PwC: Foreign investors are looking to Africa

By Rob Starr, Content Manager, Big4.com

According to a report issued by professional services firm PwC, Africa is continuing to receive more interest as an investment destination from investors looking to emerging markets to access their growth potential . PwCs’ sixth edition of its biennial Valuation Methodology Survey titled ‘An African perspective: Valuation methodology survey 2012’ reflects the views of 49 financial analysts and corporate financiers.

Economic growth in Africa has recently been significantly higher than that in many developed regions, which is often cited as the main reason for investment in Africa. On average, developing economies have an expected five year compound annual growth rate (CAGR) that is more than twice that of developed economies, according to the International Monetary Fund (2012).”Africa has a lot to offer, particularly in terms of scarce resources.

There is a strong perception in the market that African companies have greater growth expectations than those in other markets. No less than 92% of respondents see this as either “very relevant” or “extremely relevant” in explaining the increased interest in African companies.The results of the study indicate that the majority of valuations are still performed for investors in home markets. However, a significant number of valuations are also being performed in connection with investors from Europe and the US evaluating investment opportunities in Africa, which underscores the heightened level of interest from developed market investors seeking exposure to higher anticipated growth in Africa.