Time Asks: ’Is This Time For Africa?’
Wednesday, November 3, 2010
Sending your money to Nigeria – just not in response to a scam e-mail from a deposed ruler’s secret son – might actually be a smart move. A growing number of Wall Street pros have been talking up Africa as the next great investment. Goldman Sachs asset-management chief Jim O’Neill, known for spotting the opportunity in Brazil, Russia, India and China and coining the term BRIC, says Africa has interesting potential. Top value investor Chuck Royce has been hunting in South Africa for companies to add to his portfolio. Walmart made a $4 billion bid to buy South Africa’s Massmart.
With growth stalled in the U.S. and Europe, investors are looking at places that are poised to grow faster. Africa fits. GDP is expected to jump 4.5% this year and 5.2% in 2011, according to African Economic Outlook. The main driver is natural resources. Africa holds 40% of the world’s strategic raw materials, including gold, iron ore and oil. As China and others tap into those resources, money is pouring in. Consulting firm McKinsey & Co. predicts the consumer-goods, agriculture and infrastructure sectors could more than double in the next decade, to $2.6 trillion in annual sales.