The World Economic Forum (WEF) African regional meetings in Nigeria this week emphasized that a major push on infrastructure is underway in Africa.  In order for Africa’s recent economic turnaround to continue, large scale investment activities including energy, transportation, housing, and telecommunications are essential.

The amounts required are staggering.  According to McKinsey CEO Barton investment of some $2.6 trillion will be needed.  At the WEF, international institutions and governments committed to invest over $68 billion with a substantial share for infrastructure and development.

Similarly, the potential rewards for private businesses are also enormous.  African leaders have recognized that there is a pivotal role for business organizations working along with governments and NGO’s.  As the President of Kenya stated, “For business, the infrastructure deficit in Africa is an opportunity to do well by doing right.”  

Private investors are quickly realizing this opportunity.  Their interest in Africa is strong and rising; infrastructure is the focal point.  For example, last month the Carlyle Group closed its maiden private equity fund targeting sub-Saharan Africa at almost $700 million—40 percent above target.  Singapore’s Temasek investment agency invested $150 million in an oil and gas group in Nigeria.  The European Investment Bank has mobilized $15 billion for Africa.

With these opportunities come considerable risks.  Many African governments recognize the need to improve their regulatory regimes and policies toward investors.  This is a step in the right direction. However, any investment in fast growing Africa requires a comprehensive approach including a careful analysis of legal, regulatory, and policy issues.

 

This post can also be found on Cov Africa, the firm’s blog on legal, regulatory, political and economic developments in Africa.

Photo of Witney Schneidman Witney Schneidman

Witney Schneidman has nearly 40 years of experience working across Sub-Saharan Africa.

Drawing on his experience in the State Department, the World Bank, think tanks and his own consulting practice, Dr. Schneidman, a non-lawyer, has advised energy, technology, consumer and health companies, among…

Witney Schneidman has nearly 40 years of experience working across Sub-Saharan Africa.

Drawing on his experience in the State Department, the World Bank, think tanks and his own consulting practice, Dr. Schneidman, a non-lawyer, has advised energy, technology, consumer and health companies, among others, on projects in more than 30 African countries. He has also served as Deputy Assistant Secretary of State for African affairs, and on the Africa advisory committees in the Office of the U.S. Trade Representative and at the U.S. Export-Import Bank.

Dr. Schneidman provides strategic advice on the varied political, economic, social and regulatory issues that are critical to companies’ success in Africa. This includes issues related to Corporate Social Responsibility, compliance, market entry and risk mitigation. He played a leading role in the passage and recent reauthorization of the African Growth and Opportunity Act and was a delegate to the Global Entrepreneurship Summit co-hosted by President Obama during his visit to Kenya.

Dr. Schneidman chairs Covington’s Africa Practice Group and is a senior member of the firm’s Public Policy Practice Group, the International Strategy Group and the International Trade and Finance Group.