AfricaSIF sets out to bridge the reality deficit for foreign investors

Africa has become a destination for investment, but many misconceptions remain about the continent, particularly in developed markets. Graham Sinclair and Miles Mudzviti, of the newly-formed AfricaSIF, talk to Mike Scott about their task

The Social Investment Forum movement has long been a feature of the US and European financial landscape – US SIF started in 1981, with Uksif (1991) and Eurosif (2001) following at 10-year intervals.
A decade on, AfricaSIF is now taking its place in the global network of sustainable investment bodies.

The organisation is building on the new focus on Africa that followed the 2010 World Cup in South Africa and the UN climate conference in Durban late last year to create a network and knowledge base for sustainable investment across the continent. So says Graham Sinclair, founder of Cape Town-based sustainable investment consultancy SinCo and president of AfricaSIF.

“There is an increased interest in Africa and more capital flowing in but, to be blunt about it, there is a risk of Africa getting screwed,” he says.

“People are coming in and thinking about their investors and stakeholders. They’re not putting Africa first.”

Another factor is that “there is more appetite from Africans in the investment value chain to get involved now. It is important that as Africans we start to define what we require from the fact that we are now an investment destination.”

However, he acknowledges there is still a long way to go and that many challenges remain to creating a sustainable investment landscape. Sinclair says: “The first issue is the lack of information and data. In more advanced markets, it is analysis of the information that gives you an edge. In Africa, it’s simply having the data. There is some work going on, but the records kept by regulators and the information collected by people like Bloomberg are just incomplete.”

AfricaSIF is attempting to tackle this gap with a bi-annual Marketplace trends report, the first of which will come out towards the end of this year. “We want to get a picture of what the capital base is and what part is ESG-focused,” he says. “We don’t think anyone actually knows how much is invested in Africa today.

Another big problem AfricaSIF hopes to tackle is the many preconceptions about Africa that exist today, especially in developed markets, says Miles Mudzviti, managing director of Africa Investment Today. He cites a recent series of articles by Financial Times editor Lionel Barber about a trip to West Africa “which left a lot of people pretty unimpressed and many thought were condescending. But if people have thought for the same way for the last 10, 15, 100 years, it is difficult to change.”

Investors from the Bric countries do not have the same preconceptions, he adds. “They just arrive and try to outdo each other on merit.”

Yet another issue is the tendency for outsiders to treat Africa as a monolithic entity whose challenges and opportunities are the same throughout the continent, when it is made up of such a huge variety of countries.

“There is a gap between perception and reality,” Mudzviti says. “It’s like saying everything is the same in the EU. Greece is nothing like Germany, after all.”

Nonetheless, there are some common themes that investors can look to in Africa, such as the emergence of an expanding middle class, which is driving growth in service industries, retail, agriculture and education among other areas.

Sinclair stresses that AfricaSIF is a virtual network that is open to anyone with an interest in the continent, not just Africans. “It’s a great place to start your journey of understanding what is happening in Africa. We’re very open to people getting in touch and keeping up with what is going on.”