“Investing in Africa: Easy Entry, Hard Exit, Say Top Investment Managers”

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Despite Africa’s abundant natural resources, its presence in the global asset landscape remains subdued, primarily due to liquidity challenges and lackluster stock market performances, according to fund managers.

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Over the past decade, African markets have faced significant hurdles, with indices in key economies such as Kenya, Nigeria, and Egypt recording declines or minimal growth. Emily Fletcher, co-manager of the Frontiers Investment Trust at BlackRock, points out the stark disparity between GDP growth and stock market performance in emerging markets, highlighting the complexities of investing in Africa.

Nigeria, Africa’s most populous country, has struggled with foreign exchange shortages, hindering international investor participation. Bureaucratic inefficiencies and regulatory hurdles have compounded challenges, dampening investor sentiment despite reform promises from President Bola Tinubu.

Chris Tennant from Fidelity International notes a positive shift in Nigeria’s outlook following ambitious reform agendas and improved access to US dollars. Gregory Longe of Coronation Fund Managers echoes this sentiment, citing Nigeria and Egypt as more appealing investment destinations after currency adjustments.

Mark Mobius, chair of the Mobius emerging opportunities fund, identifies South Africa, Egypt, Morocco, Nigeria, and Kenya as attractive investment prospects. He emphasizes the importance of identifying companies with high earnings growth and low debt, singling out firms like Fawry, Douja Promotion Groupe Addoha, and Safaricom for their potential.

Tennant highlights South Africa’s investment potential, citing well-established capital markets and undervalued equities. Naspers and Standard Bank are among the companies drawing attention for their strong performance and attractive valuations.

Mobius underscores the need for diligence in African investments, acknowledging the abundance of opportunities across various sectors. Despite challenges, he believes diligent investors can unearth valuable prospects in the continent’s evolving economic landscape.

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