In February, AVCA spoke to Clarisa De Franco, Head of Africa Funds, and Jeremy Cleaver, Portfolio Director, about CDC Group’s investment strategy over the next five years and the importance of development finance to Africa’s growth.
We asked them to share their outlook for private equity (PE) in Africa – “What’s next for CDC Group (CDC), and what are your expectations for the future of the industry?”
A: We are at an exciting point in CDC’s evolution. Our 2017 – 2021 strategic framework is in line with what we have been doing to accomplish our mission for Africa: going into more difficult markets and developing more innovative and impactful ways to support the growth of African businesses.
Regarding the outlook for the industry, the overall trajectory for Africa is positive. The unique macroeconomic issues facing countries like Mozambique, Nigeria, and South Africa will soon pass, and we expect the growth rate of the continent to return to where it used to be. In terms of demographic trends, we are hopeful because we understand that jobs need to be created to absorb the growth in population. This means that there is scope to back more PE funds because the only way to drive economic growth through demographic change is to create the jobs in the economies. We have seen this happen in Asia, so it is a key driver for us to continue creating as many jobs as possible.
It is important for us to do a better job of highlighting the stories of fund managers that can identify the best businesses and add value in unique ways. People should be able to identify those managers and develop a much better understanding of the African investment environment. If you are only reading about Africa or attending one conference, you are not going to have that comprehensive knowledge. We invest in nearly 80 African funds, all of which have diverse performance rates. It is important for us to educate the industry on those various funds, and particularly encourage other people to invest in them because they have the right developmental impact and returns.
Generally, we find that the best private equity investors will always find a way to make money despite the macroeconomic environment. We will continue to support extraordinary fund managers and the wider industry. We also look forward to the time when things will start to improve again. In the meantime, we are working very hard to identify the best ways to invest in African PE now, and how to support our existing fund managers and the new players coming into the market.
The full interview with CDC Group can be read here.
To download CDC Group’s Strategic Framework for 2017 – 2021, please click here.
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