Outflows from emerging markets has been one of the big stories of the year, as investors brought money back to Europe and the U.S. in anticipation of Federal Reserve tapering, reflecting that some people view emerging markets as an investment of last resort when there are no other good deals to be found. Africa in particular has a reputation for being incredibly risky, with all but a few major markets given the somewhat condescending name ‘frontier markets.’

But once you move the past the commodities sector, where many African investment decisions begin and end, the continent has a unique growth story. First, it’s enormous, with a billion people and a land mass that most people can’t wrap their heads around.

Africa

It also has a population growth rate almost double the world average, about 2 percent compared to just over 1 percent. And it’s possible to increase your exposure across the continent while only dealing with firmly established markets.

“We talk about Africa as if it’s one thing, which it really isn’t,” says Robert Scharar, founder and CEO of the financial planning company FCA Corp, and the Commonwealth Africa Fund (CAFRX) manager. Scharar has been involved in different African markets for more than twenty years, and he says that it’s important to understand that there’s a huge difference between central African countries where governance might be limited, and markets like South Africa which has had a stock exchange for 150 years.

In South Africa and Kenya in particular, transactions are conducted in English, and the legal system is compatible with what Americans are already used to. “We’ve just had a good experience,” he says. “Transactions proceeded in a way that had more clarity than a lot of other emerging markets would have. In many countries there are fairly well developed accounting and legal services. The quality of that work is pretty high so the financial information is pretty reliable.”

Continent investors can invest in pan-African companies

Now that companies in these major African markets, which also includes Nigeria and Egypt, are moving into the rest of the continent investors can invest in pan-African companies based in places like Johannesburg or Nairobi. That’s exactly what Wal-Mart Stores, Inc. (NYSE:WMT) was doing when it purchased the South African retail chain Massmart for $2.4 billion two years ago, and it has been trying to buy Kenyan retail chain Naivas, although that deal recently fell through.

Scharar tells a similar story about South African grocery chain Shoprite, which has been moving into southern African communities that were previously unserved by high quality grocers. The lazy assumption that people with low incomes don’t care about quality turned out to be false, and even families who couldn’t afford to do all of their shopping at Shoprite spent some if their money there, and the expansion has been a success. By investing in Shoprite, the CAFRX was able to benefit from southern African growth while doing business with a South African company.

Of course some investors are wary of Africa because of labor strikes that turn violent, political unrest, and other upsetting news. “I think what you’re seeing is an iterative process of democracies moving forward,” says Scharar. “Kenya’s a good example of that.”

The population in Africa is large

Kenya experienced some political violence after its 2007 presidential elections, and the incumbent was eventually allowed to remain in office. But his second term is finishing this year and president-elect Uhuru Kenyatta is expected to take office without incident. The ANC has had an iron grip on South Africa’s young democracy since Mandela first became president, but this too is breaking up slowly as the middle class begins to demand more transparency and accountability, and Scharar points out that at least local elections are being seriously contended.

Even though it often gets overlooked by people more interested in Asian EM, the case for investing is compelling because “the population in Africa is so large, the human capital is so immense, and because there are rules,” says Scharar.