Global institutional investors plan to boost their asset allocation in African markets over the next five years, and are shifting to long-term investment strategies for the continent, instead of more speculative, short-term bets, a survey showed.
51 per cent of the 158 investors polled by Invest AD and the Economist Intelligence Unit agreed that Africa’s frontier markets — which are the smallest, less developed and less liquid countries that make up emerging markets — will offer the best overall prospects for investment growth in the next decade.
Two-thirds of investors with an interest in frontier markets see Nigeria or Kenya holding the greatest opportunity, putting the continent ahead of frontier markets in Asia and Latin America, the survey showed.
Investors eye Africa’s emerging middle class as the most attractive aspect for the continent, which until now has been a largely natural resources play.
In terms of popularity with investors, Nigeria and Kenya top the list, followed by Zimbabwe, Egypt, Ghana and Libya.
“Africa’s biggest challenge is to overcome deeply entrenched perceptions. But a striking shift that can be observed among investors is a change in focus from macroeconomic and political worries towards more technical market concerns,” the survey said.
One in three investors expect to put at least 5 per cent of their portfolio into Africa by 2016.