovation Summit, aimed at nurturing and
showcasing South African innovation
, will this year be held in . The Summit will bring together innovators, inventors, entrepreneurs and creative thinkers for an event that includes open discussions, pitching sessions, master classes and a hackathon.
Our best wishes for a productive week ahead. Please send any news, comments, Angela Davis memorabilia and Nollywood DVDs to africa@qz.com. You can follow us on twitter at @qzafrica for updates throughout the day.