By Martha Nakato
When governments imposed lockdowns in March and April 2020 to curb the spread of covid19 virus, Africa was expected to suffer most due to its under developed health and economic systems. However, by December 2020 Africa had registered the least number of infections and deaths from covid than any other continent in the world which has surprised experts including Bill Gates who had predicted disaster for Africa. This has made Africa more attractive to investors in Europe and Asia, whose populations have suffered from covid deaths and multiple lockdowns. “Impact investors are contacting us more frequently than they used to before the pandemic with better terms. I think the pandemic has reduced confidence in developed economies with aging populations, making them more risky to invest into than to invest in Africa after the combined impact of the covid virus and government lockdowns,” said Mr Collins Tugumisirize, CEO of Leverage Africa and advisor to Global Economic Network.
Africa has over 60% of the world’s uncultivated arable land, two rainy seasons along the equatorial region and the highest birth rate in the world, which gives hope to investors seeking to make long term investments. Although Africa’s potential has been well known, before the pandemic impact investors who write a cheque of over $300million at once, have been avoiding the continent, until the pandemic made developed Europe, America and Asia where calls have been made for a second lockdown more risky to invest in than Africa.
Africa used to attract only less than 15% annually of Global Impact Investments before the pandemic, inspite of the continent being the most needy for social investments.
“Agriculture and banking sectors are attracting more money. For example we have been able to secure commitments of euros 2.4billion for Uganda, Tanzania, Kenya and Nigeria from Asian and European investors at lower interest rates of 2-4% for ten year loans, which could help banks whose clients are struggling to pay back.” said Mr Collins Tugumisirize, advisor on Africa to Global Economic Network.
In 2019, the German development minister, Gerd Müller, announced a new €1 billion Development Investment Fund for boosting private investments in Africa. The fund’s goal is to facilitate and support the entry of German businesses into African markets or to help African businesses grow. Global Impact Investing Network (GIIN) has officially defined the practice as, “Investments made with the intention to generate positive, measurable social and environmental impact, alongside a financial return.”
According to central banks of Africa nations like Kenya, Uganda, Nigeria and South Africa were able to effectively maintain stability of their currencies and keep inflation under control during the pandemic restriction rules of 2020, which has demonstrated maturity and sound capacity of the money markets sector, despite the general economic slow growth.
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