Entrepreneurship Zone: 17 January 2025 : Investors pick four African frontier markets with the promise of super returns

Fri Jan 17 10:19:20 CAT 2025

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Entrepreneurship Zone: 17 January 2025 : Investors pick four African
frontier markets with the promise of super returns

 <https://www.firstcapitalbank.co.zw/> 

Luanda, Angola

The following article is part of How we made it in Africa’s special
coverage of the SuperReturn Africa conference, which took place in Cape Town
from 4 to 6 December 2023.

During a session at the recent SuperReturn Africa conference in Cape Town,
the panellists, all of whom are investors in Africa, were asked to identify
an African frontier market they are optimistic about. Here’s what they had
to say:

1. Olu Oyinsan, Oui Capital: Democratic Republic of Congo

Highlighting the Democratic Republic of Congo (DRC) as his top pick, Olu
Oyinsan, managing partner of Lagos-based early-stage venture capital firm
Oui Capital, pointed to the country’s significant population of 100 million.
He emphasised the increasing smartphone penetration and decreasing data
costs as key indicators of a growing digital market, which is important for
tech investors.

2. Barthout van Slingelandt, XSML Capital: Angola

The Angolan market, says Barthout van Slingelandt of XSML Capital, has
shown signs of stabilisation although the depreciating local currency, the
kwanza, is still an issue. Africa’s second-largest oil producer is also
grappling with a shortage of US dollars. He acknowledged the difficulty in
extracting hard currency from the country, though the situation has seen
some improvement.

Van Slingelandt observed that Angolan businesses have been underserved with
capital. Traditional banks do offer funding, but he sees a lack of flexible
financing options. XSML recently provided US$2.5 million loan to support the
working capital needs of Advancetire Comercio, a retailer and wholesaler of
car parts in Angola.

3. Johannes Gunnell, Maris: Mozambique, DRC and Ethiopia

Johannes Gunnell, a partner at investment firm Maris, shared his views on
Africa’s top frontier markets, dividing them into short-, medium-, and
long-term opportunities. In the short term, he selected Mozambique, citing
the country’s emerging natural gas industry which he expects will boost
economic growth. TotalEnergies, operator of the Mozambique LNG project,
recently expressed optimism about resuming the $20-billion liquefied natural
gas (LNG) initiative in northern Mozambique in 2024. The project was
previously suspended in 2021 following attacks by Islamic State-linked
insurgents in the Cabo Delgado province.

In the medium term, Gunnell chose the DRC, highlighting its large
population and the fact that it is a dollarised economy. He mentioned that
having a sizable population is important when looking to sell an investment
as foreign investors making their first foray into Africa often prefer
countries with large populations. He did, however, point out the challenges
posed by the DRC’s inadequate infrastructure.

Long-term, Gunnell is bullish on Ethiopia, largely also because of its
sizeable population of over 105 million. He did, however, highlight currency
issues as a significant challenge in Ethiopia. The country faces a severe
shortage of foreign currency that complicates business operations,
particularly in terms of importing essential raw materials.

*         —Howwemadeitinafrica

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
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subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
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suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
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