There is significant investor appetite and liquid funds available for international equity investment in Sub-Saharan Africa, according to Judith Tyson, research fellow at the Overseas Development Institute.

“Although moderated by economic headwinds in 2014 and 2015 – including commodity price declines, currency depreciation and concerns about sovereign debt levels in some countries – confidence amongst international investors in the regions long-term prospects remains firm,” she said.

The UK think-tank, the Overseas Development Institute (ODI), has estimated that between $10bn and $20bn of international equity capital will flow into Sub-Saharan Africa on an annual basis going forward.

According to the latest ODI’s report titled ‘Sub-Saharan Africa and international equity’, $54.2bn of equity capital has surged into the region since 2008.

It now comprises approximately $12bn annually and 20% of cross-border capital flows.

Between 2008 and June 2015, $16.1bn has been raised for investment in Sub-Saharan Africa through mutual funds and exchange-traded funds, $21.7bn has been raised via international IPOs and $16.4bn has been raised by private equity funds.

Tyson said that these equity inflows have been attracted by ‘pull’ factors summarized by the ‘Africa rising’ narrative that sees the recent economic growth and the rise of the middle classes in Sub-Saharan Africa as a key investment opportunity.

“The inflows have also been driven by ‘push’ factors – most importantly the ‘search for yield’ because of poor alternative opportunities in advanced economies and emerging markets in Asia and Latin America where growth has slowed and interest rates are at historical lows,” she added.

Tyson said that of the equity capital flowing into the region, private equity funds offer the best source for development.

“They share many of the positive characteristics of traditional, corporate-led FDI – incremental and stable capital for private enterprises accompanied by knowledge and technology transfer,” she said.

“Flows from international stock exchanges are also positive. Policy to support and develop such flows should be encouraged,” said Tyson.

“Private capital flowing into the region offer an unprecedented opportunity to accelerate economic development and poverty alleviation – in particular through creating jobs – but policy needs to tackle threats to financial stability,” she added.

The report suggests that there is a need for further policy development.

“This includes in relation to creating a greater pool of investable companies – as well as a greater pool of funds to invest – and to consider policy that take a holistic approach to ‘eco-system’ development including value-chain and sector development,” said Tyson.