The Renaissance of Africa Rising

African equity investing

African equity markets experienced an unprecedented decline for just over two years following the peak of the MSCI Emerging and Frontier Markets index for Africa excluding South Africa in September 2014. This followed the collapse of the oil price from its level of over USD 100 per barrel, where it had been for more than three years, as well as weaker commodity prices in general. Investor appetite for emerging and frontier markets reduced as the underlying economies are often considered to be largely driven by commodity exports. This is true for many of these economies, but in Africa there is also a distinction to be made as many African economies are benefiting from improved demographics and better political leadership combined with better economic management. 

South Africa: attractive investment destination

President Jacob Zuma has been facing a revolt after replacing a highly respected finance minister with yet another crony which was immediately followed by investment downgrades by foreign ratings agencies. This has widened the chasm within the ruling party but despite this, and public protests, we expect the president to dig his heels in even harder. He will go down kicking and screaming for sure. In essence, there now is a battle for the soul of the ANC. 

Local currencies: the main driver of investment success for African equity investors?

Currency returns play a decisive role for US$-funded investors into African equities. To highlight some examples, the annualized total return for the FTSE/JSE Africa All Share Index during the last five years in South African Rand is 13.5%, while the US$ return for the same period is 4.1%. A benchmark index for Egypt, the EGX30, has delivered an annualized total return of 26.7% in Egyptian Pounds during the same period, but in US$, this impressive return shrinks to a meagre 1.8%. Same story for Nigeria, where the Nigerian Stock Exchange Main Board Index has returned a negative annualized return of -3.6% in US$ for the last five years, while local equity investors have enjoyed a healthy 10.4%, despite a balance-of-payment crisis and the first recession since 1991. It doesn’t matter if we are comparing annualized returns in local currencies and US$ for various 10- to 20-year periods – a negative currency attribution of 5% to 10% on a yearly basis seems to be almost a rule for most African equity markets. 

Urbanization & Real Estate in Francophone West Africa

By Dmitry Fotiyev (pictured), Managing Partner; Katya Kucheriavenko, Associate, Brightmore Capital; 

Power on: Africa works on solving its electricity deficit

The slow pace of electrification is the Achilles’ heel of the African growth narrative, writes Johan Steyn, Africa Fund Manager at Prescient Investment Management 

Window of Opportunity

The current market environment in Africa is creating strong investment opportunities, write Harry Wulfsohn, Executive Director Imara Holdings Ltd (pictured) and Stuart Theobald CFA, Imara Guest Analyst 

Seizing on financial sector opportunities

Africa Global Funds speaks with Khaled Ben Jilani, Senior Executive Partner at AfricInvest, about fundraising for its new financial sector private equity fund, investment strategy and opportunities. 

Sigma Pensions: Future looks bright

Founded in 2004 and headquartered in Abuja, Sigma Pensions is the fifth largest pension fund administrator (PFA) in Nigeria. Sigma was one of Nigeria’s first PFAs and now has over 600,000 members and just under N300bn ($1bn) assets under management. The funds under management comprise of RSA Fund, Retiree fund, Afribank Fund, TCF Fund, CBN Fund, NNPC Fund, SEC Fund, NEXIM Fund, FAAN Fund, Jigawa Fund and Intercontinental Bank Fund. 

Mozambican real estate: a tale of two stories

Over the past few years, the Mozambican real estate market has rapidly evolved with developers tapping into the potential of the new gas discoveries. Not only Maputo’s skyline was rising with new buildings to house luxury hotels, condos and office parks, but also the ‘promised land’ in the northern regions of Nacala, Pemba and Pemba were showing signs of development.  

Securing land rights in Mozambique

Post Mozambique’s independence from Portugal and its emergence from civil war, the government focussed on creating legal frameworks governing land while encouraging investment. The rationale behind the Mozambican Land Law and its Regulations was to protect land rights of communities, women and farmers.  There is therefore no private ownership of land in Mozambique. In terms of the legal system, land and its associated resources are the property of the State and cannot be sold, mortgaged or alienated in any way.  The Land Law however, provides for a lesser real right - the right to use and benefit from the land known as Direito do Uso e Aproveitamento da Terra (DUAT). DUATs provide their holders with the right to use the land for specific and authorised purposes subject to certain limitations imposed by the Land Law. 

South Africa: Is it all doom and gloom?

SPOTLIGHT: PE exits in Africa

What are some of the stumbling blocks and complexities faced by private equity managers working towards an exit in Africa? 

Senegal: An Opportunity for Private Equity

While Anglophone countries in Africa have traditionally attracted more attention from foreign investors, the Francophone countries are entering the radar of many asset managers. Côte d’Ivoire has led the pack as the largest economy in Francophone West Africa and the fastest growing on the continent, while Senegal is also experiencing its own rapid economic development.