The Final Frontier

Continuing on the positive stories on investing in Africa theme, I found a great article in Barron’s entitled The Final Frontier. (found via Africa Unchained)

The main points of the article are very much in line with my own thoughts on the issue:

  • Investing or doing business in sub-saharan Africa is not easy, but easier than what general perceptions in the West would make one think. And in this misperception lies an opportunity.
  • Few have noticed, but the business environment has gotten a lot better over the last ten years, and there are no strong reasons to believe it would get worse over the next ten years.
  • The long term fundamentals look great, and should bode well for a patient long term oriented investor.

Quotes and a table:

Africa’s economy is growing at a tiger-like 5% to 8% pace, versus 4% for countries like Russia and Brazil. And the IMF has been nudging up its forecasts for Africa.

There are compelling long-term trends on the continent, says Razia Khan, the London-based head of research on Africa at Standard Chartered, a U.K. bank with businesses in many emerging and frontier markets. Political stability and economic policy has improved. Consumption is rising, with the working-age population expected to hit 65% of the total population in 2050, versus about 50% now. And new capital, some from investment funds, is coming in. Africa’s debt and foreign-exchange markets are opening up, too, Khan adds, another encouraging sign. Over all, “Africa is becoming more accessible” to Western investment.

Sub-Saharan Africa is far more attractive than its media stereotype would lead one to believe. Yes, poverty and violence are still huge problems in some parts of the continent. But, increasingly, the miseries of lands like Zimbabwe are more the exception than the rule. Africa isn’t an easy place to invest in. But the patient are likely to be rewarded for venturing into what for many is the last overlooked investment frontier.


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