Understanding the investment opportunity in French-speaking Africa: a geography where investors’ profitability objectives overlap with their desire to have a positive social and environmental impact

Interview with Elisabeth Moreno (Chairwoman of Ring Capital & Ring Africa) and Cedric Mangaud (MStudio’s co-founder & CEO)

Following the recent launch of Ring Africa, Ring Capital’s new impact fund, this month’s interview highlights Elisabeth Moreno’s and Cedric Mangaud’s backgrounds in entrepreneurship and how their diverse experiences led them to impact investing in French-speaking Africa.

Both Elisabeth Moreno and Cedric Mangaud provide insights into the investment opportunity in this region and share their perspectives, stressing the importance of holistic solutions tailored to local realities. With the pressing need for investment aligning profit and impact, French-speaking Africa appears as the perfect textbook case for impact investing. Making Ring Africa’s journey all the more thrilling.

Can you tell us about your background and, in particular, what led you to impact investing on the African continent? 

Cedric Mangaud:

After 20 years in the mobile phone industry and having sold a few companies, I decided to invest in tech start-ups as a business angel and through funds, in Europe and Africa. 

In the 2000s, when tech entrepreneurship was flourishing in Paris, I wish I had the experience, the resources, the network, the right team and the hindsight I have today to launch 30 start-ups that would have revolutionised tech in Europe. 

Today, I see in French-speaking Africa French tech ecosystem’s dynamism in its early days — an opportunity to do what I would have liked to do in the 2000s. And to do it in an environment where technological entrepreneurship can have a positive impact on people and the environment.

Elisabeth Moreno:

I was born in the Cape Verde Islands before moving to France at age 7. I have worked in a wide variety of sectors. 

First I founded a thermal insulation company when I was 20, then spent 20 years working in the digital world in various management positions and across 4 continents. I have also served as a consular judge for 5 years, and as a minister in Jean Castex's government for 2 years. 

My career path is rather atypical, but I see two key threads: entrepreneurship, and the fact that I have always been guided by values such as diversity, inclusion and equal opportunities (both in my professional responsibilities and in my involvement in different organisations and initiatives). This is probably why Nicolas Celier and Geoffroy Bragadir have put their trust in me to chair Ring Capital’s board and new fund Ring Africa. All the more so as I am also particularly sensitive to the development of the African continent, a continent bursting with potential and opportunities, particularly in the fields of tech, innovation and social entrepreneurship.

How would you describe the impact investment opportunity and the VC market in French-speaking Africa?

Cedric Mangaud:

French-speaking Africa presents a real investment opportunity for VCs in general, and even more so for investors seeking high impact. The region has historically received less interest from VC funds than the English-speaking region. For example, in 2023, French-speaking sub-Saharan Africa only received 8% of all capital invested on the continent, even though its economies are much more dynamic and resilient than those of English-speaking Africa’s countries (lower inflation, twice the annual GDP growth, and a stable currency, pegged to the euro, protecting returns on investment from exchange rate risk). 

This region is also becoming increasingly attractive: both to investors because of its dynamism and stability (in 2023, when they were not investing in the NEKS — Nigeria, Egypt, Kenya and South Africa, the majority of VC funds were investing in French-speaking Africa) and to members of the French-speaking African diaspora, most of whom have studied or pursued a career in more mature entrepreneurial ecosystems, and have the codes and networks to launch start-ups.

Finally, its emerging tech ecosystem makes it an exciting playground for tech entrepreneurs: many of the great innovations that have worked in Latin America, South-East Asia and English-speaking Africa don't exist in French-speaking Africa yet, and are just waiting to be replicated.

Elisabeth Moreno:

It is indeed a unique and promising opportunity. On the one hand, the market is very dynamic. It is growing fast and the population is young and entrepreneurial, so there's a significant pool of talents and innovative ideas ready to be tapped by start-ups. On the other hand, there is still a lot to build in education, health, clean energy, sustainable agriculture and financial services. These initiatives will not only meet important local needs, but will also offer significant investment opportunities. An incredible opportunity for both start-ups and investors. Indeed, by focusing on innovation, social impact and long-term value creation, investors can substantially contribute to the continent's sustainable development while achieving attractive returns on their investment.

Despite challenges such as fluctuating regulatory frameworks, limited access to finance and language and cultural barriers, the VC market in French-speaking Africa is growing and offers a significant opportunity for investors willing to navigate its complex but opportunity-rich landscape. 

Therefore, as Chairwoman of Ring Africa, I aim to catalyse social and economic impact by supporting businesses and initiatives that not only generate a financial return, but also contribute to the sustainable development and prosperity of the continent. I believe that through these investments, we can create a virtuous circle of growth and innovation, while addressing the specific challenges of French-speaking Africa.

What is the demand for impact financing in French-speaking Africa? 

Cedric Mangaud:

With its galloping demography, French-speaking Africa has a pressing need for investments that combine profitability and impact. This means financing the solutions that will address the major social and environmental challenges and create a more welcoming society for future generations. 

Traditionally, the investments attracted by this region mainly came from development agencies, private equity funds and public funds, financing major infrastructure projects, agriculture, health and financial services. The technological innovation sector, which was less well addressed, was mostly financed by profit-driven players. The institutionalisation of VC investment funds targeting the region has led management teams to turn to DFIs (particularly European DFIs) more and more. Increasingly, the latter are demanding that social and environmental impact considerations be factored into VC funds’ return objectives, accelerating the ecosystem's awareness. However, even today, very few VCs have genuine expertise in impact investing, or a proven methodology.

Is the African continent entering a new era of development? How do official development assistance and private investment work together today?

Elisabeth Moreno:

French-speaking Africa is at a turning point in its development. Official development assistance has traditionally played an important role in financing essential projects (infrastructure, health, education, etc.). However, this aid is evolving: rather than being limited to grants or low-interest loans, it is increasingly moving towards models favouring public-private partnerships. For instance, blended funding mechanisms are being used to mobilise private capital to finance larger-scale, higher-impact projects.

At the same time, the growing interest in impact investment and VC reflects a paradigm shift. Investors are looking not only for financial returns but also for positive social and environmental impact, particularly in areas where there is a significant overlap between profitability objectives and development needs (such as clean technologies, sustainable agriculture, health and education).

The articulation between public development assistance and the action of private investors is thus carried out through various mechanisms (credit guarantees, co-investment funds, innovation subsidies, impact bonds, etc.), which reduce the risk for private investors and attract more capital towards high-impact projects.

We are indeed in a new era of development, characterised by a dynamic mix of local entrepreneurship, international interest, and collaboration between the public and private sectors. This collaboration is essential to mobilise the resources needed to address the environmental and social challenges of the continent and to support sustainable and inclusive economic growth.

What are the impact solutions that need to be developed in French-speaking Africa to address this region’s environmental and social challenges?

Cedric Mangaud:

French-speaking Africa is catching up with more mature tech ecosystems on the continent (i.e. Nigeria, Kenya, Egypt, and South Africa). The structure of the economies in these countries is very similar to those of French-speaking Africa: high population growth, significant contribution of the informal economy to the economies, difficulty in creating jobs... The needs are thus very similar. Four sectors, in particular, come to my mind:

Inclusive fintech, to support entrepreneurship, facilitate financial inclusion, and stimulate the economy by encouraging innovation, competitiveness, and the creation of new services adapted to local needs. For example, Wave is a startup that has revolutionised the continent's financial sector by offering a mobile platform that democratises access to financial services through a user-centered model and with reduced fees.

Digital commerce, with targeted investments that can transform micro, small, and medium enterprises and enable them to reach new markets while fostering inclusive and dynamic economic growth. Vendease, for instance, helps restaurants source quality products at competitive prices, manage their inventories, and optimise their supply chain by facilitating interactions between restaurateurs and suppliers on the continent.

Edtech, also, to strengthen education and improve professional skills — and ultimately innovation, through digital professional training solutions, adaptive learning tools, or online learning like GetSmarter, which collaborate with top-notch universities to respond to a growing demand for continuing education by offering courses to professionals seeking to improve their skills.

Agritech, finally, to increase productivity, value chains’ sustainability and ensure food security in the region. Investments in areas such as data-driven agricultural management solutions, precision agriculture technologies, digital market platforms, or optimisation of agricultural processes appear particularly relevant. Apollo Agriculture is a successful example in this sector: this startup helps farmers increase their yields and profitability by offering credits, agricultural inputs, insurance, and advice based on data collected from farmers.

Elisabeth Moreno:

Several solutions can be developed and amplified to effectively address different challenges. Indeed, in sectors such as sustainable agriculture, fintech (with mobile payments and microcredits), or education (currently limited access to quality education prevents many people in Africa from reaching their full potential, developing essential skills, improving their employability, and even innovating).

In addition, I see other fundamental challenges such as improving water management (namely, access to clean water, reduction of contamination, and promotion of hygiene practices), access to reliable and affordable renewable energy sources (which would contribute simultaneously to reducing carbon emissions), as well as access to healthcare and the promotion of preventive health (i.e. the development of telemedicine services, distribution of affordable treatments, and implementation of health education campaigns).

Finally, Ring Africa aims to contribute to the development of female entrepreneurship. In French-speaking Africa, women not only face problems similar to other emerging regions of the world (such as problems accessing reliable infrastructure and services, like transportation, electricity, internet...) but also difficulties in accessing financing, bank loans, and venture capital,  cultural and social barriers (although there are plenty of women in the informal economy), and lack of training and mentoring. Women entrepreneurs do not always have access to entrepreneurial training, business management skills, or mentoring opportunities, which can prevent them from developing their businesses and succeeding fully. But these various obstacles forge in them an exemplary resilience — a much-needed quality for any entrepreneur. That is why they deserve to be supported.

In a nutshell, solutions must be holistic and take into account local realities to have impact. Collaboration between governments, investors, businesses, and civil society is essential to design, finance, and implement these solutions effectively.