Since its March 5th release on YouTube, the 29-minute documentary film Kony 2012 by Invisible Children, Inc., has gone viral around the world, capturing 100 million views in about one week. The film focuses on the group’s efforts to expose Ugandan war criminal Joseph Kony’s atrocities and bring him to justice. It has become an international rallying point against a brutal military insurgent, while also focusing global attention on continuing violence and repression in parts of Africa.
Although Joseph Kony is a relic of a 26-year war in Uganda and has spent recent years expelled and on the run, the ongoing legacy of the country’s brutal war continues. Poverty and unemployment remain high in many parts of northern Uganda, and poor infrastructure networks have been degraded by years of combat. Thanks to the film, hundreds of millions of people are anticipating the day Kony is brought to justice, and there is growing awareness of the need for humanitarian efforts and charitable contributions to work on Africa’s challenges.
In the eyes of the developed world, Africa remains a continent full of entrenched and insurmountable challenges. But, as long-term investors in this region, this contrasts with what we see in our travels around the continent, as we witness its economic growth, abundant natural resources, and thriving public companies.
As investors in Africa, we see economies that have produced consistent Gross Domestic Product (GDP) growth over more than a decade, with promising potential for the future. We have visited scores of successful home-grown African companies that are providing goods, services and jobs to an expanding consumer class. Other sectors are benefiting from a boom in exports of natural resources.
We also see a rising tide of interest from international investors who see opportunities to put their capital to work in a resource-rich continent that is home to over one billion people. We encourage those whose attention has been captivated by Africa in recent weeks to take a closer look at the region and perhaps they too will see Africa as we do: the next big global growth story.
Uganda Today: Abundant gas and oil reserves
One of the big investment themes in Africa today is infrastructure growth, including roads and bridges that will interconnect countries and hydroelectric projects that will greatly reduce the historically high cost of electric power. The infrastructure need for a continent as vast as Africa requires an enormous amount of capital. The good news is that this capital is starting to flow more freely into Africa from abroad.
For example, Uganda offers clear opportunities for increased investment in the oil and gas sector. While much of Uganda’s territory has yet to be fully explored, the country has more than two billion barrels of proven oil reserves – an amount with the potential to economically transform the entire region. Northern Uganda, the territory Kony once dominated, is believed to contain an estimated five billion barrels of oil reserves, and these riches are attracting international expertise and capital. Uganda’s oil reserves are being developed mainly by three international exploration companies: Tullow Oil (U.K.), Total (France) and CNOOC (China). Over the next three years, these companies combined are expected to spend $15 billion in developing Uganda’s oil industry.
Over the next decade, the projected investments in Uganda’s oil sector, as well as future revenues to be earned from the export of oil and related products, will dwarf Uganda’s current GDP of $17 billion and have a profound impact on every aspect of the country. Already, the Ugandan government has pledged to invest income earned from oil and gas development into the country’s infrastructure network of roads, schools, and health facilities.
Uganda’s Children: The “demographic dividend”
Like most of sub-Sahara Africa, Uganda has positive demographics trends for supporting future economic growth. The country’s present population of 33 million is projected to grow to 100 million by 2050, and young families will drive most of this growth; half of the current population is under 15 years old. The “demographic dividend” of a large, youthful population supporting relatively few retirees, coupled with an abundance of natural resources, will propel long-term economic growth and productivity. When Uganda starts to export oil in 2013, the country’s import bill will shrink, its cost of capital will fall, and productivity will increase as output-per-worker rises. Although many African countries lack Uganda’s oil riches, we see similar cycles of opportunity emerging across several regions of the continent. This is one clear reason why a long-term investment in Africa is compelling.