Conduits of Capital

Experts were asked to make recommendations on which
reforms would be needed to attract international capital
and how FSD Africa and / or the UK’s Department for
International Development (DFID), FSD Africa’s funder,
could best support the transformation of particular countries
or cities into viable onshore centres, for example, through
technical assistance or support to in-country advocacy
initiatives to build political will.
The series consists of the following five reports:
• Bella Research Group, “White Paper on Private
Equity and Financial Hubs,” March 2015 (referred to
as Bella Research hereafter);
• Econsult Botswana Ltd, “The Potential of Onshore
Financial Centres for Africa-focussed Investment
Funds and Vehicles”, March 2015 (Econsult Botswana
hereafter);
• Michael J. Fuchs, “Onshore Options for Africafocussed
Investment Funds and Vehicles,” January
2015 (Fuchs hereafter);
• Lion’s Head Global Partners, “African Onshore Financial
Centres,” January 2015 (Lion’s Head hereafter); and,
• Z/Yen Partners Limited, “Onshore Options for Africafocussed
Investment Funds and Vehicles,” March
2015 (Z/Yen hereafter).
financial centre development and results in practice;
• Lion’s Head explores how agglomeration effects and
economies of scale support a thriving financial centre
and suggests that a successful regional financial
centre results from finding an equilibrium between
decentralising (proximity to clients) and centralising
(agglomeration) forces; and,
• Z/Yen provides quantitative evidence of how African
financial centres compare with each other and with a
peer group of similar centres in other regions of the
world based on the Global Financial Centres Index,
and qualitative evidence based on interviews.
Table 1 below provides an overview of the different topics
explored in each report. These topics or dimensions can be
broadly categorised into four groups:
• Financial centre—definition, typology and requirements;
• Private equity—importance of a local private equity
industry, drivers of funds or investment company
location, and impact on the economy;
• African financial centres—current and future outlook,
comparison, and assessment of their potential to
become an established onshore financial centre; and,
• Reform requirements as well as scope and format of
donor support (see Section 5).
2. CONTENT OVERVIEW
While the five reports share common attributes (see Section
3), each report brings some unique contribution in analysing
the feasibility of establishing an onshore financial centre for
investment funds in Africa:
• Bella Research provides a comprehensive review on
the role, importance, location and impact of private
equity on a financial centre and the economy. Further,
it explores the drivers behind domicile decisions and
the impact of private equity domiciliation on economic
growth by analysing Mauritius in greater detail, noting
Mauritius’s first-mover advantage;
• Fuchs analyses how a local private equity industry that
provides risk capital to smaller domestic companies
could be a powerful tool for economic development in
Africa;
• Econsult Botswana provides a comprehensive
comparison of African financial centres and explores
the link between regulatory frameworks supporting
Conduits of Capital – Onshore Financial Centres and Their Relevance to African Private Equity
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