Building relationships to strengthen economies

Since 2017, the U.S. government has funded U.S. institutional investors delegation trips to Africa – first through the United States Agency for International Development (USAID) and more recently through Prosper Africa. These delegation trips are intended to build relationships, educate participants about the investment landscape in Africa and introduce bankable investment opportunities. 

A critical aspect of these delegation trips continues to be a focus on building relationships between U.S. institutional investors, their African counterparts, consultants and African fund managers. These relationships, initiated by MiDA Advisors, have led to over $1.8bn of capital being mobilised into Africa and other emerging markets over the last six years.

The U.S. government is moving away from an aid-based model to an investment-based strategy for Africa and other emerging markets – by educating U.S. institutional investors about the potential benefits available from investing in these markets. U.S. institutional investors could potentially generate long-term returns on their investments while also making a social and economic impact, thus helping to strengthen economies in Africa and other emerging markets.

USAID, through the MiDA Initiative, convened a first-of-its-kind U.S. Institutional Investors Delegation Trip to South Africa in May 2017. This historic delegation constituted the largest ever assembled delegation of U.S. institutional investors to visit a sub-Saharan African country to gain direct exposure to opportunities in infrastructure and private equity, and to forge new relationships with key stakeholders. Since 2017, over 80 delegates, with assets under management totalling over $7 trillion, have travelled to Dakar, Senegal; Cape Town and Johannesburg, South Africa; Nairobi, Kenya; Cairo, Egypt; and Gaborone, Botswana. These delegations included some of the largest U.S. pension funds, financial institutions, and consultants in the U.S.

These types of convenings have allowed U.S. institutional investors to network and to foster long-term relationships with their U.S. and African counterparts, African fund managers and financial sector leaders. The education provided aims to break down investor perceptions of real versus perceived risks by introducing bankable transactions, credible fund managers, and local co-investment counterparts. Risk mitigation strategies are also important discussion points.

Through MiDA Advisors’ relationships with the investment community in Africa, with global financial institutions and with the U.S. government, the innovative Caisse Régionale de Refinancement Hypothécaire (CRRH) transaction to provide long-term housing finance in West Africa was closed in March 2023. 

Over $274m in capital was mobilised into West Africa to lower the financing costs for homeownership for over 6000 homes with de-risking enhancements provided by the U.S. International Develop­ment Finance Corporation and USAID. This was CRRH’s first time accessing the international capital markets, opening the path for new investors. 

The delegation trips and follow-up meetings, conferences and targeted engagements have led to stronger relationships, deeper knowledge about investing in Africa and mobilisation of capital into Africa through transactions like CRRH.

Other examples of the financial impact of strong relationship-building include the City of Hartford Pension Commission, the City of Philadelphia’s Board of Pensions and Retirement and the Public School Teachers’ Pension & Retirement Fund of Chicago investing $5m, $50m and $10m, respectively, into a $900m vehicle called African Develop­ment Partners III (ADP III) managed by Africa-focused private equity fund manager Development Partners International LLP.

Alongside these U.S. institutional investors were African pension funds, including the Eskom Pension and Provident Fund, one of the largest pension funds in South Africa, which allocated $20m to ADP III. Kenyan pension funds also made investments, including KenGen Defined Contributions Scheme and Banki Kuu Pension Scheme 2012. ADP III invested in Groupe Cofina, which is accelerating growth for women-owned small and medium enterprises (SMEs) across West Africa.

Building relationships comes in many forms for U.S. institutional investors, including: 

• Connecting with other U.S. institutional investors who are interested in learning about the African investment market through delegation trips, conferences, forums and other Africa-focused engagements;
• Connecting with U.S. agencies to better understand the U.S. government’s trade and investment priorities in the region;
• Networking and connecting with key financial sector leaders and local businesses;
• Meeting with aligned African asset allocators to better understand their fiduciary roles and to discuss opportunities to co-invest;
• Sitting down with African consultants and fund of funds to learn more about the investment opportunities and challenges on the continent; and
• Participating in pitch sessions with local fund managers to learn more about their companies and their investment opportunities. 

Prosper Africa currently leads the U.S. Institutional Investors Delegation Trips to Africa. Prosper Africa is a Presidential-level national security initiative aimed at strengthening the strategic and economic partnership between the U.S. and Africa by catalysing transformative two-way trade and investment flows. This partnership strengthening between the two countries is directly tied to the relationships made by engaging U.S. institutional investors with their African counterparts and African fund managers. 

The most recent delegation trip to South Africa, in early October 2023, included eight U.S. institutional investors with assets under management totalling over $1 trillion. The delegates learned about the investment landscape in Southern Africa and worked to build relationships with the U.S. Mission to Southern Africa, including meeting with U.S. Ambassador to South Africa Reuben E. Brigety II. 

The delegates also participated in roundtable discussions and panels with both public sector and private sector leaders. Relationships were forged with U.S. government experts based in South Africa, leaders within Standard Bank, industry experts at the World Bank and the International Finance Corporation, and members of the Government Employees Pension Fund (GEPF) at its annual Thought Leadership Conference that brought over 300 participants together. 

At the GEPF Conference, delegates met with the Fund’s Principal Executive Officer Musa Mabesa and the government of South Africa’s Finance Minister Enoch Godongwana, among other industry leaders. These new introductions have already led to follow-up meetings focused on ways to work together for mutual benefit.

Relationship building works both ways. While some U.S. institutional investors have travelled to Africa to foster new relationships and strengthen existing relationships, African institutional investors and African fund managers are doing the same by travelling to conferences and bilateral meetings in the U.S. to expand their networks and relationships with U.S. institutional investors and consultants that have an interest in investing in Africa. These opportunities are pivotal in creating the impactful long-term relationships needed to mobilise capital into Africa to strengthen local economies.

Large U.S. institutional investors’ ability to mobilise sizable allocations can have transformational impacts on African communities in infrastructure, digital technology, energy, climate change, gender empowerment and job creation. As Africa rises into the largest workforce in the world and a multi-trillion consumer market, U.S. investors and companies can benefit from stronger returns while generating opportunities for locals in Africa. Investing in African countries can help to mitigate the worst effects of climate change on the continent that is the most exposed, and alleviate poverty and enable wealth creation as Africa’s urban population triples.

MiDA Advisors is focused on educating the U.S. and international communities about investment opportunities in Africa while facilitating relationship-building between key stakeholders to accelerate the pace of capital mobilisation into Africa to create transformational and sustainable impact.