Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a647049

Investors turn to Africa as the final frontier

by James Smith on Dec 28, 2012 at 07:00

Investors turn to Africa as the final frontier

With so much attention on emerging markets in recent years and many approaching developed status, investors are seeking a new generation of developing countries.

Africa certainly fits that bill – particularly the sub-Saharan area – and advocates have branded it the final investment frontier.

Among specialist investors, Charlemagne’s Sharat Dua, who runs the group’s Magna Africa fund, says the continent is at an exciting stage for investors, with strong fundamentals largely ignored by the Western world.

‘Such antipathy is clear from market behaviour. Despite rapid growth in economies, urbanisation and working populations, African equities were among the first to sell off as risk appetite evaporated in the face of eurozone debt problems,’ he says.

According to Dua, the balance of Western reporting on Africa is usually skewed to the negative. Of 21 countries that had elections in 2011, including a peaceful transfer of power in Zambia, few that went smoothly received widespread attention, he says.

On the brink

Africa is not a homogenous region, and has countries at different stages of economic and political development. But Dua says it is possible to contrast its many growth stories with sluggish prospects in the West. ‘Many so-called developed economies are structurally weak, with ageing populations deleveraging after years of living beyond their means,’
Dua adds.

‘In Africa, there are already around 60 million middle class households – with an annual income above $3,000 (£1,800) – and this is expected to reach 100 million by 2015. Its working population is also predicted to be the largest in the world in the next 20 years, with a current median age of 20 against 40 in Europe and 30 even in Asia.’

Recent analysis from the World Bank puts Africa at a similar stage to India 20 years ago, highlighting the continent as on the brink of economic take-off.

‘Critics see the continent as a purely a commodity wealth story and while this is a key theme, the more important factor is how it trickles down into the wider economies,’ says Dua. ‘Politics is the one area where change is not so rapid but things are improving. It is vital that governments continue to use commodity wealth for infrastructure and creating jobs, which will bring more people into the real economy as consumers.’

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Long time coming: is the recovery here to stay?


Ian McVeigh and Steve Davies, managers of Jupiter's UK Growth fund, talk about their predictions for the UK equity space. Click here to watch a series of sponsored interviews with Jupiter's fund managers on the UK equity market.

Today's top headlines

More about this:

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet