Editor’s Note: February 06, 2019

Is Africa a good place to invest?

The Wall Street Journal has reported that U.S. private equity giant Blackstone is reining in plans to invest billions across Africa, which includes selling its main investment vehicle for the continent, Black Rhino Group.

It’s a far cry from the firm’s bullish outlook in 2014, when it announced a $5bn partnership with Nigerian billionaire Aliko Dangote, and plans to invest $2.5bn by 2020. This was at the height of the ‘Africa Rising’ fad, which touted the continent as the next big thing for mainstream investing.

The company is not the first big name to lose its enthusiasm for Africa. In 2017 fellow private equity giant KKR dissolved its Africa venture after making just one investment. Others, like Carlyle, have seen returns fall short of expectations.

It’s important not to read too much into this. Foreign direct investment into Africa rose 6% last year to $40bn, defying a global drop of 19%. And while American companies like Blackstone may be having a hard time, investment from regions like Asia and the Middle East is surging.

Yet the move cannot be ignored. 

Examples like this undermine the universal refrain among policymakers that Africa is a good place for business, and will do little to help its already precarious standing among international investors.

From The Continent

South African president Cyril Ramaphosa has said the country will unveil measures to shore up finances and address structural issues at struggling state-owned power utility Eskom in the coming days. This is part of efforts to reform the country’s state-owned enterprises amid growing concerns about poor governance and corruption. More: Reuters

Swiss cement company LafargeHolcim is reportedly evaluating options for its operations in the Middle East and Africa, which could include asset sales, as part of a strategic overhaul to scale back its activities outside Europe. The company’s Africa unit has operations across the continent, including Nigeria, South Africa, Egypt and Kenya. More: Bloomberg

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The length of a proposed highway - currently in the feasibility study phase - connecting Abidjan in Côte d’Ivoire with Nigeria's commercial capital Lagos. More: The Cable

The Global Perspective

The UK’s minister of state for Africa has said the country is no longer able to support Zimbabwe’s efforts to rejoin the Commonwealth following a deadly crackdown on anti-austerity protests. The news is the latest blow to floundering efforts by president Emmerson Mnangagwa’s government to turn around the economy since the ousting of longtime ruler Robert Mugabe. More: Business Day

U.S. president Donald Trump has selected Treasury Department official David Malpass as Washington’s pick to lead the World Bank following Jim Kim’s unexpected resignation in January. The selection of Malpass, a critic of the Bank, reflects of the administration’s adversarial approach to multilateral institutions. More: Politico

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