World Cup places focus on African investment opportunities

The nation has presented a thoroughly upbeat message to a global television audience, successfully overcoming doubts that the influx of visiting fans would face almost insurmountable difficulties in getting to the match venues and violence and harassment on the city streets.
Of course, comparatively sophisticated and ‘westernised’ South Africa isn’t typical of all nations on the African continent and states like Zimbabwe continue to abuse human rights and long-time foreign investors to an alarming degree.
Nevertheless, there is sufficient stability across much of Africa to warrant a serious rethink of the belief that is a dark continent of warring tribes and despot dictators where any form of investment carries a huge risk.
The Africa brought to our television screens by David Attenburgh 50 years ago, when he was able to encounter people who had never seen a Westerner, has all but vanished, although extreme poverty still exists, even within the shadow of the high rise office suites and penthouses of Cape Town.
It is a perversely encouraging statistic that more Africans now have mobile phones than have toilets. Combine this rush to embrace modern communications and the information super highway with the financial emergence of countries such as Nigeria, which has a stock exchange tipped to be among the world’s top performers in 2010, and those nations operating under the acronym Mena, a Middle East and North African trade umbrella stretching from Morocco to Iran, and the prospect of including Africa in an emerging markets portfolio becomes compelling. 
The advantage of the African states over mature markets that might also be considered within such a regional portfolio, such as the United Arab Emirates and Saudi Arabia, is that they are growing from a low starting point and have a large, young and productive population. And it is the young of the region who are driving a surge toward consumerism of mobile telephony and information technology, and this in turn is creating wealth and a retail boom.
When the first Western-style hypermarket opened in Iran recently, 60,000 visitors poured through the door in a single day. The GDP of Ghana is estimated to grow by 20 per cent in 2011 thanks to a boom in oil production. Kenya, home to Africa’s biggest telecom company is benefitting from the expansion of mobile phone technology and banking. The debt markets in Zambia and Ghana are looking lucrative and there is the prospect that market-expanding Euro bonds will be introduced to Angola, Kenya, Nigeria and Tanzania.
Across many African nations, state-owned assets are being privatised and the financial infrastructure is being strengthened and deepened.
Insparo Asset Management, the frontier markets investment specialist, is probably ahead of the game in tracking the emergence of the Mena and other African nations, and its Africa and Middle East Fun is showing close to 30 per cent growth year on year.
So as the focus brought by the World Cup gradually diminishes, it’s well worth keeping at least one eye on Africa for investment opportunities over the coming years.

North East Life’s financial columnist Jonathan Fry can be contacted at jonathanfry plc, Gallowfields House, Fairfield Way, Richmond, North Yorkshire. Telephone 01748 810299 or visit www.jfry.co.uk

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