3 Reasons Why You Should Invest In Africa

3 Reasons Why You Should Invest In Africa

You feverishly open your mailbox to look at your latest financial report.

What do you see?

Your stocks aren’t growing as fast as you thought, and now you’re worried. Will this trend continue? Will your results remain disappointing as time goes on? Are you wasting money on these stocks?

Seth Klarman’s 2021 Letter: Baupost’s “Never-Ending” Hunt For Information

Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More

You feel you could get valuable returns, not only for the next investment, but each time you decide to make a new one.

It’s possible, but you don’t know where to look, and you ask yourself if there are other patterns to consider.

The Fast-Growing Market That Most Investors Ignore

Lately, emerging markets have driven the global economic growth. Along with this major trend, sub-Saharan Africa (SSA) has recorded powerful GDP growth, averaging 5% for almost a decade. Thus, it has become in vogue to say that “Africa is rising.”

At the same time, opportunities for lucrative investments have increased day after day in various sectors.

A growing number of African consumers are eager to find fresh products, new commodities, and new services they can now afford. Hence, innovative businesses must fulfill the huge demand.

3 Undeniable Reasons Why You Should Invest in Africa

You know it: investing is akin to sowing a field with one or many varieties of seed. And you have to have fertile soil for your grains. So when you dedicate your revenue for investment, you expect the best returns. To reap the benefits of your efforts, you must consider promising seeds like the ones SSA markets can offer today.

Some of the benefits of the SSA market and why foreign investors should invest in Africa include:

1. Higher investment rate

According to the World Bank, the rate of return on foreign investments is higher in Africa than any other developing region. Moreover, foreign investments in SSA have significantly risen year after year, showing improvements of economies.

2. Bonus effect of being the first to invest in Africa

In many sectors, there’s only a limited number of profitable businesses, and the first to target them will reap most of the benefits. For instance, some natural resources are scarce or concentrated in specific geographic areas. The first mover can invest in a business that gets almost all the supply.

It’s quite the same thing when some investors lock up promising businesses. A few months ago, the Chan Zuckerberg Initiative (CZI) joined GV (formerly Google Venture) and other investors to fund Andela, a Nigerian based start-up. Andela’s revenue model is to take advantage of shortage of talented software developers globally. Those first movers certainly took the best business available in the niche at the time, especially as Jeremy Johnson, Andela’s cofounder and CEO once said, “We’re able to tap into what I argue is the largest pool of untapped brain power in the world.”

Being one of the first investors in an emerging market is like being the first in the door at a Black Friday sale. Everything is still available for you.

3. Availability of new niches

If you look at patterns from emerging markets from a decade ago, you’ll see that as consumption rises, a larger variety of needs awake that you can capitalize on. For example, before the recent economic upswing in many African territories, they might not have felt the need for an Amazon-like company. Today, Jumia is the biggest e-commerce player in Africa. By investing in Africa and SSA markets, you can get in on niches early that have proven successful elsewhere.

Why Businesses Growth Skyrockets in Emerging Regions


The reason for continuous economic growth in emerging geographies, especially sub-Saharan Africa, is twofold.

First of all, the middle and upper classes have widely expanded. Truth be told, not many people have seen the emerging of the middle classes, only focusing on the poorest or the richest. But you as an investor should be aware of the 1.1 billion potential customers in Africa, with an estimated 1.8 billion in the next 35 years according to UNICEF. In addition, the purchase power of this population is blowing up.

All this enhances opportunities for healthy businesses. You see, some brands strategically expanded to Africa with relevant local business models: Uber, with its “big push into Africa,” is now running in 12 cities across the continent, while Airbnb is expecting to double its customers to 1.5 million in the region.

On top of that, many experts agree that profound changes have occurred in business governance in sub-Saharan Africa. A report from World Bank shows that 74% of 47 economies in SSA implemented at least one reform in the recent past, making it easier to do business.

The positive impact is not only for the new digital economy, but also for the natural resources that still contain immense potential, but are now ruled with more transparency, and thus are wide open to all investors.

Invest in Africa and Watch Your Returns Shoot Up

Think at yourself as a successful investor surrounded by wondrous opportunities in which you choose the best for your portfolio.

You can’t wait to open your financial reports, and to review again and again the upward-moving curves of your returns.

This dream can come true; the spectacular results are within your reach.

Because while most investors are totally clueless about some opportunities, you are aware that you can diversify your portfolio with amazing profits in emerging markets.

So just move forward and take decisive action to acquire those lucrative investments.

The epic returns are waiting for you.

Article by Vintage Value Investing

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Ben Graham, the father of value investing, wasn’t born in this century. Nor was he born in the last century. Benjamin Graham – born Benjamin Grossbaum – was born in London, England in 1894. He published the value investing bible Security Analysis in 1934, which was followed by the value investing New Testament The Intelligent Investor in 1949. Warren Buffett, the value investing messiah and Graham’s most famous and successful disciple, was born in 1930 and attended Graham’s classes at Columbia in 1950-51. And the not-so-prodigal son Charlie Munger even has Warren beat by six years – he was born in 1924. I’m not trying to give a history lesson here, but I find these dates very interesting. Value investing is an old strategy. It’s been around for a long time, long before the Capital Asset Pricing Model, long before the Black-Scholes Model, long before CLO’s, long before the founders of today’s hottest high-tech IPOs were even born. And yet people have very short term memories. Once a bull market gets some legs in it, the quest to get “the most money as quickly as possible” causes prices to get bid up. Human nature kicks in and dollar signs start appearing in people’s eyes. New methodologies are touted and fundamental principles are left in the rear view mirror. “Today is always the dawning of a new age. Things are different than they were yesterday. The world is changing and we must adapt.” Yes, all very true statements but the new and “fool-proof” methods and strategies and overleveraging and excess risk-taking only work when the economic environmental conditions allow them to work. Using the latest “fool-proof” investment strategy is like running around a thunderstorm with a lightning rod in your hand: if you’re unharmed after a while then it might seem like you’ve developed a method to avoid getting struck by lightning – but sooner or later you will get hit. And yet value investors are for the most part immune to the thunder and lightning. This isn’t at all to say that value investors never lose money, go bust, or suffer during recessions. However, by sticking to fundamentals and avoiding excessive risk-taking (i.e. dumb decisions), the collective value investor class seems to have much fewer examples of the spectacular crash-and-burn cases that often are found with investors’ who employ different strategies. As a result, value investors have historically outperformed other types of investors over the long term. And there is plenty of empirical evidence to back this up. Check this and this and this and this out. In fact, since 1926 value stocks have outperformed growth stocks by an average of four percentage points annually, according to the authoritative index compiled by finance professors Eugene Fama of the University of Chicago and Kenneth French of Dartmouth College. So, the value investing philosophy has endured for over 80 years and is the most consistently successful strategy that can be applied. And while hot stocks, over-leveraged portfolios, and the newest complicated financial strategies will come and go, making many wishful investors rich very quick and poor even quicker, value investing will quietly continue to help its adherents fatten their wallets. It will always endure and will always remain classically in fashion. In other words, value investing is vintage. Which explains half of this website’s name. As for the value part? The intention of this site is to explain, discuss, ask, learn, teach, and debate those topics and questions that I’ve always been most interested in, and hopefully that you’re most curious about, too. This includes: What is value investing? Value investing strategies Stock picks Company reviews Basic financial concepts Investor profiles Investment ideas Current events Economics Behavioral finance And, ultimately, ways to become a better investor I want to note the importance of the way I use value here. It’s not the simplistic definition of “low P/E” stocks that some financial services lazily use to classify investors, which the word “value” has recently morphed into meaning. To me, value investing equates to the term “Intelligent Investing,” as described by Ben Graham. Intelligent investing involves analyzing a company’s fundamentals and can be characterized by an intense focus on a stock’s price, it’s intrinsic value, and the very important ratio between the two. This is value investing as the term was originally meant to be used decades ago, and is the only way it should be used today. So without much further ado, it’s my very good honor to meet you and you may call me…
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