NextBillion.net - Development Through Enterprise - Africa Investment Horizons - Comments

Lack of Mutual Fund Options, but Promise

Mike Heiss — Mon, 05 May 2008 22:14:25 -0500

Simply a lack of options and reliable history may deter individual investors. When I searched for African mutual funds, all I found was CIMEAX which has been around since Feb 29, 2008 and TRAMX which started in September 2007. Both of these funds are only partially invested in Africa, and a majority of their holdings are in the Middle East. After a little more poking around, I found Coal of Africa (CZA) on the London Stock Exchange which is up 400% since last May. Going beyond tickers, I agree that Africa has been largely ignored by the Western investment community. However, I see Africa as the next frontier to rapid economic growth, following in the footsteps of Asia. As China, India, and much of Southeast Asia become more developed, they turn to Africa to natural resources and cheap labor. The Chinese have already begun investing heavily in Africa, and African leaders enjoy this because it comes without the West imposing its values (stipulations attached to World Bank loans, for example). While Chinese investment is boosting African economies, it has been criticized for funding and supplying conflicts and paying corrupt leaders for oil rights. The challenge now is for Africa to follow China in terms of economic growth while learning from its mistakes in human rights violations and environmental degradation. I know this is a jump, but what if Africa could leapfrog to an industrial revolution based on renewable energy rather than coal or oil?

Investing in Africa

Chaz Littlejohn — Mon, 05 May 2008 09:41:06 -0500

Investing in Africa is an awesome if near impossible opportunity for the average investor. The few funds that are available have a heavy Middle East weight, thereby making a pure play difficult. This is partly because the markets in Africa are thinly traded and also because of their small size. The capitalization of African stock markets pales in comparison to that of the US stock exchange and other emerging markets. In 2007, the IMF reported that African stock markets had a capitalization of $245 billion, which is little bit less than the size of Microsoft. The point you make about image also seems to be a real factor. Paul Collier describes this in his book "The Bottom Billion". What really stuck with me was that apparently, a large percentage of fund managers believe that Idi Amin still terrorizing Uganda. With returns like this, this is bound to change.

Africa Investment Horizons

Rob Katz — Fri, 02 May 2008 12:03:33 -0500

As I turned the corner, it appeared almost out of nowhere - a monument to the successes (and failures) of capitalism - the New York Stock Exchange. I had ventured downtown to attend the premiere of Carol Pineau's new documentary, Africa Investment Horizons, which was being screened inside the Exchange. As first impressions go, you could do no better: it's impossible not to take Africa's investment potential seriously when you're talking about it inside the center of the financial universe.

Even the security line was interesting: long but vibrant, an impromptu salon of Africanists, investors, expatriates and activists, all of whom share a passion for the business of Africa. Not surprisingly, I saw a number of base of the pyramid and NextBillion allies: Liz Wald, of EDI Imports; Emeka Okafor, of TED and Timbuktu Chronicles fame; Joy Sun, COO of Market for Change. This was going to be a good event.

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