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Friday, May 02, 2008

Africa Investment Horizons

By Rob Katz

Carol Pineau 1As I turned the corner, it appeared almost out of nowhere - a monument to the successes (and failures) of capitalism - the New York Stock Exchange. I had ventured downtown to attend the premiere of Carol Pineau's new documentary, Africa Investment Horizons, which was being screened inside the Exchange. As first impressions go, you could do no better: it's impossible not to take Africa's investment potential seriously when you're talking about it inside the center of the financial universe.

Even the security line was interesting: long but vibrant, an impromptu salon of Africanists, investors, expatriates and activists, all of whom share a passion for the business of Africa. Not surprisingly, I saw a number of base of the pyramid and NextBillion allies: Liz Wald, of EDI Imports; Emeka Okafor, of TED and Timbuktu Chronicles fame; Joy Sun, COO of Market for Change. This was going to be a good event.

Carol Pineau 2 Before screening the movie, we heard from Carol Pineau, its director. Pineau's previous film, Africa: Open for Business, came out in 2006 and served to shine a spotlight on the quantity and quality of business opportunities in Africa. (Both high, by her estimation, and underexploited.) That conclusion was a natural starting point for Africa Investment Horizons: if there were high-quality, under-exploited business opportunities in Africa, wouldn't that be a recipe for solid returns?

For the next hour, the audience heard again and again about the fantastic returns delivered by the Botswana Stock Exchange, the Ghanaian mutual fund market, Africa focused investment funds, and a number of other vehicles. The movie features experts who regularly speak about return rates in the eighties, nineties and even triple digits.

I left the movie encouraged and enthused about investing in Africa, but also curious: if the returns on investment in Africa are so fantastic, why are so few investors getting into the space? Maybe it's an image problem - perpetuated by the mainstream media - whereby most of us know Africa only in terms of war, famine and strife. If that's the main barrier, then this movie should help paint a more accurate, optimistic picture of the investment landscape.

That said, there are very real, structural issues at hand in many African economies. The bottom spots on the Doing Business rankings are all taken by African countries, a good litmus test for "don't invest here." On the other hand, India, Brazil and Indonesia all rank in the bottom quartile of the rankings, and they are some of the fastest-growing, most invested-in economies in the world, delivering sometimes similarly dizzying returns.

If it's an image problem, then I'm glad to have been at the premiere. After all, as more and more investors stream in to Africa, the returns are bound to return to earth. With that in mind, I've just invested in an African mutual fund...we'll see how things go.

Additional coverage of Africa Investment Horizons:
Timbuktu Chronicles
Grandiose Parlor
African Loft
It Takes a Village

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