The Loan Markets Association surveyed last February its almost 600 member institutions worldwide on the opportunities and challenges facing investors in Africa. “Developing markets present great opportunities. These vary from country to country, as do the challenges,” says Nick Voisey, director of the LMA.  The results were presented on April 30, the day of their conference on the topic. GTR summarises the 5 major takeaways.


1. Local banks are key lenders. A majority of the respondents see local banks as the major sources for developing market lending, followed by multilateral banks and foreign banks lagging behind. The LMA introduced this survey point this year as it “believes it is important to understand where new liquidity is coming from,” says Voisey.


2. Energy and infrastructure present the best opportunities for growth. Energy and power and infrastructure are seen as the major sectors driving growth in Africa. According to Voisey, these are not affected by commodities or oil prices swings, as the sectors remain fundamental in any growing market.


3. Mozambique is the next big thing. Mozambique was voted as the country offering the best opportunity for growth in the continent, as its demographics and renewed stability after a turbulent time offer good conditions for investments.


4. Political risk needs to be monitored. External factors are considered to be the main challenge to growth in 2015, with political uncertainty and poor governance standards being the biggest worries for those investing in Africa.


5. Local market knowledge is crucial. Knowledge of the country you are dealing with is a first step towards mitigating risk. “There is a need to understand the local markets, society, and economy,” recommends Voisey. This is important in order to attract new borrowers, but also to perform appropriate due diligence and structure contract agreements correctly.