The opportunity for investing in Africa has often been compared to that of Asia two decades ago. Over the past ten years a composite of Africa’s largest exchanges has already significantly outperformed the S&P 500, the BRIC countries, as well as the MSCI Emerging Markets Index.
However, the opportunity for success for investors interested in Africa is different from those who were looking at Asia over the past ten or twenty years. The nations of Africa currently are at a range of stages of development, political maturation, and urbanization. Unlike China and the Four Tigers - all of which depended on manufacturing or tech-driven export economies- Africa is a mosaic of industries driven by vastly different dynamics. The same trend that leads to market turmoil in one African nation, such as fuel price increases in Egypt or Uganda, can be a growth catalyst in resource-rich countries such as South Africa, Ghana and Nigeria. In Asia, virtually any investor could have been successful over time – even those who picked index funds at random – because the same tides lifted all boats. However in the diverse continent of Africa, we believe the key to success will be active management with a selective focus.