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        Global Voices Online - The world is talking. Are you listening?
        Friday, January 19, 2007
        An alternative to development?
        Now, that sounds like a good alternative to decades old let's-dish out-charity-feel good about ourselves-and-hope-for-the-best approach to development.

        Citigroup, CDC launch Africa Fund

        17 January 2007

        US banking giant Citigroup and UK government-backed CDC Group have
        together committed US$200-million to Citigroup's first dedicated
        African private equity fund, the CVCI Africa Fund.

        CDC Group will commit an initial $100-million to the fund, with
        Citigroup Venture Capital International (CVCI) - which will manage the
        fund - matching CDC's investments dollar for dollar.

        "The fund will provide growth capital to larger companies across
        Africa and will invest alongside CVCI's managed emerging market
        private equity funds," CDC said in a statement on Monday.

        CDC is a British government-owned fund of funds with assets of
        £1.6-billion that targets businesses in poorer countries, with an
        emphasis on Africa and South Asia.

        According to CDC, its commitment to the CVCI Africa Fund will bring
        its total investments in Africa to over $830-million since 2004.

        Investors eye Africa
        The move comes as companies across Africa attract increasing attention
        from both local and international private equity investors.

        The African Venture Capital Association said recently that it expected
        a dramatic increase in the amount of private equity capital invested
        on the continent since 2004, when deals worth more than $1.3-billion
        were done.

        Sunil Nair, CVCI's MD for Central and Eastern Europe, Middle East and
        Africa, said the new fund would "seek to capitalise on the growth of
        African economies, evidenced by high GDP growth.

        "The investment environment is increasingly attractive given rising
        political and macroeconomic stability, growing disposable income and
        economic reform which will particularly benefit sectors such as
        mining, oil and gas, financial services, infrastructure,
        transportation and consumer goods," Nair said in the CDC statement.

        "We believe that Africa is a high potential market where we can
        generate attractive returns," said CVCI head Dipak Rastogi.

        Individual amounts of between $20-million and $60-million would be
        invested in companies in both sub-Saharan and North Africa, CDC said.

        CDC chief executive Richard Laing said investment areas would include
        infrastructure, natural resources, energy, telecommunications and
        general manufacturing.

        Private equity activity in SA
        The boom in private equity activity worldwide has been mirrored lately
        in South Africa, where a number of large corporations - among them
        Shoprite, Edcon, Alexander Forbes, Consol Glass and Primedia - have
        attracted bids from private equity players.

        And according to Business Report, the governments of Ghana, Nigeria
        and South Africa have intervened to help develop the private equity
        asset class.

        "The South African government has established the National Empowerment
        Fund, which is targeting the black SME sector with investments from
        R100 000 to R50-million," Business Report noted. reporter
        posted by Fikirte @ 8:51 AM   Digg!
        • name<="c116927621720031926" id="c116927621720031926">

          At 1:56 AM, Blogger Benin "Mwangi" said…

          Fikirte, great story! Trade not aid is becoming a big movement across many parts of Africa. As your post acknowledges more and more multinationals are realizing the market potential of developing economies. One figure that I recently saw stated that developing countries export to developing economies twice what they sell to each other. The potential for business in Africa could be even greater than this I believe, due to a wave of market reforms moving accross many parts of the continent. Countries such as Ethiopia are beginning to establish themselves in small niche markets such as leather and coffee. If these trends continue, the AFrica of tomorrow may look much differently than the one that we see today.

          Thanks for your brilliant post. You are always welcomed to come and continue this discussion on my blog (The Benin Epilogue) at anytime you wish. Thanks again.

        • name<="c116965704579449206" id="c116965704579449206">

          At 11:44 AM, Blogger Black River Eagle said…

          I saw this news story over at BBC News online. If Citigroup together with the U.K.'s CDC can show excellent returns on the initial investment of US$200 million then you might see a gold rush for Africa from other major investment groups in North America and Europe. The recent investment pledges and flakey loans from the PR of China and India has caught the attention (and the fears) of governments and businesses around the world.

          If the "little guy" can also get into the game under the guidance and protection of reputable fund managers and stockbrokers... and governments, then you're gonna have a free-for-all (barfight) over Africa. I hope that this time around this new surge of foreign capital brings benefits to the people of sub-Saharan Africa and not just fill the already overflowing pockets of the privelaged few (Despots, Crooks and Co. International).

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