African Media and Investment

This 32-page report, commissioned by Diageo, a private global alcoholic beverages company, explores the link between business, media, and capital investment in Africa. Data were collected between July and December 2008. Thirty-six investors with a total of around US$20 billion under management in Africa provided their views about African business media and how it informs their investment decisions. In addition, insight was collected from senior business people whose businesses have a large footprint in Africa, and eight media houses including Reuters, BBC, Al-Jazeera, and the Economist. The report suggests that during the economic recession, marked by negative economic news on a global scale, the onus should be on African business media to report accurately the real changes taking place on the continent - high growth rates, increased capitalisation, and liquidity. The study makes the point that African business media both reflects and dictates investor sentiment, and that to neglect the reporting of this news will greatly impact perceptions about the continent and investment flows.

The study found that there are two types of investors in Africa: embedded, private equity, networked investors and institutional, objective, and hands-off investors. Investors generally perceived that risks are reducing, opportunities are diversifying, a burgeoning middle-class is driving increased consumption, and stock exchanges are expanding and becoming more sophisticated. Investors suggest that these changes have been due to greater and better information flows. According to the report, African business media has grown in quantity, frequency, and quality over the past five years. Such media has the ability to reach both those invested in the continent and those that are not. Because of this ability, business media has an extensive influence on the flow of capital into Africa and the type of investors investing.

The study also found certain gaps or areas for improvement in business media coverage. These include access to reliable facts and figures, training for local journalists, and sustained efforts to promote responsible and accurate reporting. Respondents cited a shared need within the investment and media communities for access to reliable facts and figures and economic performance data, particularly in frontier markets beyond Egypt, South Africa, Nigeria, and Kenya. The report notes that many governments focus on collecting development statistics, such as the infant mortality rate, and, that while this is important, an emphasis on economic performance data will help reduce misconceptions and facilitate investment flows.

Study respondents also highlighted the need for more local journalists with financial acumen to provide better financial analysis and insight. Increased training and better pay for media professionals were seen as an important step, along with improving the state of media infrastructure. According to the report, investors interviewed emphasised that responsible and accurate reporting by both international and local media houses is a prerequisite if the African business media is to play a more prominent role in investment decision-making. One element of this is an understanding of the effect that an accurate and well researched article can have on building investor confidence.


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