This increase has been spurred by rising demand for its minerals and oil, and presents some interesting opportunities for investors, in the view of Tommaso Bonanata, manager of the JB Africa Focus fund.
However Bononata said it is important to understand that the African growth is not simply a matter of rising commodity prices. There are also more structural positives.
“With rising educational standards, the continent is structurally changing and increasingly taking advantage of new economic opportunities. While economies such as Nigeria and Zambia are dominated by commodities, lower commodity prices could benefit consumption driven economies such as Kenya that are net importers of commodities.”
“The continent’s future growth will inevitably be driven by its consumer population,” said Bonanata. “Combined consumer spending reached $860 billion in 2008 and is forecast to reach $1.4trn by 2020, creating exciting future investment opportunities.”
Bonanata has maintained his overweight exposure to Egypt in the JB Africa Focus fund, where he believes the removal of the former president Mursi last summer was a strong catalyst for a rerating of the market.
“Egypt still faces some challenges in terms of politics and budget allocation and implementation, but if change is executed well and in a timely manner we should see a return to sustainable growth.”
To illustrate that Africa is not just a commodities play, the €27.3m fund’s top five holdings are spread across the financial services, basic materials, consumer defensive and energy sectors, with the largest position, 7.25%, in Commercial International Bank of Egypt. Overall 36% of the portfolio is in the financials sector, with Egypt the largest country position at 28%.
