Wednesday, 20 July 2011

Private equity investing in Africa is set to be a key discussion point during David Cameron’s visit to Africa, with the UK Prime Minister having selected some of the industry’s senior figures to accompany him on the trip.

Rod Evison, the Commonwealth Development Corporation’s (CDC) managing director for Africa, who is also the group’s acting chief executive officer (CEO), has made the list, as has Aureos Capital’s chief executive officer, Sev Vettivetpillai. The prime minister has also taken with him Stephen King, investment partner at impact investment group Omidyar Network and serial venture capitalist Doug Richard. Other leading private equity professionals not mentioned on the official list are understood to also be supporting the tour.

The investors make up the prime ministers 25-man list of senior business officials that are expected to visit Nigeria and South Africa. Mr. Cameron is scheduled to attend business events to forge relationships between businesses and entrepreneurs, and bolster Britain’s business links with some of Africa’s fastest-growing economies. The tour is part of the UK government’s mandate to promote trade with emerging global economies.

“I think it is right for Britain to be engaged with Africa as a whole. There is a huge opportunity for trade, for growth, for jobs, including jobs at home in the UK,” said the Prime Minister at a press conference with South Africa’s president Jacob Zuma.

Financial services and mobile technology are set to dominate business talks on the tour, with almost half of the entourage made up of executives from the two sectors. Bob Diamond, Barclays’ CEO and Ian Powell, chairman and senior partner at PricewaterhouseCoopers are representing the financial services sector.Vincent Clancy, CEO at Turner and Townsend, Tim Cobbold, who heads De La Rue and Royal Mint’s top executive Adam Lawrence have also been included on the financial services list.

The mobile technology sector is being represented by Vodafone’s CEO Vittorio Colao, Frontline SMS founder Ken Banks, Monitise’s co-founder Alastair Lukies and David Rowan Wired Magazine’s editor. Frontline SMS is one of Omidyar’s portfolio companies.

The prime minister is also pushing for the removal of regional trade barriers, as he believes pan-continental trade and concrete agreements will help transform Africa’s business potential. Mr. Cameron said that an African free trade area could increase gross domestic product (GDP) across the continent by about $62billion a year.

“Despite recent strong economic growth in Africa, today just 12% of African trade is with other African countries,” wrote Mr. Cameron in a Business Day article. “For much of the continent it is easier to trade with Europe or America than it is to trade with a neighbour.”

The prime minister is supported on the tour by UK Secretary of State for International Development Andrew Mitchell, who has also been campaigning for UK business to tap Africa for growth. Mr. Mitchell said in a speech last week that as a single market of one billion people, Africa could rival China or India. He added that 20 African companies can now lay claim to revenues of at least $3 billion, while small and medium-sized African businesses are seeking new openings.

“If you’re not there at all, or haven’t gone beyond the propaganda that says all Africa is corrupt, unstable and unsafe, then – well, you’re missing out altogether,” he said to businesses in a speech at the London School of Economics.

He added that African continent has six of the 10 fastest growing economies, globally, with growth exceeding the OECD, Latin America, Eastern Europe and the Middle East. Mr. Mitchell expects about five of Africa’s major cities to each have a household spending that will rival Mumbai by 2020.

“As I say, it is a moment of choice,” he said. “Scratch beneath the surface, go beyond CSR, and make a healthy profit for your shareholders while also creating lasting improvements for poor people or allow your company’s performance to be compromised so that it never reaches its full potential.”