Funding: Mind the gap

The Africa Report - Monday, 03 November 2014

Finding money for transformative investment has always been a struggle in Africa - but now banks and governments are joining forces to mobilise Africa's own resources, and find long-term funds.  Africa has development challenges that require immediate attention, like roads, housing and agriculture.
Glossy brochures in the reception rooms of upmarket private equity funds in the United States (US) and Great Britain vaunt the upward trajectory of the continent, but these vital sectors do not attract many financiers from outside the continent, except for a few backing self-contained projects such as high-end apartments, plantation agriculture for export and toll roads.
Local banks, despite the recent progress and pauses, often lack the asset bases to do the heavy lifting associated with infrastructure.
They do not have the long-term funds needed to provide housing finance, and they do not trust farmers or utility companies to pay them back. This is changing, and banks in some countries are now large enough to tackle expensive projects.
Wole Tinubu, chief executive of Nigeria's Oando used local banks to finance about 50% of the $1.5bn purchase of ConocoPhillips's Nigerian assets in July.

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