Finance

Facilitating trade and investment in West Africa

Hosted by BVI Finance and African Review, a panel of financial experts and business leaders joined moderator Anthony Osae-Brown, bureau chief at Bloomberg, to discuss how to minimise risk and maximise economic growth in West Africa.

Passionately speaking about the unique opportunities posed by Africa, Akintoye Akindele, chairman & CEO of Atlantic International Refinery and Petrochemicals, said, “Africa is an opportunity in itself. There are 1.4 billion people in Africa in need of accommodation, food, shelter, phones, data, everything. The market size has been opened up more by the African Continental Free Trade Area (AfCFTA), driven by a young population and it is scaling up globally. We have a lot of challenges, but these gaps are also opportunities.”

“Over the last five years more information and data availability has meant that there is more exposure. This drives interest which, in turn, drives investment. We now have teams who are partnered globally, developing skills and have business models which are scalable.”

Olufunmi Adepoju, managing partner, PearlMutual Consulting, built on the affect AfCFTA will have. She said, “Each government needs to ensure that while this is a great opportunity, they need to look out for local business as you don’t want to open the market for everybody and then begin to lose the local market. This can be done by providing adequate infrastructure, reducing multiple or duplicate taxes on local businesses and helping to facilitate business’ access to finance.”

Facilitating growth

Commenting on the role of incubator funds to help develop African businesses, Adenike Sicard, managing partner of Sinclairs BVI, said, “An incubator fund is mainly used for investment managers as a low cost option to set up and also develop a track record without having to comply with onerous regulations. Once a track record is established, they can then develop and transition into a bigger fund, get regulated and attract a higher network of investors.”

“Incubator funds are very easy to access, and BVI is one of the best offshore jurisdictions to launch these funds because of the speed, economy and ease of which you can set them up.”

“My advice to businesses is to encourage steps to scale up quickly by looking at what are the products available to meet your needs. BVI has six different types of products for this. ”

Jeffrey Kirk, managing partner, Appleby (BVI) Limited, noted that access to finance will be pivotal within AfCFTA for African businesses, and this where international finance centres (IFCs) such as BVI can offer a lot of added value.

Kirk added, “According to a 2019 report published by the Overseas Development Institute IFCs have a crucial role in businesses reaching that financing and can create a unique venue for investors, both private and public. The report stated that IFCs contributed some US$1.6 trillion in investment between 2007 and 2014 and boosted GDP by US$400bn in developing countries.”

Giving advice to upcoming organisations, Austin Okere, founder, CWG PLC, said, “In regards to starting a business it is important to recognise a problem and then provide a solution that can lend itself to commercial success. It is about looking for a problem, solving it and then condensing a business around it. After this, establish a minimal viable product and, when the minimal value is proven, you can start looking at value propositions, partnerships and resources you need. Then you can approach an incubator fund once you have reached the point when you need to scale it.”

Understanding risk

the business environment is becoming more complex which has led to increased risk levels in the operating environment for businesses. This, however, creates opportunities for businesses that are able to manage these risks efficiently.

“This is one major reason investments in emerging markets of Africa command higher returns compared to developed markets ‒because of the volatility of the environment which commands a higher risk premium. What sets businesses apart is their approach to risk management. If you have two businesses in the same industry and exposed to the same risk complexities, what will set one apart is their attitude and approach to risk management, and this could determine the one that will be successful and the one that will fail.

“So how should an organisation approach and mitigate risk? First of all, risk awareness and management must be imbibed in the culture of a business: a methodological approach to identifying and monitoring enterprise risk, with a defined risk management framework that captures an organisation's risk policy, risk appetites and its risk governance must be in place. There must be orientation around this from top to bottom.”

Kirk added, “In regards to risk mitigation, what we see with our clients is that there is clear focus and gaze at Africa. This is a time for opportunity and a time for investment. It doesn’t make sense to be overly cautious. All international investors see opportunity in Africa, and it makes sense that people within Africa invest also.” ■

According to a report by the ODI, IFCs have contributed some US$1.6 trillion in investment between 2007 and 2014.

To hear about the challenges and opportunities for East Africa, be sure to attend the East Africa CxO Roundtable at the end of October: https://www.alaincharlestraining.com/webinar/eas t-africa-bvi-finance