Study: African business grads plan return

One of the biggest challenges in Africa for private equity is finding talented managers; the growing influx of business students returning to the continent is a good sign for future investment.

Carlyle recently
invested in ETG, 
a business in 
Tanzania. 

Good news for GPs in Africa looking for gifted management teams: talent is on the way. The majority of African diasporan business students studying at Western universities plan to return to Africa after graduation, a study has shown.

Half of the 70 percent of students that plan to return aim to start their own business, according to the survey, which was carried out by Jacana Partners, a pan-African private equity firm.

The growth in consumer spending on the continent was singled out by 89 percent of African respondents as one of the greatest opportunities in Africa.

The survey results are a “welcome indication that the majority of talented young Africans from among the MBA diaspora will be returning to Africa post-graduation”, Simon Merchant, chief executive officer at Jacana, said in a statement.

“Small businesses are the key engines of economic growth, job creation and poverty alleviation in Africa and management talent is a critical component for SME success. By combining strong management teams with increasing access to value-add private equity capital, we can harness the potential of the returning MBA diaspora to build successful businesses, create jobs and support long-term economic growth,” Merchant said.

By combining strong management teams with increasing access to value-add private equity capital, we can harness the potential of the returning MBA diaspora to build successful businesses, create jobs and support long-term economic growth.

Simon Merchant

Oxford Saïd Business School, which researched the appetite amongst its business network students for working in Africa post-graduation, said it was not surprised by the results of the survey. “The majority of our members view Africa as offering a compelling career opportunity for business graduates, particularly at a time when the environment for growing businesses is slow in the West,” Sara Leedom, co-chair of the Africa Oxford Business Network at Oxford Saïd Business School, said in the statement.

Some big private equity firms have been expanding their investment activities on the continent. The Carlyle Group recently made its first investment from its new sub-Saharan fund in ETG, a Tanzanian-based business. But as the market continues to develop, finding good quality management teams remains a challenge, industry players told Private Equity International in November. “It is a very consistent message across most GPs,” Roddy McKean, head of the Africa practice at Webber Wentzel, said at the time.

While an increasing number of experienced people from the US and Europe with an African background are returning to the continent to take up managerial roles, there aren’t enough of them to make a huge difference, according to McKean.

Lack of certain skills remains a problem in Africa and education is not a quick fix, Mark Ransford, director for West Africa at Actis, told PEI in November. “If you are educating 10-year-olds today, they only become economically productive in their early twenties, and senior managers in companies in their mid-forties. So education today yields very strong results, but only in 30 years time.”