nairiporter (nairiporter) wrote in talk_politics,

The most alluring market

This research made by the Economist Intelligence Unit is just one of a stream of recent economic analyses that has come to the conclusion that Africa is looking like the most attractive investment destination for the next couple of years. More than half of the polled investors are seeing the African continent as the most promising place to make profit on a global scale, and nearly one in three portfolio managers is planning to allocate at least 5% of their portfolio to the African markets by 2016.

Currently most of those investors do not have any exposition to the African markets, or if they do have some, it does not exceed 1% of their portfolio. The experts believe that Africa is now experiencing the emergence of a viable middle class, demand is increasing at exponential rates, and though still in some separate regions, now some very attractive opportunities for investment are coming up. This research involved 158 institutions of various types, including pension funds, hedge funds and private banks. Most of those seem to point at Kenya and Nigeria as the primary destinations for high-return investment, closely followed by Zimbabwe, Egypt, Ghana and of course the economic juggernaut of the continent, South Africa.

For a long time Africa has been looked at mostly as a source of raw materials, and indeed it is extremely rich in natural resources. But now it is showing some signs of real economic growth, and the emergence of a viable market and significant demand on the secondary and tertiary sectors. The projections point at a shift in the dynamics of many of these economies, the processing industries and the infrastructure projects surpassing the resource extraction sectors as the most active branch for investment in the following 3-4 years. Among those new industries, the top spot as the most promising sector undoubtedly belongs to energy, followed by agriculture and agro-business, construction and real estate, and the financial sector.

China has become the main player in many parts of the continent, taking full benefit of the retreat of most North American and European investors and the neglect from America, Britain, France and Japan. The Chinese have stepped on many markets, including Angola, Zambia, Mozambique, Nigeria, Botswana, South Africa... some of these countries being among the most vibrant economies on the continent in recent years. The Chinese are investing heavily in infrastructure projects and creating jobs locally, and building bonds with the local communities and markets, which would eventually extend on a political and diplomatic level.

Of course the myriad of typically African problems are still many more than the good news - as I'm sure you are well aware, Africa has never been short of bad governments, regimes gone wild, failed states, ethnic conflicts, bloodshed, epidemics, famine, crime, corruption permeating all the levels of power, and inadequate institutions, both political and judicial. Democracy has proven a very vulnerable thing on this continent, more an exception than a norm. And all of these problems present some serious challenges to any potential investors. So it is not like there are no big political risks still lurking behind every corner... but maybe this is exactly what puts this extra sense of unpredictability, volatility, and respectively, high profit in case of success, which is drawing so many adventurous entrepreneurs to these shores.

In a sense, the scramble for Africa has never ceased. It has only changed its intensity and direction.
Tags: africa, business, economy
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