Africa offers greatest opportunity for investment growth - survey.

By bne IntelliNews January 26, 2012
Institutional investors see Africa as holding the greatest overall investment potential of all frontier markets globally and plan to boost their asset allocations on the continent in the next five years, according to a new survey of the Economist Intelligence Unit, made for Invest AD. At an aggregate level, when asked to choose two regions out of ?ve, two-thirds of investors with an interest in frontier markets see African frontier markets such as Nigeria or Kenya as holding the greatest opportunity, the report, named Into Africa: Institutional Investor Intentions to 2016, reads. The results put Africa ahead of frontier Asian markets, which were selected by 44% of the polled investors and Latin American markets with 29%. Many economic forecasters predict that the African regions growth rate will outstrip all others in the coming ?ve years. Ghana, for example, will most probably be the worlds fastest growing economy in 2011, expanding at an estimated 16.3%. The report also revealed that investors were shifting to long-term investment strategies for Africa from more speculative and short-term bets. A total of 64% of the interviewed investors agreed that market volatility, partly due to limited liquidity, now requires a longer-term investment approach. Africas emerging middle class, which counts about 300 million people out of Africas total population of some one billion, has become increasingly attractive to investors, ahead of commodities and natural resources, the survey showed. Nearly 40% of the investors, when asked to choose the top three out of 12 features, selected the middle class as the most attractive aspect of investing in African frontier markets, ahead of high commodity prices (34%) or high growth rates (35%). According to the survey, in terms of popularity with investors, Nigeria and Kenya top the list, followed by Zimbabwe, Egypt, Ghana and Libya. The main concerns of institutional investors about investing in the continent include bribery and corruption, which is the headline worry for investors, but weak institutions and illiquidity in capital markets are not far behind. The shift of concerns from macroeconomic and political risks to more technical worries reflects the steady political and economic stabilisation of many key African markets over the past decade.
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