Title: MEETING THE OPPORTUNITIES
1MEETING THE OPPORTUNITIES CHALLENGES OF VENTURE
CAPITAL IN AFRICA
MONDAY 06 NOVEMBER 2006 DAKAR
DAVID LAWSON
2OUTLINE
CHALLENGESCAPITALMARKETS OPERATING
ENVIRONMENTCHALLENGES IMPLEMENTING
INITIATIVESOPPORTUNITESLOCAL ENTREPRENEURS
INFORMAL SECTORDOMESTIC MARKETSINTRA AFRICAN
TRADETHE ECOBANK GROUP
3AFRICA
ECONOMIC BLOCS
19 STOCK EXCHANGES
4MIDDLE AFRICA STATISTICS
GDP POP
COUNTRIES
(US BN) (M)
WEST AFRICA 49
99 14
NIGERIA
96 130 1
CENTRAL AFRICA 57
120 11
EAST SOUTHERN AFRICA 105
328 18
TOTAL 307
677 44
INCLUDING CAPE VERDE MAURITANIA,
EXCLUDING NIGERIA EXCLUDING REPUBLIC OF SOUTH
AFRICA
5CHALLENGES
CAPITAL Aligning maximization of venture
capital returns with the strategic intent of
African countries. Channeling venture capital
away from extractive commodities. On average,
Africas share of FDI has been less than 3 and
mostly channeled to countries (Angola, Nigeria,
Eq. Guinea, Sudan) rich in natural resources.
What is Chinas interest in Africa?
6CHALLENGES
CAPITAL Inward Remittances, though impressive,
are not consolidated and targeted at specific
productive sectors. Private Equity investments
are not substantial. The source of capital
determines the target market. Setting restrictive
qualification criteria upfront and covenants
hinder project growth, and ability to exploit
emerging trends and unforeseen opportunities.
7CHALLENGES
MARKETS OPERATING ENVIRONMENT Fragmented
markets, outside of the extractive sectors,
lacking scale required to sustain ventures of
appreciable size.Lack of infrastructure to
support domestic and intra regional trade.
Integration issues including convertibility
free movement of capital informed issuers
investors enabling laws rules regulations
transaction communication costs clearing
settlement systems.
8CHALLENGES
CHALLENGES IMPLEMENTING INITIATIVESImplementing
and effectively managing initiatives such
asECOWAS Trade Liberalization Scheme (ETLS)
involving the total elimination of customs duties
and taxesCommon External Tariffs (CET) for
goods entering ECOWAS customs territory.
Engagement of regulators at the policy level.
9OPPORTUNITIES
LOCAL ENTREPRENEURS INFORMAL SECTORLocal
entrepreneurs are active in the informal sector,
have access to vast networks (domestic, intra
Africa), some amount of family capital, and
intricate knowledge of local markets.
Reasonably profitable but lack formal
structures, management and financial discipline
to ensure business sustainability. Lack
capacity to exploit opportunities out of their
captive markets.
10OPPORTUNITIES
DOMESTIC MARKETSLimited effort to leverage
stored wealth in commodities (land, cattle,
produce, etc) through financial markets.Limited
value adding activities and negligible
participation in world trade. How can we be
competitive in the global market? AGOA, Cotonou
Convention, Everything but Arms initiatives focus
on access and not on enhancing our
competitiveness.
11OPPORTUNITIES
INTRA AFRICAN TRADEImportant trade and
migration corridors exist between major cities.
Circa threequarters of imports into Cotonou,
Benin, are destined for Nigeria either formally
or informally.Ecobanks role in regional
integration is key to trade and investment
intermediation.
12THE ECOBANK GROUP
LEADING REGIONAL BANK IN AFRICA
13 COUNTRIES AND OVER 200 OFFICES AND BRANCHES
6 CURRENCIES
OVER US 2.5 BILLION IN ASSETS
1ST BANK HOLDING COMPANY IN WEST/CENTRAL AFRICA
13ECOBANK REGIONAL LISTING, 11 SEPTEMBER 2006
LISTED ON ALL 3 REGIONAL EXCHANGES
NIGERIAN STOCK EXCHANGE
GHANA STOCK EXCHANGE
BOURSE REGIONALE DES VALEURS MOBILIERES (BRVM)
FIRST REGIONAL LISTING IN AFRICA
14THE ECOBANK GROUP
Provides debt financing and is open to proposals
for equity participation (ACCION, etc).Offers a
robust transaction service platform for payment
collection solutions across Africa.Offers
products services designed to facilitate
regional trade including Rapid Transfer which
offers same day payments and funds transfer
Regional Trade Bills which support trade.
15THANK YOU