The unprecedented abundance of investment grade opportunities in Africa, together with maturing investment motives signify great potential for inclusive growth on the continent. However, the capital mismatch conundrum needs to be addressed and the formal consideration and inclusion of a ‘social license’ to operate needs precedence.

This is the view from KPMG’s Global African Practice ahead of the 25th World Economic Forum Africa that will be held in Nigeria, Abuja, 7-9 May 2014.

Africa is one of the world’s fastest growing regions and seems set to remain for the foreseeable future – with seven of the world’s fastest growing economies in Africa, accordingly to the International Monetary Fund. While this growth certainly remains both important and impressive the benefits of this growth have not really trickled down to the people – at least not yet, says Seyi Bickersteth, Chairman of KPMG’s Global Africa Practice.

Bickersteth believes that a significant amount of the continent’s current growth remains resource dependent and leveraging available resources is a great place to start to boost economies – as commodities make great GDP figures – however, growth strategies cannot be solely resource dependent if African nations and their people are to reap the benefits of inclusive growth. Innovative partnerships between private enterprises – international and African alike – and governments that are underpinned by shared and long-term visions can make the difference.

According to Anthony Thunstrom, Chief Operating Officer of KPMG’s Global Africa Practice, “From an investor point of view, the ‘Africa debate’ has largely been settled. Recently, it has been our experience that when discussing their Africa investment intentions or strategies, multi-nationals barely mention the ‘usual suspects’ – corruption and political instability – but instead openly relay concerns that they may have already lost prime investment opportunities to their competitors.

While there is a focused stream of investment capital that has been raised and in many cases ring-fenced for Africa, Africa still has to clear some hurdles before “business-as-usual” can be assumed. In line with this, KPMG’s Global Africa Practice notes two key emerging themes that will remain prevalent for the years to come:

·       The mismatch between attractive, bankable investment opportunities and the global capital available for investment in Africa, and

·       Increasing demand from most African governments and their people for a clearly discernible “social compact” – where foreign investors need to be able to demonstrate their long-term commitment to the economic development of the country in which they invest, not just a short-term profit motive.

Solving this mismatch between investment-seeking capital and identifiable investment opportunities will be vital to Africa’s future growth and this is where Market-Entry services come to the fore.

In the medium- to long-term, increased efficiencies in local capital markets, action by governments and trade organisations to improve the ‘ease of doing business’ and incremental in-country improvements will all help address the mismatch. In the short-term, however, qualified intermediaries and market-entry experts must bridge the gap.

Raw wealth alone, however, no longer defines a nations success and governments and businesses need to work together to achieve prosperity, and inclusivity. Africa’s billion-plus population, with its youthful demographic and deep awareness of historical injustices and global inequalities, places powerful upward pressure on the investment policies and regulatory environments adopted by African governments.

Virtually any investment must take cognisance of local social conditions and must be seen to ‘make a difference’.