A recent conference in London on investing in emerging markets provided the opportunity for a spirited defence of investment in Africa.

“Africa does have significant opportunities for everybody. The Chinese have realised it and are investing hugely in the continent”

Victor Osalador, UBA

The Emerging Markets Summit, a two-day conference sponsored by the Economist, examined the prospects for long-term sustainability in the new emerging markets. But, while China, Russia, Brazil and India are all portrayed as hot investment destinations, Africa is often portrayed as a high risk venture.

The conference provided the chance for leading African businesses to acknowledge the risks but, more importantly, to highlight the increasingly attractive investment environment across much of the continent.

Africa is on the move, with economic growth at 5-6% over the last 5 years. The African continent is still considered among the most difficult business environments in the world but offers a huge market of around 800 to 900 million consumers.

One high profile champion of Africa’s investment potential was Victor Osalador, Chief Financial Officer of United Bank for Africa (UBA) and its Executive Director for Risk Management and Finance.

Acknowledging the risks pertaining to any high return opportunity, Osalador noted however that in Africa “the challenges are diminishing by the day.” He highlighted the speed at which the market is growing and stressed its long-term potential. &ldquoIf you are able to go in there for the long haul, you will make your brand very strong very quickly.”

“Africa is mentioned only in the light of the negative but there are a lot of positives,” Osalador observed, pointing out that a recent World Bank report has highlighted strong positive indicators for the continent.

The African Peer Review Mechanism was, he said, another illustration of the way many countries in the continent are doing things differently and are increasingly prepared to account to their peers for their actions.

In terms of economic growth, he added, the explosion in the telecoms sector in Africa is a clear example of advancements that have made changes in people’s lives and in how business is done. In Nigeria, home of Osalador’s bank, the recent banking consolidation reforms transformed the economy from 89 banks to 24 strong banks. UBA, itself a merger of two banks and one acquisition, is today the leading bank in Nigeria. As the economies around the continent continue to experience growth, Osalador said, African countries’ need for skills is also increasing. This offers greater business and career opportunities for Africans outside the continent to return and participate in the growth.

He urged the delegates to revise their assumptions about the continent and to focus on the facts.

“Let us look at Africa – it does have significant opportunities for everybody,” he said. “The Chinese have realised it and are investing hugely in the continent; a sure sign that it is coming up.”

“Somehow Africa is treated as a monolithic entity,” observed Indrajit Coomaraswamy, Director of Economic Affairs at the Commonwealth Secretariat and a panellist at the conference. “This has been a real challenge for governments – to get investors to look at individual countries and, within them, at individual corporations.”

African governments are addressing the issues of governance and corruption, he said, citing Nepad (the New Partnership for Africa’s Development) as an African owned process and therefore one that will be more sustainable in the future. Many countries are making concerted efforts to move in the right direction and are providing major concessions for investors.

“There has been significant progress in terms of macroeconomic stability,” he added. Infrastructure remains perhaps Africa’s greatest challenge, making the cost of doing business in Africa high. Improving transportation and power will be key to Africa’s continued development. However, African governments are conscious of this and many are taking very pragmatic approaches to financing infrastructure projects.

The role of the private sector in Africa’s economic growth is crucial, he added. “Increasingly there is a consensus that there should be a private sector led economic strategy”. This, along with increased dialogue between the public and private sectors, has also seen emerging business associations engaging with governments. “The reform process in Africa should be seen as a marathon,” he said, “not a sprint.”

The international trading and financial systems “doesn’t do Africa many favours,” he observed. With 70% of the African continent being agrarian, European Union subsidies alone create substantial difficulties for many across the continent.

Despite these factors, overall indicators suggest that over the coming years, Africa’s star will continue to rise.