As Africa develops economically, the sustainability of the continent's growth depends largely on its ability to provide the necessary infrastructure
With emerging and frontier-market governments facing both rising public expectations and constrained balance sheets, Public Private Partnerships can act as a crucial catalyst in accelerating investment and furthering development and sustainable economic growth, argues Karim Sadek, Managing Director of Citadel Capital and AVCA board member during his presentation at Mindspeak.
“Africa is home to outstanding opportunities for long-term investors in the infrastructure that will support this growth,” said Sadek.
“It has been said that spending on infrastructure in Sub-Saharan Africa stands at USD 45.3 billion per year against a need of USD 93.3 billion annually, implying a deficit of USD 48 billion per year. This represents the funding gap which several African states are unable to fill alone. The gap shows why private investment, which includes sophisticated investors such as DFIs, is needed if African growth is to reach the level required to outstrip population growth and generate a real impact on living standards,” Sadek noted. He added that the firm’s investments were specifically designed to offer tailored solutions to Africa’s most pressing and complex infrastructure challenges.
The firm recently led the financial closing of the Egyptian Refining Company, a second stage petroleum refinery to be constructed in Greater Cairo. The landmark $3.7 billion deal will halve Egypt’s reliance on expensive diesel imports while producing Euro-V diesel, the cleanest-burning diesel fuel of its kind in the world.
In East Africa, Citadel Capital is leading the rehabilitation of the Kenya- Uganda Railway through its investment in Rift Valley Railways. Intraregional trade accounts for just 9% of Africa’s total commerce compared to 50% for emerging Asia, which is largely due to the inefficiencies of the current transport systems. This insight informed Citadel Capital’s decision to turn around the railway in order to dismantle barriers to cross-border trade and investment and open up the region.
“The East African Community’s push for integration will demand more and more investment in infrastructure. East Africans now seek a reliable platform to grow their businesses regionally to take advantage of new opportunities. These two examples clearly convey that the continent is increasingly open to private investment, in part thanks to a new generation of policymakers with progressive and visionary approaches to engagement with responsible private sector investors,” Sadek concluded.
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading private equity firm in the Middle East and Africa. Citadel Capital focuses on building regional platforms in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity-Specific Funds. The firm’s 19 OSFs now control Platform Companies with investments of more than US$ 9.5 billion in 15 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, Citadel Capital has generated more than US$ 2.2 billion in cash returns to its co-investors and shareholders (on investments of US$ 650 million), more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2007-2012, as ranked by Private Equity International). For more information, please visit www.citadelcapital.com.
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