Africa is desperately short of investment. Infrastructure alone needs $90 billion a year.  Many of the normal routes by which capital gets into economies are blocked in Africa.

Only private equity has a direct route.  Private equity raised $4 billion for Africa last year, building toothpaste factories and providing modbile phone service.  Handing cash to pioneers in Africa is often seen as less risky than putting money in underdeveloped pubic markets.

Private equity has been warmly welcomed in Africa.  But Africa needs more than these funds can provide. Often they want to sell the firms they buy in five years. Long term investment is needed.  Uganda’s privatized electric grid gets a state-guaranteed return of 20% a yaer on all dollars invested in the grid.  African economies have grown 5% or more over the past decade.  The continent’s mddle class is projected to triple (one billion people)  by 2060.

Capital restrictions are in place in the rich world which prohibit long-term illiquid investments, such as ports, railways and roads.  African governments are also to blame.  Investors have not forgotten the natioanalizations across the continent in the 1960s and 1970s.

Rich counties need to change their regulations to get capital flowing freely.  African governments need to set up large regional stock exchanges to provide liquidity, security and ease of access.  The conitnent is ripe for investment if the right climate prevails.