By Alastair McPhail
This week I was delighted to attend our Ethiopia launch event for the UK-Africa Deal Room – an exciting new platform that we hope will increase investment in Ethiopia.
In January 2020, London hosted the UK-Africa Investment Summit. On a platform in front of Heads of State and dignitaries from across the continent, the UK Prime Minister made it the aim of the UK to become the investor of choice across Africa. Our Prime Minister made it clear that we want to be known for encouraging sustainable investments that will help drive economic growth, sustainability and prosperity.
I’m pleased to say that momentum has not slowed – even in the midst of a global pandemic. Since 2020, the UK has hosted two further African Investment Conferences to raise the profile of investment opportunities and counter perceptions about the challenges of doing business in African markets. Over 3000 delegates attended the two conferences.
Indications are that we are making progress – with the most up-to-date figures showing that UK investment to Africa rose by 7% in 2020 to £47.9 billion, compared to £44.7 billion in 2019. Throughout the pandemic the UK has maintained both scale and impact of investment. British businesses have continued to be some of the most active, supporting communities and protecting jobs. I’m proud to see UK businesses active in Ethiopia in sectors such as energy, telecoms and manufacturing.
This week, with the support of Grant Thornton Ethiopia, we were joined by a wide range of rapidly growing Ethiopian companies to explore another way in which the UK can deliver transformative investment – through private equity growth capital for home-grown businesses.
The UK is internationally renowned for its financial services. The City of London is recognised as a global financial hub – with trillions of assets at its disposal. It is the biggest single sector for UK investment into Africa – seeing annualised pre-Covid growth of over 25%.
On this basis, the concept of the UK-Africa Deal Room is a simple one. On the UK side, we look to work with institutional investors to understand their mandates. We look to encourage them to take a closer look at the opportunities presented by African markets to shape those mandates, increasing the supply of capital to markets such as Ethiopia. On the Ethiopian side, we look to source high-quality, investment ready deals that match those mandates and help shape their proposals – with the aim of putting those two sides together.
At our Ethiopia launch on Tuesday, I saw the impressive depth and breadth of Ethiopian businesses looking for growth capital capable of taking them to the next stage of their development. I enjoyed discussing the different ways in which the UK could potentially fuel their ambitions – and the importance of supporting companies to get them ‘investment ready’.
We also heard about the benefits of bringing private equity investment on board. Yes, growth capital is often the main driver, but we heard from investees who have also benefitted substantially from global expertise in supporting high growth companies – ensuring that investments deliver on their potential.
Since launch in 2020, the Deal Room platform has developed a portfolio of matching projects from across the African continent with a combined value of over £400 million, in leading sectors such as agriculture, financial services, energy, infrastructure, education, and healthcare. We want ultimately to hear from capital seekers with investable opportunities, so that these can be presented to UK investors.
In this context however, institutions also matter. It’s why I am delighted that last month the UK Government helped to launch Financial Sector Development (FSD) Ethiopia, which is bringing UK expertise and resources to help develop financial and capital markets here in Ethiopia, as well as announcing funding to help establish the Ethiopia Securities Exchange. There is no better partners in these endeavours than the UK, whose first stock exchanges were established in the 16th Century.
Encouraging UK investment into Ethiopia sits at the very core of both my Embassy’s and the wider UK Government’s objectives in this country, and governments and businesses are most effective when we work together. Our hope is that through UK capital and expertise, we will jointly develop a vibrant capital market in Ethiopia into which UK funds will invest long into the future.
Dr Alastair McPhail is British Ambassador to Ethiopia and Permanent Representative to the AU