Select Page

Riscura’s latest Bright report slices Africa into regional markets for better investment understanding

Riscura’s latest Bright report slices Africa into regional markets for better investment understanding

Riscura Namibia’s Executive Director, Loth Angula may be surprised to learn that his company does not view Namibia as connected to the South African economy, instead labelling it under southern Africa excluding South Africa, but including the Indian Ocean islands.

Faced with the reality that Africa is a continent, not a country, investment analyst and advisor, Riscura, proposes in its Bright Africa 2018 report that the continent be viewed in terms of its regional growth centres, as opposed to the conventional approach based on country and city detail.

“While it’s certainly useful to explore country and city-level detail, it may be more pertinent to start at a regional level by identifying groups of countries with similarities, segmenting the continent into meaningful regional markets,” Riscura stated.

For example, the report distinguishes between francophone and anglophone West Africa, does not include Egypt in the Maghreb group, excludes Nigeria from West Africa, lumps Madagascar together with southern Africa excluding South Africa, and groups Eswatini and Lesotho with South Africa due to proximity. Namibia forms part of the Angola, Zambia, Malawi, Mozambique, Zimbabwe and Botswana regional market which also includes the Comoros, Mauritius, Reunion and Madagascar.

Riscura segments Africa into nine meaningful markets, or regions, by analysing cultural connections, interconnectivity through trade blocs, sharing of expertise, good business relations, and relative ease of transportation, among others.

“Assessing Africa at a regional level gives investors a better understanding of the strengths and weaknesses of an investment destination by not only analysing the characteristics of the country of interest, but also the support that it receives from its regional partners,” said Heleen Goussard, RisCura’s head of unlisted investment services and principal author of Bright Africa 2018.

Institutional investors

Institutional investors are one of the main drivers of the development of capital markets and savings are the necessary ingredient for the development of institutional investors. As more people become more affluent, their ability to save will naturally improve. In addition, technological innovations are enabling certain African pension funds to bridge the divide between the formal and informal employment markets.

According to Bright Africa 2018, RisCura currently estimates pension fund assets in Africa to be US$372 billion, up US$40 million since the 2015 Bright Africa report.

What are the opportunities for investing this capital? In many African countries institutional assets are growing much faster than products are being brought to market. As with previous reports, Bright Africa 2018 looks at equity investments, both listed and unlisted.

Not surprisingly, liquidity and the cost of trading remain problematic when investing in African listed equities.

With regards to private equity, Bright Africa 2018 reports that the average purchase price of private companies has risen from 4.8 x EBITDA to 7.3 x EBITDA from 2009 to 2017. Due to this this rising trend in purchase prices, private equity funds in Africa are increasingly investing in early-stage businesses in the search for earnings growth.

The report speculates that as a large amount of investment capital has yet to be deployed by funds, purchase multiples could increase even further. Assuming the risks remain controlled, this could be a huge boost to African entrepreneurs who normally find it difficult to raise funding for their businesses.

The full report is available at


About The Author

Guest Contributor

A Guest Contributor is any of a number of experts who contribute articles and columns under their own respective names. They are regarded as authorities in their disciplines, and their work is usually published with limited editing only. They may also contribute to other publications. - Ed.