Missing paperwork costing African project investors: IHC

INVESTOR Hosting Centre (IHC) general manager Benerdict Chisale says missing documents and unverifiable titles are keeping capital away from African projects, including Zimbabwe.

This comes at a time when there has been a scramble for foreign direct investments (FDI) by most African countries, with Zimbabwe’s direct investment expected to top US$1 billion this year, as the government steps up efforts to improve the business operating environment.

Chisale, who was speaking at the just-ended 12th CEO Africa Roundtable Annual Conference in Cape Town, South Africa, last week, said low FDI was not a result of lack of investor interest.

“The challenge is not a lack of investor interest in Africa, but the lack of investment-ready projects,” he said.

“Missing documentation, unverifiable property and mining titles, and inadequate due diligence undermine investor confidence and prevent viable opportunities from accessing capital.

“Investors need visibility, readiness and trust before committing their money.”

He added that such projects often lacked the reports, documents and financial models’ investors needed before deciding, while strong projects remained unknown outside local circles.

He urged project owners to prepare their core documents before approaching investors.

“Many projects fail to attract investment because they lack the reports, documentation and financial models’ investors need to assess their viability.

“At the same time, strong opportunities remain hidden in local networks, beyond the reach of potential investors.

“This is compounded by a trust deficit, as verifying titles, licences and counterparties remotely is often slow and costly, causing deals to stall between initial engagement and execution.

“Project owners must, therefore, ensure their core documentation is in place before approaching investors.”

These include company registration documents, mining rights or land title, licenses and permits, competent person reports, audited financial statements, a credible financial model and a risk mitigation plan.

Chisale also outlined 10 tests’ investors apply before committing to a project, among them a clear revenue model, signed off take agreements, a capable management team, and financial models that can survive a bad season.

He said investors also wanted to see “skin in the game”, owners showing they had already committed their own capital, land and time to the project.

IHC, profiles various projects across key sectors including agriculture, mining, real estate, tourism, energy, and financial projects, among others.

The centre advances projects to a bankable standard before presenting them to investors through a secure data room open only to qualified investors.

The firm publishes investor readiness guides on agribusiness and energy finance to help owners’ close gaps before meeting investors.

Chisale said investors also needed trusted support on the ground for site visits and for engaging local stakeholders and regulators, which IHC provides through stakeholder engagement and travel facilitation.

He said the platform gives investors tools such as GIS mapping of project sites, market intelligence and real time alerts when matching opportunities are listed.

“Investors need reliable local support to navigate site visits, engage stakeholders and interact with regulators,” Chisale said.

“Through stakeholder engagement and travel facilitation, IHC helps bridge this gap, while its portal provides tools such as GIS mapping, market intelligence and real-time alerts on matching investment opportunities.”

At the same conference, delegates called for stronger investment coordination, improved market intelligence and greater mobilisation of African capital, arguing that the continent risks wasting scarce financial resources unless investment decisions are guided by commercially viable opportunities and regional demand.

Discussions highlighted the need for African countries to move beyond competing for foreign capital and instead strengthen domestic financing capacity, regional trade, and the quality of projects presented to investors.

A key investment concern that emerged was also the risk of capital being committed to projects without adequate market intelligence and coordination, particularly in the energy sector.

Future Trends Group chairman Farzam Kamalabadi said countries pursuing renewable energy investments without assessing regional demand could end up with excess generation capacity and underutilised assets.

He cited plans by several countries to develop large solar power installations based on the assumption that neighbouring markets would absorb surplus electricity.

“If Botswana wants to export to Zambia, well, Zambia is moving fast and it is going to export to Botswana and all of them think that they will export to the others,” Kamalabadi said.

He warned that the resulting competition could leave countries with surplus electricity and investments that fail to deliver the expected returns.

United Nations Economic Commission for Africa Southern Africa sub-regional director Eunice Kamwendo agreed on the importance of market intelligence, adding that countries also needed to address their capacity to integrate generated electricity into national grids.

“We’re investing, yes, we have load capacity. But are we able to bring that capacity back into the grid? In most cases, not,” she said.

For investors, the issue extended beyond the amount of capital required to establish infrastructure to whether the supporting systems can convert that investment into usable economic output.

The conference ran under the theme The Future of Africa: Innovate, Trade and Grow.