Africa’s pockets of opportunities

Africa is often out of the limelight in the funds industry, but the continent presents some nice pockets of opportunities – from a banking, infrastructure and private equity perspective.

To get a glimpse of what is going on in the funds industry, The Lens travelled to South Africa to speak to asset managers and asset service providers. With global growth likely to remain flat, the question around the fallout from the US-China trade war and its impact on Africa continues to linger.

What The Lens encountered was a mixed picture. On the one hand, there could be more opportunity for Africa as exports from China wear down – as long as countries are producing like-for-like goods that are in demand. On the other hand, one negative side-effect could be that China dumps its goods into smaller emerging markets as its exports to the US slow.

One theme that remains at the forefront is the requirement for infrastructure development – technology, roads, trains and education among them – and that presents opportunity in private equity infrastructure. Another key challenge is stimulating the funding of Africa’s growth from the African capital market.

Growing the strength of the local investor base in each market is a big task and translating that into investment will require concentrated policy focus at a domestic and continental level. But this is going to be a new experience, and new types of funds may well emerge. Excitement is brewing at how some asset classes will look in two to three years as they consider small, medium and micro enterprises, inter-Africa growth and the digitalisation and conversion of money into investment.

As Africa maps its way forward, there are plenty of challenges, but also reasons to be optimistic.