Africa is the fastest growing Foreign Direct Investment (FDI) market in the world. From 1990 to 2013 FDI inflows into Africa increased 19 fold – from $3 billion to $57 billion. This has opened the door for great opportunities, says Gavin Commins, CEO of The Valuator Group, which is headquartered in Cape Town.
Forward looking companies in South Africa and worldwide, says Commins, have in recent years bolstered their profits and their growth by expanding into Africa and some of these can now justifiably claim to have ‘African knowhow’, an understanding of how businesses and governments work in this continent.
It is logical, said Commins, that certain South African businesses, particularly those which have acquired African experience, should see the African continent as their rightful playground, an area in which they are probably better equipped to perform than others. Nevertheless, he said, the continent has never been an easy nut to crack – and many South African businesses and investors from other countries, keen to capitalize on all that Africa can offer, have burnt their fingers here as a result of doing insufficient initial investigation.
Talking recently to potential Middle Eastern investors looking for opportunities in Africa, Commins stressed the huge importance of using a professional valuation service before making decisions on expansion into Africa.
“In most cases,” said Commins, “new investors in Africa will be looking to amalgamate with or buy into an operation or set up on their own. They are likely as part of the process to be looking at buying buildings, equipment, plant and other assets, the values of which can be\ hard to assess in countries so very different from those in the more developed world.”
In these situations, said Commins, it is demonstrably useful – and a wise precaution – to employ a valuation company such as The Valuator Group which has multi-faceted experience and is able to put accurate values on any business in Africa and its key assets. In the process they will also give advice on the viability of the operation and its future prospects. (A service of this kind, added Commins, would cover not only market values but also insurance values.)
The Valuator Group, said Commins, is now involved in this way with many companies throughout Southern, Western and Eastern Africa and has offices and/or associates in Ghana, Zambia, Mauritius and the major centres of South Africa. They are currently negotiating to open offices in Tanzania, Kenya and Nigeria and here are teaming up with local professionals to provide all-inclusive valuation packages.
The Valuator Group is also now targeting the Middle East and has just finalized the opening of an office in Dubai to service Middle Eastern clients. This, said Commins, could be one of the most significant moves ever made by the company.
“Huge investment is pouring into Africa from the Middle East and we see ourselves not only servicing our clients from the Middle East with valuations but also ‘holding their hands’ as they gain a foothold in Africa, making use of our experience and contacts throughout the continent,” said Commins.
One of the reasons why The Valuator Group has found itself appreciated in Africa, said Commins, is that valuations here are often required by governments and parastatals as a prerequisite for loans from the big international public funding agencies such as the World Bank, the IMF and the other organizations involved with local upliftment and partnership programmes. Nevertheless, it is the chance of introducing new business to Africa that excites The Valuator Group team the most and this, he said, is only now really starting to take off.
“Our aim,” said Commins, “is to partner with any companies, whether African or international, which are offering services to, or are investors in Africa. We want to help them to set up successful local businesses. When our clients use our services we can guarantee that they will benefit and new clients have time and again testified that with our help it becomes easier to ensure that whatever investment they are looking at is accurately priced and has a fair value in an environment where many different, often unique, factors must be taken into consideration. Our experience and knowledge are useful to such people, not only as a one-off initial exercise but also on an ongoing basis – and I must stress that in my view those companies moving into Africa right now are likely to be seen ten years down the line as the ones with real foresight.”