By Tom Koch, Director, Global Capital and Strategy for FCA
As COVID-19 and the war in Ukraine continue to hurt the African continent, many countries will require significant investment to revitalize their economies. But a persistent attribute of many African markets will continue to be a barrier to private investment: a relative lack of data. Data challenges will prevent large scale investment into Africa unless this is addressed.
A lack of data leads to diminished demand from international investors, which leads to underinvestment. This underinvestment leads to underdevelopment, and underdevelopment leads to less data being supplied, and so on. This is how a doom loop is formed.
It doesn’t take sophisticated data to see the potential within Africa. But for that potential to be realized, governments, institutions and investors must take a clear-eyed and long-term approach to building a mature data ecosystem. It would be a worthy investment.
Currently, the ecosystem is tiny relative to Africa’s potential. In 2021, Africa-focused private equity funds raised a record $4.4 billion, but compared to the over $700 billion raised globally, it shows just how much data challenges hinder large-scale international investment. Academic research regarding cross-border investments also confirms the data problem.
This In-depth Atlantic Council article from Tom Koch, Global Strategy Director at FCA Corp and an Atlantic Council member, shares his thoughts on the problem and offers possible solutions on how African nations need to urgently fix this problem in order to generate a self-sustaining ecosystem that encourages investment. Luckily, the continent’s FinTech revolution might offer them an opening.
Article explores the following topics:
- Data means development
- Investment at scale
- A three-pronged approach
Click here to access this research-rich article on the Atlantic Council website: https://www.atlanticcouncil.org/blogs/africasource/better-data-is-the-key-to-unlocking-major-investment-in-africa/
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Robert Scharar
Robert Scharar is President of FCA Corp, a Houston-based investment advisory firm founded in 1975. FCA Corp provides global investment, wealth management, tax and business advice through a team with backgrounds in law, accounting, finance, financial planning, taxation, real estate, and international investment.
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