In terms of an investment opportunity, the idea of committing finance to Africa can never really been on top of the agenda for most investors. With so many different options for investment elsewhere, and much safer options at that, why consider making African investments that could quite easily be lost without any potential reward?
Well, for one thing, there are most definitely profits to be made if you choose the right industry in which to invest. Another thing is that you will be essentially helping a more unfortunate continent to build itself up and begin to express itself more on the world stage. With such serious problems such as famine and disease and civil war and genocide, Africa has been struggling to maintain the balance and lead to serious growth for many years. This is despite having a wealth of natural resources at its disposal.
These natural resources have led to exploitation and pillaging by foreign nations and indeed the colonialist attitudes of the British Empire amongst others have somewhat led to the deep economic issues that the continent suffers today. As a result Africa sees constant aid in the form of charity and relief and yet the only way that the nations of Africa will begin to flourish is through a massive increase in foreign enterprise and investment. As can be seen from the figures, a couple of years back, sub-Saharan Africa accounted for a mere 1% of foreign investment. Yet it has also be shown that this region provides the highest returns on investment than any other in the whole world.
with different risks such as political problems and currency fluctuations it is possible that your investment will fall into a black hole. However, in many parts of the continent, countries are seeing a rise in democracy and a stabilisation of their economies, which has in turn led on to the growth of new markets and industries.
The economic performance in sub-Saharan Africa is increasing, with the largest growth areas being seen in industries such as finance, infrastructure and tourism. Tourism particularly is an important industry for African nations and encourages people to see what these countries have to offer, in turn bringing in foreign investment.
Furthermore, the stock markets of Africa are seeing dramatic improvement, outscoring world averages on a regular basis. Meanwhile the stock exchanges have increases from ten to eighteen over the last ten or so years. South Africa is also seeing positive growth, which is important seeing as it accounts for roughly a quarter of the entire GDP of the continent.
For any canny investor willing to take a slight risk in the hope of some high returns there is no doubt that Africa can offer some significant opportunity. The main problem for any independent, small time investor is finding funds that will offer then the opportunity.
It is however, not easy to do so. Since there is low demand, it is difficult to find fund managers who will be offering African funds. It is possible perhaps to find some good exposure to certain mining funds, through some of the larger funds. Other funds will offer some exposure to Africa. Genesis, a successful fund in emerging markets, for example, has a 10% of its fund invested in South Africa and other 5% in Egypt, with smaller holding in growing African nations. For someone adamant that they find an appropriate fund, they can be discovered.
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