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Enterprise

African enterprises solving society’s critical problems

Investing and partnering with entrepreneurs
Investing and partnering with entrepreneurs that solve on-ground problems while focusing on growth gives risk-tolerant global investors a shot at higher returns as the economies continue to prosper. 

As Africa begins to showcase its potential, global investors are excited to join the growth story.

According to African Development Bank (AfDB), between 10 million and 12 million youth enter the regional job market each year, but only 3.1 million new jobs get created. To bridge this gap, in 2016 AfDB launched the Jobs for Youth in Africa Strategy. The programme aims to create 25 million jobs, and train 50 million youth to be entrepreneurs by 2025.

A report by Global Entrepreneurship Monitor says countries like Angola, Cameroon, and Botswana have some of the highest number of entrepreneurs in the world.

Entrepreneurs such as Dr Abasi Ene-Obong of 54gene, Cyril Gunda of ZimAvian and Nzambi Matee of Gjenge are solving real problems that deliver impact as well as profits. 54gene studies the African genome to make healthcare more effective, while ZimAvian is increasing the region's access to nutritional food by supplying high quality day-old chicks at affordable rates to small-scale farmers. Gjenge Makers makes bricks from plastic waste, upcycling it and offering cheap and durable building material.

What these companies, and many others, have in common is that they are creating jobs while solving fundamental problems. Entrepreneurs are finding profits while contributing to the region’s growth - be it in the areas of food and nutrition, healthcare, renewable energy, housing or education.

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These ventures have caught global interest. According to the WEF, half of the world’s fastest-growing economies are from Africa.

Global investors looking to find their next big investment and make a difference, are partnering with local funds to infuse capital in African companies. Interestingly, despite political and social strife in many countries, most agree that there is substantial potential in these investments.

One such global investor example is Capria, which has put it’s toe in the water in a troubled country and joined with Vakayi Capital to invest in Zimbabwe-based ZimAvian.

Other global and regional investors include AfricInvest, which has raised $1.5 billion across 18 funds from local and overseas investors. AfricInvest has invested in Cotugrain, a Tunisian seed distribution company, and Sopat, Tunisia’s second largest producer of poultry products. 54gene counts Bay Area’s YCombinator among its investors.

Turkey-based Ida Capital has partnered with international investors to invest in Reengen, a SaaS solution for reducing energy consumption in small and medium enterprises.

As with any emerging economy, the potential rewards are high, if one can tolerate the risks. Investors from across the world — China, Japan, the US, and Europe — have steadily increased their investments in the region. Between 2015 and 2018, there were around 861 investment deals in Africa, and this number is growing.

Switzerland-based Seedstars is partnering with First Growth Ventures’ partners to launch a $100 million Sub-Saharan Africa venture fund. There are many more and the interest is increasing rapidly. Governments are also doing their part to foster entrepreneurship. Ghana, Nigeria and Rwanda, among others, have startup funds to help local companies. The potential for global investors to partner with government agencies for more specific developmental projects now has a ground to build on.

Investing and partnering with entrepreneurs that solve on-ground problems while focusing on growth gives risk-tolerant global investors a shot at higher returns as the economies continue to prosper.

Simultaneously, by seeking global capital, entrepreneurs and investors in the region will get exposure to global standards of operations and build a discipline to help great investments scale great businesses, hopefully developing overseas markets as well, bringing much needed foreign currency to the continent.

Mr Kranzler is a senior partner, Capria

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