Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


It's boom time for African stock markets

23 May 2013, 07:42AP

Nairobi - The barrage of hourly tweets sent out by Aly-Khan Satchu - East Africa's version of CNBC's Mad Money host Jim Cramer - cheers on what Satchu says is a growing sentiment among investors: If you're not investing in Africa, you should be.

Or as Satchu loudly proclaims on his Twitter feed or newspaper column: "It's boom time baby."

Several African stock markets are seeing huge returns this year. Though small, Ghana's stock market is up more than 50% so far in 2013, one of the world's top performers. Kenya - up 35% - has been touching record highs all year. Nigeria is also up 35% on the year.

Global investors used to put their money into Africa in the continent's north - the Arab rim - and the south - South Africa, Satchu said. But now the money is going to the middle. When Rwanda offered $400m in 10-year dollar-denominated bonds last month, demand was more than eight times the supply.

"The American writer Edwin Lefevre wrote in the novel 'Reminiscences of a Stock Operator' that one of the rules is that the tape is your telescope. You have to look at the returns if you're going to be a serious investor. And right now Africa is flashing across everyone's tape," said Satchu.

"The golden flood of free money that Ben Bernake has launched on the world, usually it would stop short of Africa," said Satchu, who once ran the global trading desks in emerging markets for Credit Suisse First Boston and now runs his own financial management business in Nairobi.

With US treasuries now paying so little, investors are putting money in Africa, he said.

World Economic Forum on Africa

At the World Economic Forum on Africa, held in Cape Town, South Africa earlier this month, forum managing director Borge Brende noted that the continent's people are the youngest in the world, with 70% of the population under the age of 30.

"The perspective on Africa has changed dramatically the last years from an aid perspective into a perspective of economic growth, opportunities and also investments," Brende said.

Uhuru Kenyatta, the newly elected president of Kenya, told the Cape Town forum that Africa over the last 50 years spent its energies on emerging from the colonial period, when coup after coup weighed down advancement.

Now African neighbors are learning how to work with one another to advance each other's business development, he said.

Rwandan President Paul Kagame, writing in the Wall Street Journal on Sunday following his country's wildly popular bond offering, noted that nine out of the world's 15 fast growing economies are in Africa.

Foreign direct investment was $9bn in 2000; last year it exceeded $80bn, he wrote.


Despite the increased investment and rising stock indexes, investors must still wade into Africa carefully.

The continent still needs to improve its infrastructure, improve gender equality and advance the population's skills and education, Brende said.

Corruption plagues businesses in Africa throughout their life cycle. Construction can be slow. Quality supply chains are difficult to find, a fact that keeps major corporations like McDonald's in only small corners of the continent.

The corporate governance of small-cap stocks can be an issue, Satchu said, making large-cap stocks headquartered in the US or Europe more attractive.

"You're leveraging Africa opportunity and parent-company corporate governance," Satchu said. "Investors are going for these big cap stocks where they feel the corporate governance is the highest standard."

Brende noted that the continent - a collection of 54 countries - still has 17 nations defined as fragile states. Africa, Satchu said, is not the homogeneous investment environment that the United States or India is.

"Would I throw my life savings into the DRC?" he said, referring to the violent but mineral-rich nation of Congo. "You must be joking. But would I make a big bet on some real estate in Kenya where the title is clear? Yes."

International Monetary Fund

A report from the International Monetary Fund released this month titled "Sub-Saharan Africa: Building Momentum in a Multi-Speed World" predicted that growth in sub-Saharan Africa will accelerate moderately in 2013-14 and that inflation will continue to edge downward.

Economic stagnation in the eurozone and the potential of a drop-off in outside investment could slow that growth, it said.

"Sub-Saharan Africa has performed strongly and should continue to do so," it said. "Output grew, on average, at a rate of 5.1% in 2012 and is projected to accelerate to 5.4% in 2013 and 5.7% in 2014."

Satchu said big pension funds and university endowment funds are looking to invest in Africa.

The issue for the continent, he said, is not going to be too little capital but too much, and how it absorbs it. Kagame wrote in the Journal that a view exists that development in Africa is a marathon, not a sprint. He said Rwanda does not agree.

"In our pursuit of progress, we have of course looked to East Asia's so-called 'tiger' economies for inspiration. But Africa's experience is unique, and we must now define our own destiny," Kagame wrote.

"So while being described as an 'African tiger' is a welcome recognition of how far Rwanda has come, perhaps it isn't quite right. After all, our continent has its own big cat. Step forward the new lions of Africa."

- AP


Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Nigeria @ 56: Words to my green f...

A leader’s job is not to dictate, but rather to be respected, admired and be a trustee, of the land we love, with so much potential, a land which should be freer than free. Its still a long way to fufilling our destiny! Read more...

Submitted by
Isaac Asabor263
Recession: An opportunity for Nig...

The recession should be seen as an opportunity for the country’s promotion as long as we all collectively conduct ourselves in a patriotic manner, writes Isaac Asabor.  Read more...

Submitted by
Black and White

We want to imitate the whites in everything because we are ignorant of our inherent originality and content. We spend all our Naira to acquire his inventions because we so oblivious of our natural endowments that we allow him have it for free. Read more...

Submitted by
Nate Nat
Adamawa State University Mubi: A ...

ADSU integrity forum has accused the Sunday Joshua Wugira, a lawyer, of adopting unorthodox tactics by abusing his privilege by attacking the integrity of ADSU Vice Chancellor Dr. Moses Zira Zaruwa, writes a News24 reader. Read more...

Submitted by
Abdulsalam Jubril
My Country Nigeria (Part One)

Poetry by Abdulsalam Jubril.

Submitted by
Abdulsalam Jubril
Recession, dearth in leadership a...

Every leader has the opportunity to become great and making himself immortal in the lives and hearts of people for generations to come. Will Mr. President seize this opportunity?, questions Abdulsalam Jubril. Read more...