Chief Executive Officer of Investment bank, Renaissance Capital Stephen Jennings has said his bank expects to invest about $2 billion in Africa by 2014, adding that African economies can outpace the fastest-growing countries in Asia if managed properly.
The Moscow-based bank, which focuses on emerging markets, believes countries such as Nigeria, Liberia, Ghana and Uganda could emulate the sustained double-digit gross domestic product growth seen in some of the fastest-growing emerging economies like India and China.
Speaking recently in Lagos, Jennings said “I think it is probable that in the coming decade’s large parts of Africa will outpace the growth enjoyed by Asia.
“We have expansion plans across the continent. I can easily imagine us investing a couple of billion dollars over the next three years,” Jennings said.
Political turmoil in North Africa this year has turned some investors to safer havens but many international banks are looking to raise their exposure in a continent which has rich natural resource reserves and strong trade ties with Asia.
Jennings believes sub-Saharan Africa would be attractive to investors because it has a more stable political outlook than its northern neighbours and some of the booming emerging economies of the BRIC (Brazil, Russia, India, China) group.
“Not only is political risk coming down quite dramatically and government improving in sub-Saharan Africa but compared with some other quite big emerging markets it is actually in a more advanced democratic stage, there are some BRICs I could name that have to go through phases of (democratic) transition,” she said.
She said RenCap intends to make Nigeria its main African investment banking hub, a country it says has huge economic growth potential due to its vast population of 150 million, improved political landscape and reform plans.
Although its large population attracts investors because of the mass potential consumer base, many of the country’s inhabitants live on less than $2 a day, while businesses are hampered by poor infrastructure and chronic power shortages.
April’s elections and the passing of a sovereign wealth fund bill this week have given some investors confidence that ongoing reform plans for Nigeria’s power and energy sectors could succeed where decades of former attempts have failed.
Goodluck Jonathan made ending chronic power outages one of his key campaign commitments before winning the presidential vote and has laid out a roadmap for privatising the sector.
“Power is key. I’m very positive about reform. Reform has been improving in Nigeria for some time, I’m very bullish, we see Nigeria as the next Brazil or Russia,” she added.