Giving Compass' Take:
- Salma Okonkwo makes a case for investing in African-led enterprises in Africa, especially within the renewable energy sector.
- Why is it valuable to support African businesses rather than foreign companies operating in Africa? How can individuals support economic development in Africa through personal financial decisions?
- Read about funding African-led nonprofits.
What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Despite the global economic slowdown caused by COVID-19, the case for investing in Africa is stronger than ever. Africa will remain a competitive investment destination for decades to come because of its improving relative risk profiles, regional integration and strong economic fundamentals. Africa is young, connected, entrepreneurial, and poised for immense growth through regional integration via the African Continental Free Trade Agreement (AfCFTA), which will create the world’s largest free trade area.
Renewable energy is a priority sector for Africa’s post-COVID recovery because small and midsize enterprises need reliable and clean energy to get back to business and continue growing. Stakeholders ranging from the African Development Bank to large-scale private funds recognize the need cost-efficient industrial energy access as well as universal household electricity. To expand the impact of their investments in the energy sector, development finance institutions (DFIs) and private investors should pay more attention to empowering African-led energy firms by adjusting their risk analyses and to closing gaps for off-grid solar project financing.
Representation of local African founders, and female founders, remains a challenge in the African startup funding space. While it is a positive sign that African companies are attracting international investors’ attention, only 20 percent of private investment into African startups and companies came from Africa-based investors during the last five years. Further, eight of the top 10 African startups that attracted the most capital in 2019 were led by foreigners.
The golden age of African investment is just beginning. However, real developmental impact in critical sectors such as solar energy cannot occur without local empowerment and African firms taking a leading role. Investors are running out of excuses: African companies can be competitive, profitable and world-class when given the support they merit from capital markets and DFIs.
Read the full article about investing in Africa by Salma Okonkwo at GreenBiz.