Investing in Africa – How to Invest in Africa? Where to Invest in Africa
Want to know more about investing in Africa? Our team has focused on investing in Africa for over 3 decades. It includes some of the most successful investment managers in Africa, both in debt and equity, and also ex CEOs of African stock exchanges and dealmakers with investment expertise across the continent. So what have we learnt? Clearly Africa is a land of opportunity. In our opinion Africa will follow Asia’s development path, and the coming decades will see a strong rise in incomes, continued reduction in poverty, and substantial economic gains for many investors who get in early. The investment opportunities in Africa are so obvious to us, but very few people globally have yet turned their attention to Africa as an investment destination. This is good news for you as we believe that asset prices are unreasonably cheap bearing in mind the economic growth that we expect to take place in coming decades. However Africa is a huge continent with 54 countries, the geographic size of Africa is immense – equivalent to North America, Western Europe, India, China and Japan combined. There are multiple stock exchanges, and currencies. Some economies are growing at 10% + p.a. while others are struggling with political issues and a very small number are experiencing conflict. Read on to find out how to invest in Africa.
Background – Africa has changed and is growing rapidly
Historically Africa was perceived as being unattractive to investors, however in recent years investor interest in Africa has risen considerably- the arrival of the internet, rapid urbanisation, increasing access to infrastructure (most importantly power) has allowed Africa to finally break free from a legacy of slow economic growth, and poverty. Africa is now the final frontier of emerging market investment but learning how to invest in Africa requires dedication. With a youthful, increasingly educated, connected and eager population Africa is set to be the bright light economically within a world that is ageing rapidly. Africa’s economic growth has already surpassed that of more developed economies for decades , and the continent is, in our opinion, likely to be one of the fastest growing economic areas in the world – if not the fastest – in coming decades.
How to Invest in Africa?
Option 1. Direct Investment into African Stock Exchanges
If you are an individual looking into how to invest in Africa, then one of your options would be to invest direct into shares or bonds listed on an African stock exchange. There are 29 stock exchanges in Africa representing 38 nations’ capital markets. In order to invest on one of these stock exchanges you need to open a brokerage account, either in each country in which you plan to invest, or if you are a larger investor ($1m+) with one of a small number of brokers based generally in London or New York who offer brokerage services across multiple African stock exchanges. Many of Africa’s most important stockbrokers attend our annual AFSIC – Investing in Africa conference in London. So if you need advise please do not hesitate to contact us.
Alternatively ASEA is the official organisation for Africa’s Stock Exchanges. You can review their website and discover which African countries have stock exchanges, and from there research which stockbrokers you would like to use to purchase or sell investments direct. When researching stockbroking firms you might focus on how big they are in each respective market and what their charges are. Bigger stockbrokers will see better flow of shares between buyers and sellers and may be able to assist you better in buying or selling securities.
Option 2. Direct Investment into Private Companies or Investments in Africa
If you represent a corporation and are looking into how to invest in Africa on behalf of your corporation then your task is complicated by the fact that the continent is so large, with 54 countries, and multiple potential acquisition/investment possibilities in each country. If you are a corporation looking to transact in quite a large way in Africa ($25m+) then we recommend that you contact one of the investment bankers prominent in Africa, many of whom attend our annual AFSIC – Investing in Africa event. Or contact us for recommendations by country.
For smaller transactions, or where you have a general interest at this stage only, Africa is full of talented entrepreneurs who are seeking capital to grow their business. These companies might be in the agriculture sector, renewable energy, retail, food, in fact any sector that you can think of. The huge size of Africa makes it pretty difficult to discover these investment opportunities. However we suggest that you register on our Investment Dashboard where you can be matched against investment opportunities across Africa based on your sector and country preference. There is no charge for this.
Option 3. How to Invest in Africa via an Africa Focused Fund
Our final option is perhaps the easiest. It involves outsourcing your investment decisions to experts in Africa investment running some of Africa’s most exciting investment funds. These experts will invest across the continent, sometimes in one sector only, other times across sector. You can focus on debt opportunities only (yields are high in Africa comparative to the rest of the developed world), or in equities of even in property. If Africa follows in the footsteps of Asia there could be substantial economic gains for investors, and you will be in the investment space early! There are only a few specialist investment companies that allow you to invest into a fund specifically focused on African investments. Many of these attend the annual AFSIC – Investing in Africa conference in London. It may be worth reviewing the list of companies attending on our website, and contacting funds that appeal directly. Or please contact us direct for recommendations.
If you want to know more about how to invest in Africa, or to subscribe to receive our monthly investment factsheets we would be delighted to assist you, and you can contact our team for further advice.