Investing in Africa

The word, “Africa” can conjure up a lot of emotions, talks, movies, ideas, stereotypes, fears, hopes, dreams, ideas, pain, war, anguish, dismay, corruption, distrust, animals, safari, the list goes on and on.

Now mix in Investing and Africa, the words conjure up even more powerful emotions. I encounter these emotions in a lot of my client meetings.

Tiri, how can I invest with the economy like this? How can you expect me to save with inflation like this? Tiri, did you see the WhatsApp messages going around, times are tough! Tiri, I don’t know where the country will be in 6 months, I can’t invest!

I choose to talk about Africa, and not just one specific country, as a quick indaba with my Carrick colleagues all over Africa, we find that the challenges faced by Africans are very similar.

Africa is a sleeping giant, we can be a huge powerhouse in the future. Your country will also be a powerhouse, Zimbabwe, South Africa, Malawi, Kenya the list goes on and on. Africa will rise, but what can you do while waiting for Africa to rise?

Serenity prayer 

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The first paragraph by Reinhold Niebuhr in the Serenity prayer is the best way to describe investing in Africa.

God grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.

No matter what your religious views are, this is what, you have to do when choosing to invest in Africa. 

Accept the things you cannot change

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Take a look at your country, what is out of your control? Can you change the fiscal or monetary policy today? Can you change the exchange rate? Can you change the rate of inflation? Can you change the past?

Focus on what’s true about investing and saving. You need to diversify your portfolio. Diversification is about making sure your portfolio is not susceptible to one form of risk. If all your money is in the Zimbabwe Stock Exchange (ZSE) for example, your portfolio is very vulnerable to the performance of the ZSE. 

If all your money is in property, be it local or international, we can look at the example of the recent financial crisis, how bad being exposed to property risk can get.

Talk to your local specialist, about your options. Are there funds that help you diversify your risk while still helping you invest in your local economy/country? Is your current strategy giving you peace of mind, or making you worry every time you hear something bad on the news? 

Courage to change the things I can

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There is so much readily available information out there, and it’s free. You can learn about stocks, bonds, notes, mutual funds etc from a quick Google search. Educate yourself, even if you haven’t started investing.

Zimbabwe is a very interesting country especially when it comes to personal investing. The country has gone through one of the worst hyper-inflationary periods in the past and is currently experiencing high inflation. 

It is very easy to panic when the economy seems to not be working towards your favor. However, no matter what happens, an acre of land will always be an acre of land, a litre of diesel will always be a litre of diesel. There are options to help your "wealth" survive the inflation storm. 

Wisdom to know the difference

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Due Diligence. This phrase was embedded in me by my finance professor in business school.

Investopedia defines Due diligence as “an investigation or audit of a potential investment or product to confirm all facts, such as reviewing all financial records, plus anything else deemed material. It refers to the care a reasonable person should take before entering into an agreement or a financial transaction with another party.”

How well do you know your investment broker / wealth specialist? Do you know anything else about the fund you are in other than how much return it’s given in the past? Do you understand the fees associated with your investment? Do you know the opportunity cost you are paying for your current strategy? Do you know all the options available to you? How well do you know the markets you are exposed to?

When it comes to investing your money in Africa, history has proven that certain industries, commodities, and markets do well in times of economic collapse or downturn. The key is to come up with an investing strategy that suits your life stage and life goals.

Africans have survived a lot. I personally believe Africa will be an economic giant, however, we don't control when it will be. We can, however, control how we protect, and grow our money waiting for that day to come.

For a free financial review and plan that helps you grow, protect and diversify your wealth, send me a LinkedIn message.