Investment special: Boom time in Africa

It’s easy to see why until recently Africa has been a hard sell. It is still regarded as a place for charity rather than investment. But that view is out of date: much of the continent is booming now and investors are wising up.

The economy of sub-Saharan Africa is expected to grow by 6 per cent this year. Compare this with the eurozone’s paltry 1 per cent, and you start to see why smart money is moving from the old continent to the dark one. ‘Economists have had to rip up their numbers for how rich African households are — they were too low,’ says Charles Robertson, author of The Fastest Billion, a book about Africa’s economic revolution. ‘And this is just part of a much improved story.’

As a Brit of Nigerian ancestry, I was pleased that Robertson regards Nigeria as Africa’s most exciting economy. After all, as he points out, one in six Africans live there, and its stock market grew by 47 per cent last year. Following the rebasing of the country’s economic figures, Nigeria has over-taken South Africa to become officially Africa’s largest economy.

Improvements in the country’s governance are particularly encouraging. Nigeria now has a respected and credible finance minister, Ngozi Okonjo-Iweala, a woman who has put in place a number of sensible initiatives and ensured that government debt has remained below 20 per cent of GDP. Moreover, she is helping to double the country’s electricity supply by supporting the construction of new power plants.

Charles Robertson argues that ‘Anglo orbit’ African countries (in contrast to French orbit countries) have an openness to capital markets and the stock market. Nigeria, Kenya and Zimbabwe all have surprisingly large pensions funds, for instance, which enhance Africa’s increased appeal to foreign investors.