Join Us! Call Us Now : +234 805 888 2775
Why Investing In Africa
Why Investing In Africa
There are a lot of reasons why we believe Africa is an excellent investment opportunity for people with a long-term perspective, including: Africa is "undiscovered" from a global investment standpoint, resulting in what we believe are very low valuations in both African debt and equity investments, which provide attractive entry points, especially when compared to valuations in many more developed markets; per ratios are in the mid-teens, and return on equity is in the mid- to high-twenties.
Growing Double Rate
Africa is witnessing a major population surge, with Africans accounting for 17% of the world's population. Africa is growing at a rate of double the population of France every two years, and will double in size by 2050. Between 2050 and 2100, it is predicted to double to 4.3 billion people. Africa's GDP per capita has been increasing since the 1960s as the continent has progressed. Unless that trend reverses (Africans become poorer), which we believe is improbable,
robust demographic growth should translate into strong GDP economic growth. We expect Africa, like many other nations that have witnessed rapid expansion in the working age population, to profit significantly from a "baby boom"; it is worth remembering, however, that the developed world is quickly ageing, and even China's working population is shrinking annually.
Africa's economic growth is coming from a "low base," resulting in GDP growth rates that are considerably higher even in the more developed countries, as the continent catches up, and in some cases leapfrogs ahead, with the use of new technology or operating methods, such as renewable energy and online education. As a result, Africa gives access to growth, as evidenced by the greater profit growth rates of several publicly traded companies. The market capitalization to GDP ratio is the lowest in the world, and capital market expansion is expected to benefit investors in the future decades. With the advent of the internet and other kinds of communication including mobile phones, global firms will progressively "offshore" their operations to Africa to take advantage of lower labor costs, and vice versa.
African economies are diversifying, and new sectors such as telecommunications, consumption, and infrastructure are fast rising. Increasing electrification is taking place in Africa, as the need for power generation plants fed by (in most cases) imported coal fades, being replaced by solar as well as other forms of power generation that are far less expensive to implement and do not necessitate the same extensive power grid as countries that electrified earlier. Over the last three decades, Africa has benefited from dramatically improved fiscal and monetary policies. Lower interest rates, controlled inflation, stable currencies, and low African state debt levels relative to industrialized markets have all come about as a result of this.
Africa, in my opinion, is following Asia's path of development, and the future generations would see a big rise in incomes, ongoing poverty reduction, and significant economic advantages for early investors.