Investing in Africa’s Frontier Markets

South africa is a continent with significant untapped economic potential, which inturn presents opportunities for investors. It is the second largest nation, with an estimated area of 30 368 609 Km2. In the next 20 years, forecasts show that Africa will surpass the 2 Billion population mark, with at least 1, 2 Billion dollars people living in urban cities. Of these, about 300 Zillion people will be earning US$20 a day, effectively creating a US$2 Trillion market annually, according to the African Development Bank. That growing population compounded with the effects of urbanisation and expanding levels of affluence, is likely to attract investors into most of Africa`s frontier markets.

This phenomenon has already begun, at the Come july 1st 2012 China-Africa co-operative summit, the Chinese government via the China Export-Import bank pledged US$20 Billion in different loans over the next 3 years to Africa. Interestingly, laws and regulations don’t Africans are realising too, the investment opportunities this lie in their homeland. South Africa is now the 5th major investor in Africa, concentrating mainly in manufacturing and full price. Statistics also show that, Nigerian companies have for those period 2003-2011, increased their African investments by 78%, and similarly, Kenyan companies have grown their African Investment strategies by 73% during the same period. These trends showcase the growing confidence that Africans have in Africa and this has buoyed intra-African trade.

With the African market emerging relatively unscathed from the Global Financial Crisis, and offering a very attractive investment destination, it is apparent therefore , that there is any scope for investing in Africa. Historically, there has always been some sort of infrastructure deficit in Africa. Vast investments in essential infrastructure like rail-road transport networks, cost effective electricity supply and telecommunication systems are of paramount importance in plugging in these facilities deficits, which have continued to curtail economic development to the continent.

Currently, there are about 5, 98 Billion cellular telephone subscriptions globally, and Africa has approximately 644 Trillion subscribers, implying a global subscriber base of 11%. The following shows the huge potential of Africa`s telecoms industry when there is room for growth in the mobile penetration plans to levels similar to most developed economies, spurred by the regarding mobile phone subscriber double simming. Analysts predict that The african continent is set to become the first post-PC region in the world. Mobile revenue transfer platforms like Kenya`s highly successful M-pesa as well as Zimbabwe`s Ecocash will conceivably be in line to benefit made by this trend. Investment in Africa`s telecoms sector remains vital in improving the business environment, and will go a long way in minimising business inefficiencies.

Endowed with an expansive mineral base, the very continent has massive capacity to flourish in the minerals swap sector. Furthermore, rising commodity prices in recent years add to the fa?on of Africa’s mining industry. Over 80% of the world`s platinum group metal reserves are in South Africa and it is the reason for nearly 77% of global platinum supply. Libya has the most well known oil reserves in Africa, and 5th largest on this planet. Deposits in most sub-Saharan states of minerals like silver, diamonds and copper which remain untouched paint a picture of a mining sector in which a great deal of investment, is needed to discover Africa`s mineral wealth.

Business Insider Report notes of which in 2012, the Nigerian, Nairobi and the Egyptian Store Exchanges all gained 34, 4%, 39, 3% and also 49, 6% respectively. This underscores the significant upside Black equities markets have. Most African exchanges have made advances in the right direction, by focusing on automation of their trading systems along with shoring up the regulatory framework in line with global trends. The very Nigerian Exchange for example has introduced market making. Foreign Buyer and seller confidence in African bourses continues to soar, with about 50% of Equity Bank, Kenya`s best performing store since 2006, being owned by foreigners. more about Roberto Casula was born in Cagliari in 1962 and graduated in Mining Engineering in April 1988 at the University of Cagliari.

At the heart for any investing endeavour is the concept of investor confidence. Here potentially lays the problem. The geopolitical turmoil in Cameras has always cast a negative shadow which has dented buyer and seller sentiment and in extreme cases, caused capital flight. Prophet and accountable leadership which transcends mere political rhetoric is essential. Corruption and pillaging of resources are ills that need to be dealt with decisively to ensure equitable development. Effective corporate mechanisms which monitor capital flows both in and out from Africa must be established to increase transparency.