As developed markets remain sluggish, investors should look to sub-Saharan Africa for growth, according to ACPI Investments, a provider of asset management solutions for institutional and individual investors.
Outstanding fundamentals in the shape of high growth, low debt and increasingly diversified economies is making Sub-Saharan Africa an increasingly attractive proposition at a time when the rest of the world is still suffering the fall out from the global downturn.
The region is healthy with a young workforce and a growing middle class of 300-450 million. Added to this “demographic dividend” is an increase from USD16bn in BRIC-Africa trade in 2000 to USD157bn in 2008 and average bond yields of 11 to 15 per cent.
There are several sector specific opportunities identified by ACPI Investments with agribusiness, financial services, telecom and media, and energy and utility all showing strong fundamentals.
Alia Yousuf, head of emerging market debt at ACPI Investments, says: “The investment case in Sub-Saharan Africa has been one that has divided opinion over the years. However, it is clear that the fundamentals are pointing to a far healthier outlook for the region in the future especially when you consider the relatively flat growth prospects for much of the rest of the globe. Sub-Saharan Africa has also remained well insulated to everyday volatility in global markets via its immature FI markets. At ACPI the positive fundamentals have encouraged us to include exposure to the region via the ACPI Emerging Markets Fixed Income Fund and we expect the positive outlook to continue.
“In agribusiness only about four per cent of arable land in Sub-Saharan Africa is currently irrigated, compared to about 20 per cent globally and 38 per cent in Asia. Equally, of the 160 African financial institutions registered on the global MIX Market database only 0.5 per cent of the population are borrowers (5.2 million) and 0.9 per cent are savers (nine million) leaving significant room for development. Meanwhile in telecom and media Sub-Saharan Africa is the fastest growing telecoms market globally and in energy and utility Africa has 10 per cent of the world’s proven oil reserves and 30 per cent of the world’s mineral resources including gold (40 per cent), cobalt (50 per cent) and platinum group metals (90 per cent).”
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