Africa's capital markets face a paradox. Investors are willing to put money into the continent and domestic savings are growing. However, the continent's fragmented financial systems make it difficult to channel that available capital into the infrastructure and businesses that it needs to reach sustainable and transformational growth.
According to Samira Mensah, head of S&P Global's Africa National Ratings, the question that Africa currently faces is whether it can create the necessary conditions for capital to work in its favour.
"Africa already has meaningful pools of domestic savings, including pension funds, insurance assets, sovereign wealth funds, bank deposits and diaspora capital but too little of this capital is channelled into long-term productive investment," she points out.
That assessment may be informing the 85-year ratings agency's operations in Africa. In July, S&P announced an agreement to acquire a majority stake in Agusto & Co, a Nigerian-based pan-African credit rating agency with operations in Nigeria, Kenya, Rwanda and Ghana. S&P Global Ratings says that the acquisition means that its international experience will be combined with Agusto's local market knowledge, with Agusto expected to continue operating as a separate ratings entity under applicable local regulatory requirements.
Originally published by African Business.