Prosperity for all stakeholders: Opening remarks at the 2022 AVCA conference

The African Private Equity and Venture Capital Association (AVCA) held its 18th annual conference on 25 - 29 April 2022 in Dakar, Senegal. Below is a look back at the event - including the introductory remarks that I delivered as Chair of the association.

When I assumed the role of AVCA Chair in 2018, I referenced an African proverb that says: “Though we share the same sun, we do not share the same homes” – to emphasise the point that as an industry we cannot merely deploy capital for our financial gain but that we need to intentionally play a part in addressing the social and economic inequalities embedded in our everyday reality.

Unfortunately, four years later the gulf of inequality appears to be widening.

Fortunately, though, there are green shoots of progress that elicit hope and put a spring in our collective steps.

I am pleased to say that since 2018, as an industry we have embraced strategies to more purposefully consider Environmental, Social and Governance (ESG) factors alongside the financial returns of our investments for the wellbeing of our people, and the preservation of our planet.??

Also, as an association over the past four years, we have witnessed growth on a number of fronts, and I am proud to say that we have sought to purposefully drive initiatives that have made it possible for us to play a key role in:

(i)?enabling access to finance and resources for growth and the wellbeing of African households, businesses, and economies

(ii)?creating opportunities to address the problems of inequality and exclusion; and

(iii)?identifying opportunities for the advancement of our continent, sector, and partners.

The association has continued to build on its past successes while breaking new grounds and pursuing avenues for further action across three specific pillars, content and capacity building, community engagement, and communications for impact.

A.???Content and Capacity Building

Through AVCA’s investment in knowledge production and advocacy, it has created greater opportunities for participation, engagement, and knowledge dissemination.

Thereby enabling a greater understanding of Africa’s PE and VC landscape through its commitment to data-led knowledge production.

Over the past 4-years, AVCA has deepened local and international research collaborations resulting in data-led publications examining private investment and entrepreneurship in Africa from multiple perspectives.

We have transformed the AVCA Academy into a digital professional platform available for all our stakeholders 24/7. Enabling our community to up-skill in their own time, affordably and purposefully towards continuous professional development credits and ultimately towards improving governance and decision making within the industry.

Of worthy note is the establishment of two collaborative programmes for emerging fund managers and African institutional investors:

1. First is the Emerging Managers Acceleration programme commencing with the development of content tailored to the needs of new fund managers and a Look book of first-time female fund managers giving them exposure to a curated group of investors
2. Second is an LP knowledge sprint, particularly for non-traditional investors dipping their toes into investing in African headquartered and focused fund managers for the first time

B.????Community Engagement

When we cancelled the AVCA 2020 conference two years ago, we did so with much trepidation and wondered how the association would survive without the convening power and capital of our annual conference. Like the world over, we speedily pivoted to virtual webinars and conferences and found new ways to keep our community engaged beyond the annual trek to an African city through the first of a kind digital platform with members at the heart of its design and operation.

The impact of AVCA’s enhanced community engagement has led to an increase in membership from across Africa and beyond. Similarly, the association’s revenue has increased due to intentional efforts to diversify from physical and limited repeat revenue opportunities to virtual with boundless repeat revenue opportunities. We are now able to redefine what it means to COPE: Create Once and Place Everywhere.

The pandemic provided AVCA with the opportunity to accelerate digital transformation leading to the development of a wide range of resources that, coupled with our CPD programmes, enables members to engage with the association and other members, and skill up in a flexible and affordable manner. Significantly, the new AVCA Platform provides a bespoke experience for stakeholders to gain knowledge via AVCA’s suite of services and initiatives.

C.????Communications for Impact

The African PE Landscape has changed considerably since 2018 with AVCA playing a key role in making the case for Africa as an attractive investment destination, spotlighting the commercial opportunity of African investments and the potential for a multi-fold return of profit and impact. Resulting in:

• Increased capital flow

For example, the total value of private capital transactions grew from US$3.6bn in 2018 to US$7.4bn in 2021, an over 80% rise.

• Diversified investor base

In 4-years, Africa’s investor base has diversified to include commercial investors growing in volume and value. Of note is the growth of the number of North American based commercial investors now investing or considering investments in African Private Equity and Venture Capital.

AVCA’s partnership with MiDA has helped accelerate this alongside African LPs such as Kuramo Capital who in the past have purposefully curated US LP attendance at the AVCA conference. And of course, the allure of African technology and innovations has attracted a whole new set of players. Many of whom are attending the bundle of the AVCA PE and VC conferences for the first time ever. Small wonder that this year’s conference is turning out to be the largest in AVCA’s history with over 500 attendees.

Indeed, in the mid to late 1990s, there were just 12 Private Equity funds managing a total of US1bn to invest in Africa. Today, there are over 150 Private Equity firms in Africa, with nearly US50bn in total funds raised to target various strategies across sectors and regions.

Furthermore, AVCA, through its public engagements and advisory support, has also provided educational opportunities for new LPs – especially domestic African LPs. An area that still requires a significant amount of intervention to convene a critical mass of domestic funding to partner with the dominant source of foreign capital flowing into Africa.

• Robust partnerships with Regional Associations

A popular proverb holds that “if you want to go quickly, go alone. If you want to go far, go together” – thus, demonstrating the importance of collaboration and collective engagement in achieving impact faster and at scale. In keeping with the spirit of this adage, AVCA has deepened local and international research collaborations resulting in data-led publications examining private investment and entrepreneurship in Africa from multiple perspectives (including reports produced in partnership with Forbes Africa and the Oxford Business Group). In addition, AVCA has initiated and extended partnerships with local associations for the achievement of the mutual goal of promoting and enabling private capital investment in Africa. This has yielded initiatives such as

1. A first of a kind collaborative data platform with key PE and VC associations in Africa
2. regional summits hosted in partnership with all the regional and national associations
3. co-authored studies such as a Pension Funds and Private Equity in Nigeria Study; and
4. fireside chats, webinars, and data presentations in partnership with a myriad of associations across the continent.

IN CLOSING

As I look back in time and reflect on what my leadership as Chair of the AVCA Board with the support of my fellow board members has achieved in four years, even with the interruption of the pandemic, I can only be proud of this legacy even as I am aware that there’s still much more to be done.?Three matters stand out:

1.????Firstly, the number of female-led GPs still remains very low. A factor that has been confirmed as contributing to the low allocations of funding to female founders. Therefore, it gives me great pleasure that for the first time AVCA, in partnership with MEDA, has made it possible for a cohort of first-time female GPs to be sponsored to the AVCA PE and VC conferences and receive tailored training and exposure to a curated list of LPs that can help these GPs reach first close.

2.????Secondly, the amount of domestic African capital playing a role in the private investment landscape, particularly through private equity and venture capital remains tiny, which is why the AVCA LP knowledge exchange initiative and specially curated training for domestic LPs, policymakers and regulators remains critical. If African economies are going to reach their full potential, the vast sums of money managed by asset groups such as African pension funds (who currently manage over $350bn) are key to the inclusive development of our economies.

3.????Thirdly, the maturing of our industry comes at a critical time and requires much intentionality to ensure it does not go off the rails. Excitement and exuberance abound and at times such as these, we have a collective responsibility, from LP to GP to portfolio company, to ensure we do not merely pay lip service to governance even as we tout the term ESG more liberally now than at any time of our industry’s existence. When we put the label on our cans, let’s be sure to do what we state on the can.

There has been significant progress, positivity, and goodwill towards our sector. We’ve donned the feel-good coat with our commitment to ESG, but we must not allow exuberance to get the better of us.

a.????We must operate with standards of care and diligence

b.????We must guide our companies and stakeholders to operate with care and diligence

c.?????We must be the voice of reason.

That said with all the will in the world, there will be hiccups and so with this backdrop, it’s not hard to see how the role of AVCA at this time is even more pertinent and that’s why all the initiatives I have mentioned around the Academy, Advocacy and Research are key pillars of the value that we will continue to deliver for our community and all stakeholders.

As I welcome you to this year’s AVCA conference in Senegal, home to some of the fastest-growing companies in West Africa, it is my hope that our discussions this week will inspire and birth new pathways for shared prosperity for our stakeholders, economies, and Africa as a whole.?

Over the next few days, when we engage in important discussions on the state of our sector and formulate strategies for building resilience and driving results for a better world, I ask you to consider your corporate missions, the raison d’être for investing beyond profit, and to ponder on ways to create a better future for ourselves and for our continent.

Thank you.