02.02.12 Ghana Politics and Security
EIU survey highlights Africa's investment potential
According to a recent survey of over 150 institutional investors by the Economist Intelligence Unit (EIU), more than half those polled believe that Africa is “the most attractive region to invest”. While Nigeria and Kenya are likely to offer the best investment returns during
the next decade they are followed by Ghana, Zimbabwe and Egypt. Despite this
interest, however, more than half of the institutional investors (including
banks,
pension and hedge funds) admitted that Africa made up less than one per cent of
their total investment exposures.
What makes the poll interesting is that investors increasingly believe that
African growth is not simply about commodities. The CEO of an Abu Dhabi
government-owned investment fund, Invest AD Asset Management, stated that
Africa has “real economic growth drivers”, and is no longer just a “destination for grants and aid” but now a “destination for trade and investment”. Nevertheless, investors still believe that commodities, natural resources, and
energy are those sectors which are most likely to produce the highest returns
with agriculture, agribusiness, construction, and banking and financial
services
also being attractive. The survey's respondents are, however, still wary of
political difficulties, bribery and corruption.
It is interesting that most of the highlighted countries have had severe
political problems in recent years although, in one case, it has perhaps set
the stage
for a brighter political future. As always the potential size of returns could
lead investors to discount some of these risks. The actions of Boko Haram in
Nigeria have, for example, so far had a modest effect on the “foundations” or economic fundamentals of investing in the country.
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© 2012 Menas Associates