Exploring Investment Readiness Among Aspiring and Emerging Fund Managers in Africa
Africa’s investment landscape has undergone a significant transformation over the past two decades. Once viewed primarily as a high-risk destination by institutional investors, predominantly from the global North, it is now considered a frontier market teeming with untapped potential and lucrative opportunities for discerning investors.
Despite this progress, investment distribution remains uneven, favoring sectors with immediate high returns, such as oil and gas, mining, and telecommunications infrastructure.
The gap is particularly pronounced in the Small and Growing Businesses (SGBs) sector, which represents a majority of the private sector in many African economies. These enterprises frequently struggle to secure the necessary capital to scale their operations and improve their productivity.
This learning brief aims to probe deeper into the nuances of investment readiness assessment practices in Africa, with a particular lens on the challenges and opportunities faced by aspiring and emerging FMs in demonstrating investment readiness.
The brief aims to:
- Explore definitions of investment readiness within the African investment landscape.
- Investigate prevailing practices of assessing investment readiness amongst investors in Africa. This includes exploring common criteria that are used to assess investment readiness and the underlying factors, including biases that may underpin these criteria, with a specific focus on the implications for women-led funds and aspiring and emerging FMs.
- Examine the Fund’s investment strategy and approach to assessing an emerging FM’s investment readiness.
- Uncover the barriers that preclude IVs from reaching investment readiness, exploring the role of systemic factors such as lack of access to risk capital, investor mindsets and challenging macroeconomic conditions.
- Recommend actionable strategies and best practices that can enhance the investment readiness of African IVs, thereby unlocking more capital for sectors that hold the key to inclusive, job-rich growth.