Picky Investors Pick…Africa

In 2012, Africa may be home to some of the hottest frontier markets in the world. Get there!


At the end of 2011, I made some bold predictions for 2012 that, in hindsight, look pretty outlandish. For example, I predicted that I would lose 20 pounds before March 15. That’s not happening. However, a few of my predictions look, well, prescient. Take this one:

“Many institutional investors will be planning how they can allocate (or increase their allocation) to Africa.”

That’s right; my view at the close of 2011 was that Africa would, in 2012, be home to some of the hottest frontier markets in the world. Why so bullish on Africa, you ask? Yeah, good question. On the one hand, there are some genuinely positive things happening on the continent in terms of growth, labor productivity and consumption. And, moreover, these positive developments have taken place in a capital-starved environment, which means that when capital does start flowing...growth could really take off. Cue some big initiatives to help unlock capital for Africa’s infrastructure development.

Anyway, let’s get back to my amazing psychic powers. This just in: institutional investors are increasingly interested in Africa!

According to a report published by Invest AD and the EIU entitled “Into Africa: Institutional investor intentions to 2016”, there is a growing appetite for African investments among the 158 institutional investors surveyed. Here are some of the big takeaways:

  • “Institutional investors see Africa as holding the greatest overall investment potential of all frontier markets globally”
  • “Institutional investors plan to increase their asset allocation in African markets over the coming five years”
  • “Africa’s emerging middle class is catching investors’ eyes, ahead of commodities and natural resources.”
  • “Investors are moving towards longer-term investment strategies for Africa, rather than more speculative, short-term bets.”

In short, institutional investors now see Africa as a viable market for investing. In fact, it’s even better than ‘viable'; a better word is probably ‘attractive’. That’s good for Africa. And that’s good for the investors. Read the whole report here.