DAKAR West Africa nations are racing ahead of their Central African counterparts in deepening economic integration and slashing red tape to open up regional business opportunities, a private equity fund manager said.
Patrice Backer, chief operating officer for Advanced Finance and Investment Group (AFIG), said his $72 million fund was invested in finance, mining and agricultural services in the small but rapidly growing economies along Africa's Atlantic Coast.
Backer said he was seeing changes in the perception in Francophone Africa that private equity was an "Anglo-Saxon" business but more understanding was needed of how the industry could fund firms keen to grow but starved of credit by banks.
AFIG has committed its fund to seven investments ranging from a mining services company in Mauritania and banking in Chad, Liberia and Rwanda, to a Senegalese bus-maker and an agriculture firm serving cocoa growers in Ghana and Ivory Coast.
While Francophone nations in West and Central Africa share currencies and a common business law, West Africa had made more progress in freeing up movement of people and goods, he said.
"I would not underestimate this ability to travel. A lot of people are deterred from trying to do certain regional ventures by the bureaucratic procedures," he said. "West Africa has done more work than central Africa at regional integration."
"NEEDS TO BE REGIONAL"
Investment funds have tended to focus more on economic powerhouses South Africa, Nigeria and Kenya than the collection of numerous but smaller Francophone nations.
But Backer said adopting a regional outlook had helped AFIG spot opportunities supplying a booming mining sector and the still underbanked financial sector.
In Mauritania, the fund took an $8 million stake in Deep Drilling Company, which works across West Africa, a region rich in iron ore, gold and bauxite.
"People may wonder why we invested in Mauritania but when you look at the need to create regional mining services you have a completely different equation," Backer told Reuters in a telephone interview. "It has to be a company that is regional or has regional aspirations."
Investments in pan-African Ecobank's subsidiaries in Chad, Liberia and Rwanda reflected the fund's enthusiasm for the potential for growth in financial services. The World Bank estimated last year just 23 percent of adults in West Africa had bank accounts, and only 11 percent in Central Africa.
A stake in Senbus Industries, which makes buses in Senegal, and oil and gas distributor Elton International highlight potential in firms involved in transport and logistics.
The largest investment, $14 million, is in RMG Concept Limited, a firm making and distributing crop protection products in Ghana and Ivory Coast, the world's top two cocoa producers.
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(Editing by Daniel Flynn/Ruth Pitchford)