Webinar insights: African opportunities - chasing returns, managing risks

Africa continues to offer compelling opportunities for growth and diversification. Drawing on our experience in the region over the last 40 years, we understand that hesitation often stems from perceived risk. Through our work with US-based fund managers considering Africa but unsure how to approach it, we know that the right advice and structures can mitigate risk and unlock potential.

To help demystify the region, Yasho Lahiri, partner in our New York office, moderated a discussion on 21 October 2025, with Martin Kavanagh, Brigette Baille, Patrick Hirsch, and Ziyanda Ntshona - all partners with deep experience advising clients across Africa.

Understanding the Landscape

The discussion began by highlighting Africa’s diversity: multiple languages (including Arabic, English, French, Portuguese, and Spanish) and varied legal systems - some based on civil law, others on common law, and some blending both.

Despite these complexities, investing in Africa is often less risky than perceived. Default rates on closed debt transactions are lower than in most Western markets and other emerging economies, even for large structured deals like project finance. Global data shows Africa’s default rates are among the lowest worldwide. The key to investing in Africa is not eliminating risk entirely (because to do so would eliminate the return too) but to understand and mitigate risk where necessary.

Risk Mitigation Structures

The panel shared three structures to consider for mitigating common risks, all emphasizing the importance of agreeing on terms with governments and stakeholders upfront:

1. Political and Currency Risk
   A case study demonstrated how using a Mauritian holding company - an investor-friendly jurisdiction - helped manage political and currency exposure.
2. Forex and Payment Risk
   Another example showcased innovative mechanisms to reduce the risk of non-payment by utility companies.
3. Cross-Border Preference Shares
   This structure involved identical sets of preference shares under different legal regimes, requiring close collaboration with local counsel to ensure compliance and dividend flow.

The discussion also covered the growing use of warranty and indemnity insurance - once favoured by private equity, now adopted across telecoms, financial services, and project finance - with global providers like AON, AIG, and Marsh offering coverage.

Future Opportunities

Looking ahead, the panel identified sectors poised for growth:

• Telecoms & Fintech: Data centers driven by AI adoption; major players like Microsoft investing in infrastructure.
• Real Estate & Consumer Goods: With 70% of the population under 30, demand will surge as incomes rise.
• IT Connectivity: Solutions like Starlink are transforming remote access.
• Water Technology: Innovations addressing scarcity will be critical.
• Power & Energy: Smaller, rapid-deployment networks offering premium services.
• Education: Expanding access and quality to meet demographic needs.

To watch the full webinar, please click here.