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ECP comments on US President Obama’s visit to Africa

ECP in the News – Insight: On President Obama’s recent Africa trip
Carolyn Campbell, Managing Director and General Counsel at Emerging Capital Partners


President Obama’s recent trip to Africa may have inspired some mixed headlines – “Obama’s trip to Africa is too little – and very late” (Financial Times, June 30) and “Obama’s Africa trip bolsters US interests” (Al Jazeera, July 2) are just a couple of examples – but aspects of his two core initiatives, Power and Trade Africa, are worth highlighting.


There is no question that electricity in Africa is inaccessible to many of its citizens. The African Development Bank (AfDB) estimates that only 42 percent of people in Africa have access to electricity, with this number being significantly lower in the sub-Saharan region. The effects of this power shortage are numerous: on businesses looking to compete on a global scale, on health care facilities, on quality education services. To close the gap, the World Bank estimates a need of $93 billion in annual investment in Africa’s infrastructure over a period of 10 years – half of which is required for power supply. 


Even with Obama’s increased pledge of $7 billion from the US government to increase access to electricity in Africa over the next five years, there is still a clear gap remaining, if demand is to be met. Private equity continues to play a part. ECP’s Fund II portfolio company, Finagestion, counts among its subsidiaries CIPREL, a power generation company based in Côte d’Ivoire, which provides 30% of the energy consumed by the country. It has been raising funds to grow out its existing natural gas-fired power plant, in order to boost electricity production, transmission and distribution across the country. The project is expected to enhance the efficiency of the power plant by generating about 25% more power, without the use of any additional gas. Previous fundraising, including the EUR 75m loan arranged in April 2012 that resulted in the construction of the gas turbine, led not only to a significant increase in access to electricity, but also to additional employment opportunities.


Recognizing the role that private equity can play in development in Africa, ECP was selected to provide direct input into the official Obama second term strategy on Africa, through our role on the board of the Corporate Council on Africa. President Obama’s Trade Africa initiative reflects the overarching recommendations made by the board, when it aims to facilitate trade, starting with the East African Community (EAC) of Burundi, Kenya, Rwanda, Tanzania and Uganda. Intra-EAC trade has doubled in the past five years, and the region’s GDP has risen to more than $80 billion, quadrupling in only 10 years. By supporting further intra-African trade as well as access to international markets, the Trade Africa initiative enables the greater development of businesses with a strong capacity for success outside of their country of origin: a boon for private equity-backed companies looking to scale.


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Author : SAVCA