While the last couple of years have been tough for African equities and currencies, we believe the long-term case for investing in Africa remains intact. The worst commodities bust in a generation, the strengthening of the U.S. dollar and indigestion in frontier and emerging equity markets have left many African stocks trading at valuations not seen in years.
However, Africa is still at extremely low levels of per-capita economic output relative to the rest of the world and is still in the very early stages of its long journey to becoming a middle-income continent. While the decline in commodities prices has applied the brakes to growth in the most resource-dependent African countries, we believe the continent remains on a multi-decade upward trend.
Strategic, long-term oriented investors with a knowledge of and affinity for Africa should look over the valley of the continent’s current challenges and consider establishing (or increasing) investment positions at today’s compelling prices.
Here are five key considerations for Africa investors:
Africa today consists of fifty-four countries—each with its own strengths and weaknesses, its own opportunities and challenges. The continent is huge and diverse and defies simple labels or descriptions. Africa has many formidable challenges ahead, including job creation, improving transportation and power infrastructure, developing manufacturing capacity and increasing agricultural production. But it is in the efforts of countries and companies to address these challenges where investors will find opportunity. We believe that as it has before, Africa will recover from its current challenges and continue on its upward economic trajectory.
Please do not hesitate to call or email me to discuss any aspect of investing in Africa. My email address is firstname.lastname@example.org and my phone number is +1.619.435.1701.
Africa Capital Group LLC
1330 Orange Avenue, Suite 302
Coronado, CA 92118