Russia, economic downturn, and green energy: Navigating these challenges and prospects in Africa effectively
The African Market: A Goldmine Amidst Crisis
Taking the stage in Johannesburg, South Africa were a trio of investment gurus - Bryan Turner from Spear Capital, Philani Mzila of Founders Factory Africa, and Zubair Suliman of Norsad Capital. Their mission? To delve into the multitude of challenges and opportunities facing African businesses, and discuss strategies to capitalize on these opportunities.
In the heart of the continent, where climate turbulence, global recession, and the Russia-Ukraine war loom, these experts saw more than doom and gloom. They saw a bustling market ripe for the taking.
Mzila encapsulated their optimism, acknowledging the uncertainty of investing in a turbulent market. "The African context necessitates investing in an unpredictable environment with shifting investment climates and factors," he said. "However, it has allowed us to spot opportunities in even the most volatile markets. We're incredibly bullish about the prospects in Africa."
Turner, who navigated the 2008 financial crisis head-on while working in London's banking sector, was lured back to Africa by the untapped potential. "The rest of the world regards Africa as a bleak landscape with few opportunities," he said. "But there are billions of people here who yearn for a better life, better economy, and sustainable resources. Someone has to take the initiative."
For Suliman, whose upbringing was marked by conflict in war-torn Mozambique, the key to success lay in seizing opportunities, regardless of the circumstances. "I've learned from my family and friends the importance of identifying opportunities," he said. "They've become some of the wealthiest individuals in the region by doing so."
Riding the Green Wave
When they looked to the future, the panelists agreed that the renewable sector was where the action would be. However, they cautioned that the focus on renewables should transcend energy production and touch other areas like waste management and water filtration.
Take the South African firm in Limpopo that repurposes macadamia nut shells for water filtration, as an example. Water renewables, Mzila believes, are unfairly overlooked.
Turner, meanwhile, pointed to Africa's abundant mineral reserves - essential for renewable energy - as another vital sector. "We aspire to create circular economies," he said. "We're moving away from an extractive approach focusing solely on resources."
Suliman emphasized a unique approach to maximize the positive impact of renewables in Africa. "It's essential to find instant solutions, capture consumers, and find ways to minimize international presence while growing the region," he said.
Resilience: The Key to Survival
When asked about the character traits necessary for African entrepreneurs to thrive, the experts agreed on one thing: resilience. "We see businesses with solid fundamentals stand out," Mzila shared.
Suliman concurred, highlighting the importance of strong management and character. "We assess the personalities of our company leaders and then examine how they can make an impact."
Turner added that it was essential to buy into an entrepreneur's vision, looking beyond the numbers. "The reality is that you have to believe in the vision and look beyond the pitch deck and financial projections."
Unleashing Investment Potential
Ultimately, these investors agreed that the key to unlocking Africa's full potential lay in encouraging more investors to step up. "We often find ourselves as the only ones betting on promising projects," said Turner. "There should be fierce competition for quality deals."
Mzila shared his vision for the future, "My dream is a thriving ecosystem with increased risk appetite, cultivating more deals."
To further this vision, they emphasized the need to shift investment strategies from equity to debt-based financing. "There's a lack of understanding of the power of debt," Turner said. "Debt isn't scary; it's the foundation of wealth creation, and we need more of it to empower entrepreneurs without diluting their equity."
According to Suliman, venture debt - a type of loan aimed at early-stage, high-growth companies with venture capital backing - could play a crucial role in filling the debt gap on the continent. "Venture debt is crucial," he said. "It addresses the funding gap in the debt market and offers ripe opportunities waiting to be packaged."
In conclusion, to fully realize Africa's untapped potential in the renewable sector, faith in and understanding of the continent's prospects must stretch beyond its borders. "The potential of Africa is enormous," Mzila echoed. "It was the only region that received more funding in 2022 than in the previous year. It's about believing in the broader ecosystem."
- The panelists, speaking at an event in Johannesburg, saw the African market as a bustling goldmine amidst the global crisis, despite the uncertainties posed by climate turbulence, global recession, and the Russia-Ukraine war.
- Bryan Turner, Amidst the volatility, is drawn to Africa by the untapped potential for better lives, economies, and sustainable resources, while Philani Mzila remains incredibly bullish about the prospects for growth in Africa.
- Zubair Suliman, having learned resilience from his experiences in war-torn Mozambique, emphasizes seizing opportunities in any circumstances to achieve success.
- In the future, these experts agree that the renewable sector will be where the action lies, but stress the need to focus on areas beyond energy production like waste management and water filtration.
- They advocate for more investors to step up, fostering a thriving ecosystem with increased risk appetite and a shift from equity to debt-based financing, such as venture debt, to fill the funding gap on the continent.
- They believe that faith in and understanding of the African market's prospects must stretch beyond its borders for the full potential of the renewable sector to be realized.
