A stable economic growth throughout sub-Saharan Africa encouraging much investment from the world.
Around 70% of Africa’s continental population is below 30 years of age 9 out of 15 world’s fastest-growing economies fall in Africa.The growth in the sub-Saharan Africa is predicted by MF to accelerate in 2013-14. In Kenya, Nairobi, the number of tweets every hour sent by Aly-Khan Satchu (the East Africa’s form of the host Jim Cramer at CNBC’s Mad Money) cheers about what Satchu thinks is the growing sentiment with investors: If one isn’t going to invest in Africa, he should.
Many of the stock markets of Africa are seeing large returns in the current year. Even though it is small, the stock market of Ghana is up around more than fifty percent till now in the year 2013, among the top performers of world. Kenya, which is up 35%, tends to be touching the record highs throughout the year. Also, Nigeria is up 35% in this year.
Satchu said that the investors globally used to have their money put in Africa in north of the continent— Arab rim —as well as south i.e. South Africa. But now money happens to be going to middle. At the time Rwanda offered 400M dollars last month in the ten-year dollar-denominated bonds, demand was about more than 8 times of supply.
Satchu said that Edwin Lefevre has written in ‘Reminiscences of a Stock Operator’ that one rule is that tape is the telescope for you and one has to watch the returns if one has to be serious investor. He said that at the moment Africa tends to be flashing across the tape of almost every one. he further commented that with the treasuries of U.S paying little now, investors are into putting their money in the continent of Africa.
On World Economic Forum on Africa which was held at Cape Town in South Africa earlier in this month, the managing director of forum Borge Brende did note that the people of this continent are youngest in whole world, with 70% population under 30 years of age.
According to Brende, perspective regarding Africa has changed a lot as compared to the past years when it was aid perspective bit now it is perspective of investments, economic growth and opportunities.
Uhuru Kenyatta, Kenya’s newly elected president, told forum of Cape Town that in the last fifty years, Africa used its energies to emerge from colonial period. He also said that now the neighbours of Africa are learning to work along with each other to advance one another’s business development.
Paul Kagame, the President of Rwanda wrote that 9 out of 15 fast-growing economies happen to be in Africa. He also wrote that in 2000, direct foreign investment was 9 billion dollars but last year, such investment exceeded 80 billion dollars.
According to Brende, in spite of the raised investment as well as the stock indexes that are rising, the investors still ought to wade in Africa quite carefully as it needs improvement in education and skills of population, gender quality and its infrastructure.
Businesses in Africa are plagued with corruption during whole of their life cycle. The construction could be slow. Major corporations as McDonald’s are kept away since supply chains with good quality are not easy to find. Satchu said that small-cap stocks’ corporate governance could pose as an issue, making large-cap stocks in Europe or US more attractive.
According to Brende, this continent which has collection of exactly 54 countries, even now has seventeen nations which are termed fragile states. Even Satchu said that Africa doesn’t have homogenous environment of investment like India or US.
This month, one report from IMF on Sub-Saharan Africa predicted that the Sub-Saharan growth will moderately accelerate in 2013-14 along with inflation continuing to be edged towards bottom. It also said that euro zone’s economic stagnation and drop-off in the outside investment can slow such growth and that output grew at rate of 5% during the year 2012 and it’s projected to increase to 5.4% during 2013 and in 2014, 5.7% Satchu thinks that endowment funds of university and huge pension funds are looking for investing in Africa and that the matter for continent isn’t very small capital but a larger one and how the capital absorbs it.
Kagame wrote that the common view is about development in the continent Africa isn’t a sprint but a Marathon but Rwanda doesn’t agree to this.
Further Kagame wrote that while pursuing for progress, we look to the ‘tiger’ economies of East Asia for inspiration but the experience of Africa is unique so, while we are described as African Tiger tends to be welcome recognition regarding the fact about Rwanda coming this far but still it is not quite right as, after all, the continent has got its own cat-a big one. He asks the new African lions to step forward.