Africa Emerging: The African Investor Index Series Awards at New York Stock Exchange

by Jake R. Bright, Whitehead Fellow, Foreign Policy Association

There’s an old business expression: “By the time you hear about it, it’s too late.”

For global companies and investors not recently revising their assessment of Africa, that phrase could quickly ring true. This was evident at Africa Investor’s (AI) Index Award Series at the New York Stock Exchange, where entrepreneurs, statistics, and success stories on sub-Saharan Africa’s business climate coalesced in a convincing fashion. There’s a growing drumbeat of hard information on Africa’s economic transformation, much of which was assembled by a recent McKinsey & Co. report. Here’s a sampling:

Sub-Saharan Africa is expected to grow at a faster clip than Brazil and India, boasting six of the 10 fastest growing global economies over the last 10 years and projected to have seven of the ten fastest growing economies over the next five.
In 2011, South Africa became the first African BRIC country (now BRICS).
In March 2011, the Carlyle Group launched a sub-Saharan African investment practice; Wal-Mart made a $2.4B acquisition of South Africa retailer Massmart, and GE’s Jeff Immelt named Africa as one of the company’s target growth regions. This followed Coca-Cola’s highest growth announcement in 2010, the same year Ford Motor Co. posted its highest quarterly earnings on the continent and IBM announced a $1.5B investment in African-focused technology company Bharti Airtel.
Africa is posting some of the highest returns on FDI in the world and some American fund managers in the U.S., such as Don Elefson, have become bullish on African equities, touting them in their investment portfolios.
Consumer spending power in Africa came close to $1B in 2008 and is forecast to reach $1.4B by 2020, connected to a growing middle class.
Bain & Company released a report in 2011 projecting double-digit growth in Africa’s financial services sector, including retail banking growth of 40 percent by 2020, as Africa’s 80 plus percent unbanked population begin using banking services.
Africa’s diaspora is thriving and channeling its success back home. In the U.S., Africans went from being the highest educated immigrant group in America to having the highest educational attainment of any demographic in the entire nation. A new class of diaspora entrepreneurs is emerging, with many young professionals leaving top jobs in the US to launch businesses in Africa. Kenyan’s now send home over $1BN a year, Nigerians $10BN, and estimates project diaspora remittances as the largest source of FDI in many countries, collectively exceeding foreign aid for the continent.

At the AI Index Award Series, a day-long program of panels, speakers, and deal sessions, facts like these and the most successful people working around them filled the New York Stock Exchange. There were representatives of some of Africa’s 29 stock exchanges, panels on private equity, and investment outlooks by senior commercial and investment bankers.

I spoke to Julius

Steyn (left), president of the World Trade Center Africa Initiative, developing 13 World Trade Centers in sub-Saharan Africa to increase participation of small- to medium-sized African firms in global trade. He told me about the venture’s one percent initiative to achieve $70B, or a one percent increase in Africa’s global trade within five years as a means of commerce tackling development challenges. “One percent, not five percent or 10 percent, just a one percent increase in African trade can alleviate poverty on the continent. It is three times more than all the development aid and would be more effective,” Mr. Steyn said,

Jorgen Ole Haslestead of Norway’s Yara International described his company’s f

or-profit, public-private partnerships to boost Africa’s agricultural output, distribution, and returns. Philisiwe Buthelizi (right), CEO of South Africa’s National Empowerment Fund, won AI’s Leading Woman in Business Award and told me about her organizations’ support of business, investment and entrepreneurship to counter lasting effects of apartheid.

The AI Series concluded with awards announcements, including Institutional Investor of the Year, Bank of the Year, and Venture Capital Deal of The Year, confirmation of Africa’s changing business lexicon. Sub-Saharan Africa’s clichéd challenges related to corruption and poverty have not disappeared. Still, make no mistake, a new era of enormous capital investment, economic modernization, and business opportunity is underway in Africa and global business actors are taking notice. How this will transform the continent's economies and in turn Africa’s challenges with socio-economic standards and governance remains to be seen. Growing numbers in investment and policy communities will certainly be watching

Photos by Ben Hider. Read more of Jake Bright's work on his website.