Next week, April 1st and 2nd, the 11th Annual AVCA Conference takes place in Lagos, Nigeria. A few hundred delegates, including LPs representing hundreds of billions of assets under management, will discuss current opportunities and issues in the private equity and venture capital industry in Africa.
We had a chance to catch up with Michelle Essomé, CEO of the African Venture Capital and Private Equity Association (AVCA), organizer of this important event. Read the interview below. And also see the announcement of the VC4Africa meetup at Angel Fair West Africa in Lagos coming Saturday, the weekend before the AVCA Conference.
What will happen at the AVCA Conference next week, and what do you hope will come out of it?
“AVCA has been holding conferences each year in a different country in Africa since 2000. Effectively, it is about bringing people together who have been investing on the continent for a long time, such as development finance institutions, fund managers, foundations or wealthy families, in order to talk about what are the obstacles, challenges and investment opportunities, and how to continue to grow the industry and attract more capital for greater development of the continent. This year’s conference in Lagos will focus on how private capital acts as a catalyst for change in Africa.
Private capital in Africa continues to be chiefly growth investment, unlike the typical perception of private equity in more developed markets. It is an essential provider of jobs and boosts local economies. What is more, private equity implements a focus on corporate social responsibility, governance, and environmental responsibility, to create greater transparency and accountable cultures. Private equity fund managers play a key role in helping management to establish these governance structures, as well as growth plans, leading to more sustainable businesses that are better equipped to support the communities in which they operate.
The Conference will feature many interesting speakers, including influential LPs such as Vicki Fuller, New York State Common Retirement Fund, Jainen Thayer, Oberlin College and Stewart Paperin, Soros Economic Development Fund.
This year, AVCA will launch a Policy Report on Impact Investing in collaboration with Bridges Ventures, sponsored by the Rockefeller Foundation. Drawing from the findings of five country-level studies and primary research, the report will highlight the policy barriers and enabling environment for impact investing across Africa.
Other highlights will be the presentation of new AVCA research initiatives including the launch of the inaugural pan-African private equity asset class Limited Partner Survey (with SAVCA and RisCura), and the release of the second edition of the annual Private Equity Exits in Africa Study (with EY).”
What role do you see AVCA and other actors in the African PE/VC space play, and how do you aim to work together?
“A large part of the advocacy work that AVCA does on behalf of its members is to facilitate constructive dialogue between the public sector and private investment throughout Africa. We are unified in our ambition to develop and promote private capital as a catalyst for change in Africa – a fact that is very important indeed, and the subject of this year’s conference.
We spend a great deal of time educating key stakeholders about the activities and risks associated with private equity investment. In collaboration with the Commonwealth Secretariat, we facilitated a private equity training for Ghanaian policymakers and regulators, and met with other regulators in Nigeria and South Africa this year, for example. Recent legislative changes permitting pension funds in countries like Zambia and Namibia to invest in private companies is a testament to the great work that actors within in the African PE space are doing.”
The conference will also feature a panel session focused specifically on the SME investment segment. How do you think this segment will develop, and what do you hope will come out of the session focused on SMEs?
“In 2013, AVCA reported private equity investment in Africa of $3.2 billion, highlighting that private investment supports hundreds of local businesses in Africa looking to build to their potential. It plays a crucial role in financing the SME sector, the engine of economic growth the world over. In Nigeria – the location for this year’s AVCA conference – there are 17 million SMEs in existence. However, recent statistics have shown that these SMEs currently only contribute 1% to the GDP of the country (a figure that is low relative to some Asian countries, US and Europe).
At a recent press conference in Lagos to launch the conference, AVCA members and supporters including Adlevo Capital, African Capital Alliance, AfricInvest-TunInvest Group, Alitheia Capital, KPMG, PAL Pensions, The Abraaj Group, Udo Udoma & Belo-Osagie, and Verod Capital Management discussed this 1% figure, and detailed the importance of private capital to growing the potential of Nigeria’s SMEs: to further their role as engines of economic growth, to create jobs, and to generate wealth. By using the private equity model, private capital can be recycled within the community, creating jobs locally and forming a sustainable cycle of wealth creation. With a population set double to 2 billion by 2050, this is an important consideration.
All of these issues will be picked up further at the conference next week.”
See the AVCA Conference website for more information. And see the announcement of the VC4Africa meetup at Angel Fair West Africa in Lagos coming Saturday, the weekend before the AVCA Conference.