The Investment Climate in Africa 2015

by Jörgen Eriksson on May 17, 2015

CBA headquartersFriday 15/5 I visited the Commercial Bank of Africa headquarter in Nairobi. CBA is the largest privately owned bank in Kenya with assets of approximately US$1.363 billion. I met them to discuss investment opportunities in Kenya and the latest trends in innovation in the financial sector, and how fintech is applied in Africa.

It has been three years since I last met Isaac Awuondo, the Group Chief Executive, and Kature Nyamu, the head of the Investment Bank subsidiary, and since then the bank has had a spectacular expansion both in Kenya and through internationalisation throughout East Africa.

Screenshot 2015-05-30 18.52.55Africa is at the frontier of frontier markets, although historically challenged by illiquid exchanges and seen as high risk. This is no longer true though, as can be read in the United Nations publication “Frontier Markets in Africa – Misconceptions in a Sea of Opportunities”.

Several African countries, with developing financial markets that are likely to attract institutional financial investors, are promising candidates to become part of a second generation of “emerging market” countries. The economic performance of Africa since the turn of the twenty-first century has been remarkable, even in the aftermath of the global financial and economic crisis. Growth has averaged 5 per cent per annum over the last decade, consistently outperforming global economic trends.

Contrary to the notion that growth in Africa can be attributed to a boom in global demand for natural resources, the resources sector only contributed about a quarter to the post-2000 economic expansion.

Underpinning the remaining three-quarters of the growth are improvements in governance and macroeconomic management, rapid urbanization and increasing domestic demand, increasing investment and trade ties with traditional and new partners, expanding regional markets and consistent, though slow, diversification of production and exports.

Sub-Saharan Africa is the home of 15 stock markets and they actually outperform world markets over the recent decade.

Screenshot 2015-05-30 18.34.41

The key element of investing in Africa is that the returns are higher and volatility is lower than in other world markets, as can be seen in the chart below.

Screenshot 2015-05-30 18.37.21

In the video below from Financial Times, Christopher Hartland-Peel of Hartland-Peel Africa Equity Research explains the African investment climate to Financial Times East Africa correspondent Katrina Manson.

African Investing Myths Debunked

About Jörgen Eriksson :

Jörgen Eriksson is the founder of Bearing and is the Chairman of the firm since it was created. He has successfully expanded Bearing into covering projects on four continents. He is also Adjunct Professor of Innovation Management at the International University of Monaco and at Universitat Politècnica de Catalunya in Barcelona and he is an active member of the Founders Alliance organisation.

Working with consulting engagements across Bearings practices, he has over the past fifteen years participated in and supervised a large number of client projects, from innovation system development and place development and branding, to merger and acquisition assignments and leading edge research and business development activities for key clients.

His new book, Branding for Hooligans, will be published in 2015. It is about how innovation and branding are key survival factors in our modern times of hyper competitive markets.

Prior to Bearing, he was Director of Europe, Middle East, and Africa for Trema Treasury Management, a technology and consulting services provider, supplying financial software solutions for the global financial industry, Clients included The European Central Bank, Citibank, SEB, South African reserve Bank, Deutsche Bank, Abu Dhabi Investment Authority (ADIA), as well as many other large financial institutions and Fortune 500 companies.

Early in his career Eriksson was educated at the Stockholm School of Economics, where he studied economics, financial economics and philosophy. He then worked in Scandinavian investment banks and also for the Swedish Institute of National Defense Research.

You can contact Jörgen on e-mail jorgen.eriksson@bearing-consulting.com, connect on LinkedIn on http://fr.linkedin.com/pub/jörgen-eriksson/0/38/8a0/ and follow him on twitter on joreri508.

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