Global investors prefer Nigeria to SA.

Global private equity investors prefer to put their money into Nigeria rather than SA, as this country is currently seen as "over-invested".This view was voiced during a panel discussion held at the recent SuperReturn Africa conference in Kenya, one of the many private equity conferences held on the continent in 2011.

The panel discussion was hosted by Will Jimerson, executive director of Musa Capital.

"I don't necessarily agree with the panel's view but admittedly, returns in Nigeria have been astronomical and it continues to be one of the fastest growing markets," he told I-Net Bridge/BusinessLIVE in a telephonic interview.

He added that Nigeria's population stood at 150 million people of which 40% were seen as being economically active.

"Nigeria is the fastest growing market in the world for players like MTN and the country's growth is upwards of 6%."

Jimerson added that some economists had already predicted that Nigeria would soon take over from SA as the largest economy on the continent.

"SA is seen as being over-invested for private equity as you have institutions like Actis and Brait and other big guys - so this may be true for the high-end market. For example, if you're trying to buy one of Anglo's subsidiaries, you're going to compete against a lot of other guys."

He explained there was a perception that there was "too much money" in SA.

"Look at institutions like the PIC [Public Investment Corporation] - we often hear in the media that they are investing R2 billion a quarter in infrastructure - for them it's not a question of money."

However, Jimerson said that some African countries had a weakness when it came to accessing resources - whether human, capital or technology resources.

"SA, compared to the rest of the continent, has these things in abundance and the best-trained personnel in Africa are to be found in SA - that is an advantage for this country.

"You go to Nigeria and some of the infrastructure - power, water, - doesn't work half of the time and it might be difficult getting funding and skilled personnel.

"However, there is tremendous opportunity in Nigeria, because whatever you're selling, you're selling to 150 million people.

"Look at it this way - there are more billionaires in Nigeria than in any other country on the continent, including SA."

He added that if one wanted to start a housing finance bank in SA, one would have loads of competitors.

"But in Nigeria, you'd only have around two competitors."

Jimerson added that China was now regarded as over-invested and Africa, in general, under-invested.

"Investors in private equity funds will be the first to tell you that."

Other African countries with investment potential included Kenya, Jimerson said.

"It's the largest most sophisticated market in east Africa and it has a blend of what both SA and Nigeria have."

It also had a good market size of around 60 million people as well as the large port of Mombasa.

Jimerson said that Ghana could not be ignored as it had an impressive growth rate.

"Ghana is a country that is extremely under-invested with highly educated people both inside and outside the country.

"Ghana has resources such as palm oil and cocoa that will require a higher level of processing. Oil has also been found off the coast of the country. The fact that Ghana is English speaking makes it more powerful as well."

Jimerson said that in southern Africa, he still considered Zimbabwe a good place to invest, in spite of the country's past problems.


Credits: Janice Roberts /BUsiness Live

This article was originally posted on Sustainable Development Africa Platform

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