The case for Africa as an infrastructure and real assets investment destination
Infrastructure investments hold great appeal for institutional investors: strong returns, a low sensitivity to swings in the business cycle, little correlation with equity markets, long-term stable and predictable cash flows, inflation hedging properties, and low default/loss rates. While infrastructure investments have increased in value approximately tenfold in the past decade, heavy demand in developed markets is driving up prices and potentially eroding returns.
As a result, more institutional investors are considering investments in emerging markets. However, most will face a steep learning curve, as only a few large asset owners possess the internal capacity to understand the necessary vehicles and structures to deliver these benefits (and appropriate risk profiles) and conduct due diligence to reap the benefits of investing directly.
With Infrastructure financing in sub-Saharan Africa: Opportunities and impact for institutional investors, Mercer and MiDA Advisors offer institutional investors both a macroeconomic perspective and detailed analysis of transactions to build understanding of the nuanced opportunities and risks on the continent.
A follow-up to 2018’s Investment in African Infrastructure: Challenges and Opportunities, the new report tapped leading African financial institution Standard Bank Group to contribute expertise to surveys and analysis. MiDA also partnered with the U.S. Agency for International Development (USAID) to conduct a deep survey of the market, which included interviews with two major African asset-owner initiatives funded by the Agency to enhance the capacity of African pension funds seeking to pool and diversify their fast-growing assets into infrastructure investments within their communities.
Read the full report here.
