Investing in Africa: Targeted Investment Strategies Just Might Succeed

Predicting the potential opportunities…and perils…for investments into Africa is not just a science, it is also an art.

A cursory examination of key performance indices, such as the stock market performance across Africa, would make any sophisticated investor / business hesitate, to say the least.

However, evidence of a fast-growing consumer market, concentrated in certain cities across Africa, is irrefutable. This fundamental tenet underlies most investment theses for value creation in emerging markets.

According to the World Bank, urbanization is the single most important transformation the African continent will undergo this century. Sub-Saharan Africa is already 40% urban, while tens of millions of people are flooding into cities every year.

By 2050, it’s estimated that the continent will host at least nine “megacities” of more than 10 million people and more than two dozen in excess of 5 million. Cities, of course, have for millennia been the locus of economic activity, wealth creation and especially jobs.

Per an article on Bloomberg, Africa’s consumer class is already more than 300 million and heavily concentrated in a handful of large metropolitan areas such as Cairo, Johannesburg, Kinshasa, Lagos and Luanda.

The African Development Bank estimates that up to 12 million young Africans finish school and join the job market each year. The most attractive, well-paid and high-productivity jobs - in finance, information technology, creative arts, data processing and even manufacturing – will nearly all be in densely populated clusters.

Picking investments as “Africa-wide” can be difficult…if not impossible. Country based investment strategies are not precise enough in today's investment climate. However, targeted investment strategies with understood dynamics | opportunities | perils on a city-by-city basis…just might work.

Good hunting!

The article references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.