Institutional investment into Africa is set for a boost due in part to a new task force that will work to encourage capital flows into infrastructure projects in the region.
Linked to President Barack Oba-ma's Power Africa initiative, the task force will identify opportunities, address risk and develop structures to connect investors with new projects.
The group is co-led by the Stockholm-based Swedish International Development Cooperation Agency, known as Sida, and the United States Agency for International Development.
Also present at a round table held to discuss the task force and its operations were four pension funds, two from Sweden and two from Canada, including a representative from the C$140.8 billion (US$131.1 billion) Ontario Teachers' Pension Plan, Toronto.
A source with knowledge of the round table said the Ontario teachers plan was present to counsel and advise on how the task force should shape the initiative, and to provide insight to infrastructure investment in emerging markets.
“It was easy to see there is a gap between what European and U.S. pension funds can invest in given their structures, relative to what is out there to invest in,” said Sarah McPhee, Stockholm-based CEO at Swedish life and pensions provider SPP, which is part of the $75 billion assets under management, Nordic life insurance and asset management firm The Storebrand Group. “I don't think any pension fund has missed the fact that Africa expects high levels of growth — the question is, does that compensate for the risk?”
She said it was clear from the round table — at which she was present — that funds without in-house investment teams to concentrate on Africa would struggle to invest on the continent.
“Therefore investments need to be made fairly simplified and with a high level of guarantee,” she said.
In March, SPP/Storebrand invested $140 million in a green bond — a tax-exempt bond issued for the development of brownfield sites — to finance and promote long-term and sustainable growth through water and energy improvements in Africa. The bond was issued by the African Development Bank.