The Pros And Cons Of Equity In Africa

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The flow of transactions in Africa, is primarily specific to each company and generated by the personal networks of fund managers, given the lack of intermediaries in the ecosystem. Nearly half (48%) of the transactions are done via networks or relationships, while others are done through companies and due to the monitoring of the sector . Only 14% of the transactions have been opportunities brought to private equity firms. Approximately 80% of the deals had a value lower than 50 million dollars and approximately 40% of deals currently performed, were less than $ 5 million . The big problem is that most companies are family businesses which often still need to be informed about the benefits of financing through equity, as part of the prior…show more content…
A number of countries are reluctant to open up their financial systems for fear of abuse. To some extent, most financial systems are underdeveloped, which makes difficult the movement of capital. In some cases, private equity is facing enormous difficulties due to administrative delays and the slow approval process of reserve banks, to exit or enter the funds.

Among other difficulties, there is the high cost of borrowing (In some countries, the cost of borrowing, may up to 40%, which does not favor investment), strong tax rate and the number of experienced African t fund managers is insufficeant. There is also a lack of institutional bodies to enable the private equity industry players to discuss the issues affecting the sector. Few countries and governments are generally aware of the private capital sector and the scope of its operations in the country.

3.2 – The need of Infrastructure Development in sub-saharan Africa : a requirement for facilitating acces to
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Investment in infrastructure is a huge untapped potential to create productive jobs. It has contributed to more than half of the growth in Africa in the past decade and has a potential to contribute even more in the future Infrastructure is crucial to make progress agriculture and plays also a major role in facilitating trade and integration. It has an impact on the emergence of regional development hubs and essential to offset the effects of geographical fragmentation. Infrastructure is essential to enable Africa to break into world markets, It is moreover fundamental to human development, including the provision of education and health services. This is a decisive factor for economic growth, the development of the territories, and improving the living

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