Peter Leger, Portfolio Manager, Coronation Asset Management

“Africa’s relative growth prospects show that it looks a far better investment than many other regions.”

Investing in Africa can be, mildly put, difficult for the uninitiated as it is a continent of great potential with many varied markets. Yet through the WIOF African Performance Fund, one can invest in a fund which moves investment throughout the whole African continent, using the expertise of one of Africa’s best Investment Managers. The WIOF African Performance Fund enables you to participate in equity funds not only in South Africa, Egypt and Nigeria but a host of other countries such as Kenya, Ghana, Morocco, and Zambia. These markets provide extended investment opportunities in the Africa region and can help to diversify ones portfolio. African markets have shown resilience in these times of financial crisis leading stronger economic growth ahead of other more developed economies.

Economic outlook

Africa, as everyone knows is a large continent, with a multitude of countries, yet it has been a major growth laggard contributing only 2% of Global GDP despite all its blessings! But Africa is a continent undergoing change and there are four major reasons for this: Debt reduction, Investment into Africa as opposed to Aid, Political stability and wider democracy and Technology as a growth accelerant.

Debilitating debt levels have been brought under control together with investments into African economies make for a sustainable growth environment. Capital is a coward, and political and policy continuity is essential for capital markets to function, lowering risk premiums over time to the benefit of investors hence stability is also a key to economic growth and in Africa there are numerous examples of how democracy is strengthening accountability and providing stability.

Technology is amplifying growth in the region as telephony and banking lubricate economies and make transactions more efficient. Africa is the fastest growing market for cell phones in the world and is transforming lives. A 2005 study of developing countries concluded that a 10% addition to mobile penetration adds 0.6% to GDP growth. Africa has transitioned from being a lagging growth region to being a leading growth region. Over the last decade average GDP growth has gone from 3.5% to over 6%. Inflation has almost halved over this period. 2007 was a peak year with 8 of the top 10 global GDP growers being African. Eight of the top 10 equity markets were African. Part of this has been due to commodity prices. But non-commodity GDP growth has been high, communicating into structural changes that are driving higher growth.

Comparison of GDP

Foreign investment into Africa, up 6 times in the last 8 years, is another big growth stimulus. More interestingly, is that the nature of the investment source has changed. Today it is China, India, Latin America, Russia and the Middle East that are investors, increasingly displacing the West. Africa’s physical locality and size of market is the appeal.

Africa - Growing Foreign Investment

Banking is still in its early days as lending in Africa is still in it infancy. The bulk of loans is to corporates, with only SA having a large retail banking market, and even this is still at a reasonable 40% household debt to GDP level when compared to developed markets sitting at twice these levels. Africa in general sits below 10%. In having no toxic assets on balance sheets, so accordingly there are no wholesale write downs. Longer term, retail banking is still a major opportunity although title deed and performance rights still have a long way to go.

The world has changed and Africa will not emerge unscathed from this global financial crisis. The IMF 2010 growth outlook for Africa is expected to be +4,1%, comparing to developed markets in Europe +0,7% and in North America +1,7%. The long-term outlook for 2014 is assumed for Africa on the level 5,5%. Africa’s relative growth prospects show that it looks a far better investment than many other regions.

Capital market

Africa is considered to be less correlated with global stock markets as compared to other emerging markets. However the Africa continent hasn’t been fully resistant to recent world economic development.

Majority of the African stock markets have provided decent return such as Mauritius (+69,1%), Egypt (+74,4%), South Africa (+74,9%). On the other hand the losing markets have been Ghana (-48,5%), Malawi (-14,0%), Tanzania (-5,9%).

Stock Market (and Index)

(5 February 2010)

Mkt Cap


1 Year
% in USD

Botswana Domestic Companies Index



BRVM Composite Index



Egypt CASE 30 Index



Ghana All Share Index



Kenya 20 Index



Malawi Domestic Index



Mauritius All Share Index



Marocco Casablanca All Share Index



Namibian Local Companies Index



Nigeria All Share Index



South Africa JSE All Share Index



Tanzania Core Securities Composite Index



Tunisia BVMT Index



Uganda All Share Index



Zambia All Share Index



Source: African Alliance

Over three years, returns have been solid, and markets became overheated in 2007 and 2008. We can see rebounding the markets again in 2009. The outlook for 2010 remains clouded. The massive liquidity injection and financial support provided by western governments has stabilised the world’s financial system, while markets have generally rebounded and many economies are again reporting growth. But, government finances in the west look increasingly sick and withdrawing the stimulus is likely to prove a tricky affair. Africa will continue to be impacted by world economic development, but we remain confident in the underlying story.

Africa in total offers a wealth of investment opportunities, sustainable growth, a dramatically improving investment climate, an increasing investor base and significant upside from current valuations.

Equity fund WIOF African Performance Fund = opportunity instead of Asia

The fund investment manager is the investment company Coronation Asset Management („Coronation AM“) one of the largest asset managers in South Africa with an international presence. Coronation AM started out as an owner managed business in July 1993. This culture of ownership is still evident – staff own 34% of the business. The company headquarters are in Cape Town, South Africa with further offices in the United Kingdom, Botswana and Namibia. Coronation AM manages funds on a discretionary as well as non-discretionary basis for among others retirement funds, governments in Southern Africa, corporations as well as private individual accounts.

Investment manager Coronation Asset Management uses a simple strategy: to be as domestic consumer facing as possible - where longer term trends will grow volumes and revenues over time and infrastructural improvements will lower costs - healthy drivers of cash profits over time and only buys stocks where it believes that there is a high margin of safety in the valuations. The fund mainly invests in equity markets in South Africa, Egypt, Nigeria, and Kenya though the WIOF African Performance fund is mandated to invest throughout Africa.


This document is designed for the professional advisers only. This document is not an invitation to subscribe for units or shares in the funds described herein and is by way of information only. Past performance is not a guide to the future. The value of investments, and the income from them, can go down as well as up. You may not get back the amount you have invested. You should be aware that currency fluctuations, either up or down, may also affect the value of an investment. The mention of any specific shares should not be taken as a recommendation to deal. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Yields are not guaranteed and can fluctuate. Net asset value information has been obtained from sources believed to be reliable but WIOF makes no representation to its accuracy, reliability or completeness and accepts no liability for any direct or indirect loss arising from its use. WIOF and Cornhill Management International S.A. assume no liability for the correctness or accuracy of the given information and it may be subject to change at any time, without notice. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. Before investing in any WIOF Sub-fund(s) investors should contact their financial adviser and refer to all relevant documents relating to the particular Sub-fund(s), such as the latest annual or semi-annual report and/or simplified prospectus, which specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing.