Private equity investor Mediterrania Capital Partners (MCP) is considering investments in supermarkets, health and education as the impact of COVID-19 whittles down the list of financially strong candidates, CEO Albert Alsina tells The Africa Report.
AfroChampions Initiative aims to create a new generation of big African firms
The African Union will urge heads of state to work with the continent’s top wealth holders to help give rise to new economic champions. Cooperating as a group under the AfroChampions Initiative, these wealth holders seek to raise $1trn in investment by 2030.
The AfroChampions Initiative is a project that seeks to mobilise investment funds to help give rise to African economic champions.
At the latest African Union (AU) summit in Addis AbabaMahamadou Issoufou, President of the Republic of Niger and Champion of the African Continental Free Trade Area (AfCFTA), praised the initiative.
The Ghanaian non-profit organisation AfroChampions is being called on to work in cooperation with African ministers, “especially those in charge of commerce, finance, industry and planning, and development,” to further the initiative.
- It will hold a summit on the industrialisation of Africa will be held in 2020 alongside the United Nations Industrial Development Organization (UNIDO) and the United Nations Economic Commission for Africa (UNECA).
The idea is to invest $1trn between 2020 and 2030 in companies “that are highly likely to become African champions,” said Paulo Gomes, President of the Executive Committee of the AfroChampions Initiative, meaning “companies that, in both their operations and capital, go beyond the scope of a country.”
AfroChampions, co-chaired by former South African President Thabo Mbeki and Nigerian businessman Aliko Dangote, brings together a range of business and political figures.
Included in the Afrochampion ranks:
- Togolese Gervais Djondo, co-founder of Ecobank and founder of Asky Airlines,
- The former Nigerian President Olusegun Obasanjo,
- Mali’s Samba Bathily, CEO of Africa Development Solutions, an industrial and financial group,
- Egyptian Naguib Sawiris, Chairman of Orascom,
- Cameroonian Paul Fokam, Chairman and CEO of Afriland First Group,
- Jean-Louis Billon, former CEO of Ivorian industrial group SIFCA and former Minister of Commerce of Côte d’Ivoire.
Capital raising underway
To reach its $1trn objective, the AfroChampions Initiative sought out consulting firm Accenture to help it to establish a private equity fund which makes investments in a portfolio of African companies and to entrust it to a management company.
Although AfroChampions maintains that no final decision has been made, the organisation has not ruled out the possibility of remaining a shareholder of up to 30% of the fund’s capital by waiving its rights to any dividends, which would be reinvested in the fund.
- “We’ve already identified 20 or so African companies from different sectors (banking, food, logistics, etc.) and our capital raising, currently underway, puts us at between $700 and $800m,” Gomes said, adding that it has a particular focus on Asian, Gulf State and African funds.
The former Ecobank executive, who helped set up the financial structure of Asky Airlines, plans for the final closing to be completed around late 2020. The location of the fund’s headquarters is still to be determined, with Casablanca and Mauritius as the frontrunners.
In 2018, AfroChampions published a ranking of African Globalizers, i.e., a list of globally successful African companies.
However, unsatisfied with the criteria that was used to compile the list, the organisation did not release another ranking and nothing indicates that the AfroChampions fund will specifically target the 30 companies featured in the list.
Awareness and capital investment go hand-in-hand
In any event, the AU saw the recently formed private equity fund as an opportunity to provide structure to its Agenda 2063 plan, particularly regarding the AfCFTA, as UNECA has been supporting the emergence of African economic champions for several years now.
- In Abidjan, Alain Kouadio, CEO of Kaydan Group and founder of Fondation Kaydan’s African entrepreneurship and innovation research institute (Institut de recherche sur l’entrepreneuriat et l’innovation) commended the valuable initiative “because the regional integration process, whether within ECOWAS or elsewhere in Africa, never involves the private sector.”
- With that in mind, “any investment fund focused on the private sector is a welcome change,” Kouadio added.
However, private equity funds have thus far played a very small part in the African private sector’s most exemplary success stories.
At Dangote Group for example, whose famous namesake, Aliko Dangote, serves as the initiative’s co-chair, private equity made up just 1.4% of its entire capital.
Nevertheless, Kouadio is moving the initiative forward, particularly as AfroChampions also entails an awareness campaign directed at the continent’s entrepreneurs.
Accordingly, meetings with business leaders have been organised since 2018 in Cape Verde, Côte d’Ivoire, Ethiopia, Ghana, Kenya, Morocco, Rwanda, Senegal, South Africa and Ethiopia, and have also involved business community representatives from Nigeria, Tanzania and the North American African diaspora.
- Such meetings give AfroChampions the chance to “help business players seize opportunities outside their borders,” said Anne-Elvire Esmel, Programs Coordinator for the initiative. “The issues we deal with most frequently are related to customs, regulations, access to finance and foreign exchange constraints,” she added.
Toolkits are currently being created to assist entrepreneurs.
The initiative also intends to be open to the NGO sector. “Quite a few NGOs in West Africa play an important role in financing seeds, electrification, etc. They contribute to development, so it’s an ecosystem we need to get to know in order to better guide it,” Gomes said.
In parallel, an informal group of business and political leaders, known simply as the AfroChampions Club, has been serving as the think tank and research arm of the initiative since October 2017 and stated its ambition of becoming an advisor to the AU at that time.
Clearly, the club was successful in preaching its sermon, as it managed to quickly ink a partnership agreement with the AU in March 2018, which was eventually confirmed at the pan-African institution’s headquarters on 9 February 2020.