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Botswana: Venture Capital is Growing - Moroka
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Mmegi/The Reporter (Gaborone)
19 March 2008
Posted to the web 19 March 2008
Wanetsha Mosinyi
The just-ended two-day African Venture Capital Association conference presents Botswana with a unique opportunity to secure the establishment, management and domiciliation of more pan-African investment funds, said the Minister of Trade and Industry Neo Moroka on Monday.
"It is my sincere hope that this conference will expose international investors to Botswana and that it will be an important player in attracting international investors seeking investment opportunities in Africa," Morola said.
He was performing the official opening of the annual 7th AVCA conference at the GICC, which was run under the theme 'Africa Rising; Opportunities and Perspectives for Private Equity.'
The conference was attended by close to 300 delegates from the Pan-African Private Equity Investment Industry and related players from Europe, the US and Asia.
ACVA comprises a membership of 90 private equity and venture capital practitioners, who collectively manage over Euro 5 billion earmarked for investment into Africa.
Moroka said the venture capital industry in Botswana is still in its infancy, with P500 million under management.
By comparison, according to the 2006 SAVCA-KPMG survey, South Africa, had US$ 8.5 billion venture capital and private equity funds under management.
"This is a clear indication that opportunities do exist in Africa." As a step towards developing the industry, the minister said government took the initiative in 2003 to set up the CEDA Venture Capital Fund as a means of stimulating the growth and development of the venture capital and private equity industry in the country.
"It is the government's expectation that the success of this Fund will lead to the private sector taking the lead," Moroka said.
The pensions industry continues to show significant growth in terms of assets, which stood at P34.3 billion as at December 2007. Moroka said this growth in pension assets, leads to a need for pension schemes to diversify their investment portfolios.
"It is most important for Botswana to develop investment opportunities locally to accommodate this growing pool of long-term savings. In the past, the inadequacy of such opportunities locally has tended to encourage investment in foreign assets."
Moroka told the delegates that great investment opportunities abound in Botswana, stating that government encourages Public-Private Partnerships and private investment.
He gave examples of the US$ 6 billion Mmamabula Energy Project, the US$ 100 billion Kazungula Bridge, the US$ 1.2 billion Morupule Expansion Project as well as the Botswana International University of Science and Technology as avenues they can invest their funds in.
The minister said he is concerned that only few African countries attract enough Foreign Direct Investment (FDI). "I hope conferences like this one will continue to give platforms for the continent to deliberate on ways to convert its rich resources to finished products."
The majority of delegates who spoke during the conference said private equity and venture capital in Africa is expressing a boom.
The Managing Director of Netherlands-based development bank FMO, Arthur Arnold, said his firm would allocate Euro 320 million to new investments in Africa, with a large chunk of it going into equity funding.
FMO invests largely in risk capital in emerging markets. Among the emerging markets, fund managers believe Africa still shows signs of significant growth spurred by development in infrastructure and the boom in commodity prices.
"Many active investors in private equity have a general positive bias towards emerging markets, and Africa has the potential to surpass Asia and Latin America," said Alexandre Alfonsi, a partner at French equity firm Axonia Partners.
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For his part former President of the African Development Bank Dr Babacar Ndiaye said private equity ad-venture capital will be a measured force for the growth of Africa.
"I am so affirmative and optimistic that private equity and venture capital will transform Africa.
Here is your challenge: in 20 years from now we want Africa to look like China and India," he said.
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