A recently released annual survey of African investing by Rand Merchant Bank highlights a changing landscape. The survey shows Nigeria in a position to overtake South Africa as the leading investment destination on the continent, and the world’s second largest continent is now more than just a haven for high-risk mavericks and resource multinationals. With the developed world muddling through recovery and the BRIC’s feeling the limits of early-stage growth, frontier markets like Africa are a key source of return potential for a number of global investment managers, many of whom will gather to discuss the topic at the New York Society of Security Analysts’ (NYSSA) African Capital Markets Conference on October 18th.
“It is common knowledge that improved capital markets, among other factors, have lifted millions of people in emerging and frontier market nations out of poverty over the last two decades,” said the conference’s lead organizer, Thomas Brigandi. “Therefore, in my perspective, putting capital to work in Africa not only enables investors to potentially capture returns not seen in the low yield environment of the developed world, but also, increased capital inflows further spurs development in a continent that has one of the fastest growing middle classes globally and is already home to six of the world’s ten fastest-growing economies.”
The challenge for investors is allocating capital to capture sustainable profits from the increased economic output of various countries. One of the most attractive sectors over the past few years has been sovereign bonds, with an ever-increasing number of oversubscribed issues by fast-growing countries like Ghana. “This is now the time for the relatively decoupled continent to provide alpha returns, even more so in this context of global interest rate and foreign exchange volatility,” said conference panelist Claire Husson-Citanna, an emerging markets fixed income portfolio manager at Franklin Templeton. ”Both fundamentals and technical factors are favorable to most African bond markets.”
Ms. Husson-Citanna joins a panel of distinguished fixed income professionals, which includes representatives from Standard Bank, as well as Moody’s and Greylock Capital. The conference will also include panels on public equity and private equity, covering the three main investment vehicles on the continent. In addition, Tom Speechley will deliver the keynote address. Speechley is a senior partner at Dubai-based Private equity shop, Abraaj Group, which has been at the forefront of investment in Africa and is building upon successes in previous emerging market destinations. This is a trajectory shared by many panelists, who will bring valuable insights from markets that were and are similar to Africa.
The conference is the direct province of NYSSA’s Global Investing Committee, which has become a leading forum for investment in emerging markets. Filled with veterans of the investment booms in the BRIC countries, Southeast Asia and Latin America, the committee has sought to provide a comprehensive discourse for top investment professionals to learn from the successes and shortcomings of past practitioners. The committee previously organized an Africa Investment conference in April of this year, and the increased focus on Africa helps underscore the growing profile of the continent among the top globally-minded investment managers.
While not a direct focus of the conference, the topic of broader human development is very much on the mind of conference organizers, who have brought in the American Foundation for African Children’s Education (AFACE) as a non-profit sponsor. The organization, which is devoted to repairing neglected primary schools, has long evoked broad partnerships and local participation. Influenced by economists like NYU’s William Easterly, who have painstakingly refuted top-down approaches and pure aid economies, the organization’s “Total Development Model” has emphasized collaboration of organically successful entities as diverse as business, NGOs and government working towards a common cause.
“With a level of growth unprecedented in the continent, now is the time to organize and leverage the efforts of millions towards providing greater opportunities and a better standard of living,” said AFACE Vice president Daniel Fridson. “In our minds, those efforts begin with access to education, but we are the first to recognize that there is far more that can and needs to be done.”
Those interested in learning more about the conference or signing up to attend can do so at http://www.nyssa.org/programs/mastercalendar/ctl/viewdetail/mid/512/itemid/786/d/20131018.aspx