Slide of the month July – Investment horizon in Africa

africon GmbH has made over 130 interviews with sub-Saharan African steel manufacturers between 2016-2017. In these interviews, one of the key issues holding back Western manufacturers was the risk perception of management, reflected in the preferred payback periods of the machinery. The management of steel companies was hesitant to make too large investments in machinery that would require long payback periods, mainly because of political, regulatory and other economic risks. The preferred payback horizon is 2-5 years, whereas most high-end Western equipment requires 8-12 years of payback time in Africa. Providing machines that fits risk perception or intended payback period is one of the main challenges of western engineering companies.