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?
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