Africa Rising, Nigeria Shining
Africa is receiving unparallel attention from large global companies with Nigeria seen as the shining light for investment due to the substantial opportunities in energy and natural resources, agriculture and agri business, construction and real estate, financial services telecommunications, manufacturing and consumer goods.
Standard Chartered Bank predicts that over the next 20 years, Africa’s economy will grow by an average of 7% annually more rapidly than China’s. By 2020, the World Bank says consumer spending in Africa will grow by 60% to $1.4trillion with number of disposal income households rising by 50% to 128 million.
Within the last year Africa was able to gain increased attention not just in the media but also from big think tanks, research institutes, blue chip companies and big global investors.
“Africa is the untold story, and could be the big story of the next decade, like India and China were in the past decade…… the presence and significance of our business in Africa is far greater than India and China even today.” Mukhtar Kent, CEO, Coca Cola.
“It is still possible to gain access to attractive investment targets with relatively low capital input” Olaf Meier of the African Development Corporation (ADC).
The recently published ADInvest 2012 Survey “Into Africa: Institutional Investor Intentions to 2016” sees a better governed Africa with less dependence on resource extraction, a growing middle class with frontier economies like Nigeria, Kenya and Egypt becoming the BRICS of the future. Institutional investors see Africa as holding the greatest overall investment potential of all frontier markets globally and plan to diversify their investment portfolio into Africa increase their asset allocation in African markets over the coming five years.
E and Y 2011 Survey, “It’s time for Africa” found that Africa is high on the agenda of investors, with 43 per cent considering investing further. It also found that globally as a whole, Africa could compete for investment with BRIC nations with China in the lead, India second and Africa taking the third position from Russia following the economic crisis.
A research conducted by Oxford Economics on FDI into Africa from 2012 finds that new FDI projects into Africa are forecast to reach $150 billion by 2015 creating 350,000 jobs per annum.
Africa is seen as the most attractive frontier market with the biggest frontier market opportunity in Nigeria, Kenya, Zimbabwe and Egypt. Others include South Africa, Angola, DRC and Ghana. The most attractive aspects of investing in the first four include emerging middle class and consumerism, high economic growth rate, high commodity prices, increasing political stability, ability to capture pricing and other market inefficiencies and improved fiscal and monetary policies.
In these countries asset classes offering the best opportunities include private equity, infrastructure, commodities, equities and real estate.
The best investment vehicles include equity fund, multi-asset class funds, exchange traded funds, structured products and fixed-income funds.
Nigeria is now seen as a gateway to the African region and a primary target for investment due to its proven resource endowment, population size, growing middle class, economic growth, political stability and favourable demographics.
At a time of global pessimism, Africa and indeed Nigeria have a lot to look forward to.
InvestAD EIU Africa Report 2012
E&Y 2011 Africa Attractiveness Survey
The Africa Competitiveness Report 2011