Invest in africa

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Invest in africa

  1. 1. Mutual Funds Mutual funds need no introduction. They are one of the most popular investment vehicles in the country today. Mutual funds allow a group of investors to pool their money together and taste a broader range of stocks or bonds than they could if they were trying them on their own. Some of the many benefits of investing in mutual funds are: 1. Very simple to purchase and sell 2. Mutual fund industry in India is very well regulated and transparent 3. Funds can be made in lump sum or intermittent payments 4. Diversification helps to defend from problem risk 5. Professional management saves time and costs. 6. Dollar cost averaging helps profit from small regular investments There are a lot of categories of mutual fund scheme accessible today and in each category there are hundreds of mutual funds present akin to stars in a milky way. But depending ahead the category of mutual fund scheme you invest in, the earnings from such investments can be in the form of regular income and/or capital appreciation. The taxation differs for different categories of mutual fund schemes. Investment in Africa Africa, in the last Few years, has experienced a marked financial increase fueled by increasing economies. South-South cooperation, as well as intra-African trade, has jump-started the continent’s development. This comes as the trade and industry center of gravity shifts from industrialized economies to large developing economies. Africa can only take benefits of the new economic landscape by addressing continental consistency, infrastructure development, and governance — both at national and cross border levels, to further the continent’s economic development. By UNCTAD statistics, trade in supplies among Africa and developing countries has been on the upraise since the mid-90s. While it represent only $34 billion in 1995, trade rose to $97 billion in 2004, before surging to $283 billion in 2008. In the same year, trade between other developing countries and those in Africa exceeded the total volume of trade between Africa and its main trading partner, Europe, for the first time ever. Business between Africa and Brazil , for example, quadrupled during the tenure of President Lula. Reputation at $6 billion in 2002 when he took office, trade between the Latin American country and the African continent has reached $26 billion in his final year in office. But while trade has increased, experts have encouraged Africa to take advantage of this new economic landscape to drive its economy.
  2. 2. Africa is open for business. In the future, when Americans reach for their checkbooksin response to information they just heard about Africa, it will be for commercial investments rather than for philanthropic aid. The hugely successful staging of the 2010 World Cup in South Africa was a fitting exclamation point on a decade of sustained economic and social transformation in Africa. Due largely to “ignorance-exploited racism,” many Americans harbor a negative attitude toward Africa. I say “Ignorance-exploited racism” because Americans have been fed a steady stream of negative images that comport with racist stereotypes about Africa. Charlayne Hunter-Galt, a well-known African American journalist who resides in both the United States and South Africa, refers to this steady negative stream as the 4-D’s: death, disease, disaster, and despair. As for the World Cup, it almost appears as though the media were disappointed to report that the World Cup held in South Africa was not only totally free of incident, but many proclaim it to be one of the best held, ever. Visitors who attended and spectators who watched were wowed in observing South Africans having the panache to put on a globally-riveted show so competently and confidently. By Rahwa Asmerom Newsweek notably proclaimed that Africa is becoming the new Asia. It’s quite a statement yet one that aligns with recent findings that many African countries are boasting competitive GDPs and outperforming many emerging markets in the midst of the global recession. This, however, is nothing new to Ryan Shen-Hoover who has for some time now financially backed his belief that the continent offers a diverse array of strong markets and opportunities for investors. While working in Lesotho for a human rights organization, Ryan began to question the issue of aid and the nature of aid dependency. He then gave thought to other ways to creatively circumvent that ultimately harmful approach and decided that the most mutually beneficial solution was to invest in the economies and businesses directly. He ultimately co-founded Kivuno Capital Management, an early-stage asset manager focused on African equities and the Kivuno Africa fund, which specializes in small-cap and closely-held stocks. Investing in everything from tea in Kenya to ice cream in Ghana, the fund’s performance has generated stellar returns and continues to confirm the promise of frontier markets like those in Africa. We caught up with Ryan to discuss how he got into the game, how amateur investors can access African stocks and and which countries and industries he’s feeling bullish about right now. What are your reasons for investing in the African Stock Market? The most important reason is that I believe that it has some of the biggest bargains anywhere in the world. There is a lot of value there and [people don't realize that] because, especially here in the U.S., the perception of the risks of investing in Africa is much greater than the actual risk. The media portrayal of Africa is one of a dangerous volatile place where only fools would send their money and hope to get a return. In our experience and looking at the numbers, it’s actually, on a risk-adjusted basis, a great place to invest. You have economies that are growing five to six percent annually and it’s common to find stocks that are trading for five to six times earnings
  3. 3. which is unheard of in the U.S. market where the economy is growing at a much slower rate. You can often find banks that are trading for less than book value. There are a lot of hidden gems there. So the perception of risk is essentially keeping people from investing? 15 of the 18 African stock exchanges have outperformed the S&P 500 over the past three years in U.S. dollar terms. That’s something I like to point out to people that question the level of risk involved in investing in Africa. Where is the real risk? This past year the Johannesburg stock exchange is up 92 percent in U.S. dollar terms and I think the S&P 500 has only been up 27 percent. There are definite returns to be had in these markets and it’s something that I think investors should take a close look at. How did you come to start investing yourself? I had lived in Lesotho for a number of years. There were definitely problems there and other countries I was visiting but the markets were still functioning and business was still being done in spite of the political problems. That’s what sparked my interest. I was a volunteer working with a human rights organization and I started to become disillusioned with the aid industry and it led me to wonder ‘What is the most appropriate role for an outsider in Africa?’ I was getting more and more uncomfortable with the idea of aid creating dependency and crowding out local entrepreneurial initiatives. After I returned to the United States and as I was investing my own portfolio in the U.S. markets, I got to thinking about how I could try to put my money to work there. There wasn’t a whole lot of resources online telling you how you can invest in these markets. I saw that there were stock markets but didn’t know foreigners could invest and how they could go about it. I started sending emails to local stock brokers and seeing what they would tell me about setting up an account and trying to ask them for references from other investing firms overseas and what their experience had been. As I started getting comfortable with it, I started sending my own money and, luckily, I had some success early on and I caught the bug. You were at one point producing a newsletter called Investing in Africa – how did that come about? I later decided to put my lessons in writing and thought that maybe other people would find them helpful as well. Through the process of writing the newsletter, some people said ‘you know this is great, it looks like some good returns can be generated from investing in these markets.’ Africa is lumped into one big place and it is a disservice – there are 20 different stock exchanges in Africa and each one is very different. You have everything from the South African market where there are hundreds of stocks and local brokers and you can basically trade online like you can in the States and then you have some markets like in Mozambique and Rwanda that are just starting up and where they only have one stock listed. Some markets are open for only one hour a day. There is a whole range of markets which range in sophistication, size and liquidity. After an amateur investor has done his basic research and decided what market he’d like to invest in, what are his next steps in getting started?
  4. 4. You would first find a reputable broker. Most of them have websites. You can send them an email and ask them for info on how to set up an account. They generally require a short form and a copy of a passport. There is a leap of faith in giving someone in another continent some personal information about yourself but if that’s something that you’re okay with, it can really open up a lot of markets for you. For more information about Investment in Africa pls visit here http://www.nilefunds.com/investingInAfricaWhy.html

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