Africa's position in large institutional portfolios
Africa accounts for one-sixth of the world’s population, and its 54 nations comprise a diverse, rapidly-growing economic force. Despite this, for nearly all of the world’s largest pension plans, sovereign wealth funds, most endowments, some foundations and many family offices, Africa’s presence in the portfolio is little more than a footnote. Relatively little time is spent seriously considering Africa as a capital destination.
And yet, this will change. In the past, the first words to spring to mind for many when hearing the word Africa were negative: instability; war; corruption; disease; and poverty. But for the investor engaging with the African story today, there are positive words that come to mind: consumer demand; demographic dividends; leapfrogging; education and workforce skilling; government accountability; and strengthening institutions.
This paper sets out the reasons for thoughtful, forward-thinking institutional investors to reconsider Africa’s position in their portfolios. In our view, analysis will reveal that most investors are significantly underweight relative to the attractive opportunities that lie ahead. Those who start now will be well positioned to benefit as these opportunities are realised. Those who wait too long will regret not moving sooner.