The following article is part of How we made it in Africa’s special coverage of the SuperReturn Africa conference, which took place in Cape Town from 4 to 6 December 2023.

During a session at the recent SuperReturn Africa conference in Cape Town, the panellists, all of whom are investors in Africa, were asked to identify an African frontier market they are optimistic about. Here’s what they had to say:

1. Olu Oyinsan, Oui Capital: Democratic Republic of Congo

Highlighting the Democratic Republic of Congo (DRC) as his top pick, Olu Oyinsan, managing partner of Lagos-based early-stage venture capital firm Oui Capital, pointed to the country’s significant population of 100 million. He emphasised the increasing smartphone penetration and decreasing data costs as key indicators of a growing digital market, which is important for tech investors.

2. Barthout van Slingelandt, XSML Capital: Angola

The Angolan market, says Barthout van Slingelandt of XSML Capital, has shown signs of stabilisation although the depreciating local currency, the kwanza, is still an issue. Africa’s second-largest oil producer is also grappling with a shortage of US dollars. He acknowledged the difficulty in extracting hard currency from the country, though the situation has seen some improvement.

Van Slingelandt observed that Angolan businesses have been underserved with capital. Traditional banks do offer funding, but he sees a lack of flexible financing options. XSML recently provided US$2.5 million loan to support the working capital needs of Advancetire Comercio, a retailer and wholesaler of car parts in Angola.

3. Johannes Gunnell, Maris: Mozambique, DRC and Ethiopia

Johannes Gunnell, a partner at investment firm Maris, shared his views on Africa’s top frontier markets, dividing them into short-, medium-, and long-term opportunities. In the short term, he selected Mozambique, citing the country’s emerging natural gas industry which he expects will boost economic growth. TotalEnergies, operator of the Mozambique LNG project, recently expressed optimism about resuming the $20-billion liquefied natural gas (LNG) initiative in northern Mozambique in 2024. The project was previously suspended in 2021 following attacks by Islamic State-linked insurgents in the Cabo Delgado province.

In the medium term, Gunnell chose the DRC, highlighting its large population and the fact that it is a dollarised economy. He mentioned that having a sizable population is important when looking to sell an investment as foreign investors making their first foray into Africa often prefer countries with large populations. He did, however, point out the challenges posed by the DRC’s inadequate infrastructure.

Long-term, Gunnell is bullish on Ethiopia, largely also because of its sizeable population of over 105 million. He did, however, highlight currency issues as a significant challenge in Ethiopia. The country faces a severe shortage of foreign currency that complicates business operations, particularly in terms of importing essential raw materials.