The economic environment for private equity investments in Africa has improved from a few years ago during a global economic downturn, and this bodes well for infrastructure development on the continent, industry experts said on Tuesday.
Romain Py, investment director and head of transactions at African Infrastructure Investment Managers (AIIM) said unlocking African pension fund money to invest in infrastructure debt on the continent would deepen local capital markets.
"African pension funds have a key role to play as an additional pool of capital," Py said.
"Bad news stories on the continent often cloud out the opportunities, but when African pension funds, which understand the investment risks, are coupled with limited partners for investment, it can lead to outsized returns for patient, long-term investors."
Bernhard van Meeteren, an energy specialist at Dutch development finance company FMO, who has been involved in the facilitation of a number of financing deals on the continent, said while there had been delays in construction, political unrest and non-cost reflective tariffs, specifically with energy-related projects, all problems were eventually solved.
"On all the projects in which I have negotiated financing, we have received all interest and repayments, although the repayment profiles had to be amended in a number of instances," he said.
Py said Africa should implement reliable domestic policy frameworks in order to attract large-scale investment in its power sector.
He cited South Africa’s renewable energy independent power producer procurement programme as an example of how sound processes had attracted investors from all over the world, affording developers the opportunity to lower prices.
Py and van Meeteren are both due to speak at the African Utility Week in Cape Town next month.