AFRICA DAY: INVESTORS SHOULD ALLOCATE CAPITAL TO BUSINESSES IN AFRICA

With our purpose to build a better Africa, we celebrate the huge potential that the continent offers in terms of our youthful human capital base, high-growth prospects and impactful investment opportunities. At Norsad Capital, we believe that investors also need to prioritize allocations of capital to Africa, to complement their investments in other regions of the world. This idea came upon our observation that attractive risk-adjusted returns can be earned by long-term investors. Despite the fact that Africa has been severely constrained from participating as a significant player in the world economy, there is so much positivity about the continent if we take a closer look at the potential on offer.

Impact investing

While financial returns are obviously a crucial part of investing, Norsad focuses on the societal returns available through impact investing. In more advanced economies of Europe and North America, society has moved beyond many of the issues that are still predominant in Africa, such as the lack of financial inclusion and the opportunity for most people to secure sustainable livelihoods.  According to the International Labour Organization (ILO), it is extremely difficult for most people in Africa to secure good employment opportunities. This has resulted in the development of a large informal sector, in which people have to accept lowly-paid work that holds little opportunity for career growth. Fostering and supporting the business growth is crucial for the continent to create meaningful employment opportunities. However, an important issue that holds Africa back in terms of business development is access to finance for businesses.  The conventional approach of lending taken by banks does not address a majority of businesses needs on the continent. As a result, very few businesses qualify for loans from traditional banking sources as established in other regions of the world.

Growth finance

 It is against this background that we developed our products at Norsad Capital – a specialist approach to provide finance to profitable businesses on a growth trajectory.  We are not restricted to the same lending criteria as the banks. We complement bank funding and open up access to finance for growth beyond what can be activated by traditional bank lending. With an aim to create industry champions, we provide growth finance to businesses and also select the beneficiaries of our products on the basis of the social impact the businesses has, through the services and employment they provide.  The positive impact of this approach can be seen in tangible numbers – over 13 000 direct jobs supported by the businesses we are currently financing  and almost 200,000 indirect jobs impacted through their supply chains and local spending. The majority of these jobs aim to benefit the marginalized in the society, namely women and the youth.

 Being able to impact lives is satisfying, especially when it involves improving the lives of millions who have talent and enthusiasm but otherwise held back by issues beyond their control.  We should therefore endeavour to contribute to building a better Africa and celebrate this Africa Day 2022!