Stephane Bwakira

Portfolio Manager

Sanlam Investment Management (Pty) Ltd


With rapidly-growing foreign investment, abundant commodity reserves, a fast-improving economic climate and emerging large consumer markets, Africa is a continent investors cannot afford to ignore. The WIOF African Performance Fund gives investors access to a wealth of investment opportunities in a leading growth region with a strong future.



Africa has in the past often been perceived as a continent plagued by poverty, famine, war, lawlessness and insurmountable infrastructure problems. But while parts of the continent do face challenges, the broader picture is increasingly positive.

Some simple statistics about Africa underline its enormous potential:

  • Africa has 13% of the world’s population.
  • It is bigger than the USA, China, Europe, India and Argentina combined, making up 20% of the world’s land mass
  • It has 12% of the world’s farming land.
  • It holds over 30% of the world’s mineral/mining resources.

And more specific indicators show how far the continent’s economies have developed in just over a decade:

  • Africa’s economy has grown by 5% per year for the last 15 years.
  • Average annual trade between Africa and the rest of the world has increased 200% since 2000.
  • Foreign direct investment (FDI) projects have more than doubled in the last decade.
  • Consumer markets are emerging and rapidly expanding across the continent while consumer spending is expected to more than double in the next 15 years.


The business environment is also improving as countries implement economic and capital market reforms. Over the last five years 13 African countries have been included in the World Bank’s Top 10 business reformers. And of the 30 economies which have improved their business regulatory environment the most over the past five years, one third are in sub-Saharan Africa, according to the bank.


The continent’s massive wealth in natural resources, including precious metals, oil, copper and iron ore as well as vast areas of arable land mean that commodities are a vital part in the African economic growth story. But there are huge opportunities in other areas as well. The financial services sector is one such area as it grows and becomes more sophisticated. While the banking industry in Africa is well established and is one of the most active sectors on many stock exchanges, other areas within the sector are less developed, for instance, insurance and mortgage financing. Opportunities in the consumer goods and services sectors, including the telecoms industry, are expanding exponentially amid the rapid growth of Africa’s middle class and rising household disposable income. The African Development Bank has projected that by 2030 much of Africa will have middle-class majorities while consumer spending will have grown to USD2.2tn – more than double current levels. Nigeria, Africa’s largest consumer market, has a population of 158 million which is set to more than double by 2050, highlighting the huge potential for consumption.



The continent’s attractiveness is underlined by the growing investment pouring into it. Africa is now one of the world’s major investment destinations and recorded its largest ever share of global foreign direct investment (FDI) in 2011, according to a survey by global consultancy group Ernst & Young. FDI rose 27% from 2010 and is expected to almost double to USD150bn by 2015. This FDI produces positive feed through effects to the wider economy and will continue to push GDP per capita upwards and, in turn, boost capital markets and improve annual GDP growth.


What is equally encouraging is that investment is booming on an intra-continental level. Investment between African nations has grown by 47% since 2007 with South Africa, Kenya and Nigeria leading the way in intra-African investments. Intra-African investment helps overcome existing barriers between the continent’s diverse economies, allowing them to move forward more closely as an overall region, re-enforcing Africa’s ability to attract further foreign investment and its attractiveness as a place to do business. This rising investment is also helping address infrastructure shortfalls as the needs of foreign investors to get goods in and out of countries means major upgrades of transport channels are planned or in process and governments are prioritising infrastructure development. This in turn is driving private sector investment and promoting the development of bond markets to raise finances for infrastructure spending. African corporates, such as Dangote Industries across Africa and the likes of Coop Bank across East Africa, are already looking to improve integration, hedging country specific risk and opening up the chance to draw on opportunities across a continent which overall is growing faster than most other regional blocks.



Africa’s demographics also underline its market potential. While many countries in the developed world have ageing populations, almost half of Africa’s 1 billion population is aged between five and 24, making Africa’s youth potentially one of the biggest drivers behind the continent’s sustainable economic development. Moreover, Africa’s population is set to double by 2050 to 2 billion.



The Egyptian market did well in 2012 and there are further opportunities there over the next six months. There is also positive momentum in Nigeria with banks in particular attractively valued. Meanwhile, Kenyan corporates have done the right thing in the past year by diversifying in the East African region  and the next six months should be supportive from a valuation perspective. Overall, the prospects for the Fund’s focus markets are very positive as a clear decoupling of African markets from negative trends seen in developed western markets continues. Regional trade and resources should provide positive support to the Fund’s investment markets going forward.



The Fund’s investment adviser is Sanlam Investment Management (Pty) Ltd (“SIM”), a multi-specialist asset manager offering its clients a broad range of portfolio management services and collective investment schemes for retail and institutional investors. As of June 30 2012 it had USD42bn of funds under management.


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