With the United Kingdom having voted in its recent referendum to leave the European Union, many businesses with existing or planned investments in the UK will be looking to new investment frontiers. Africa’s move to diversify its economies and its rising consuming class are creating an array of new investment opportunities. Kenya, Côte d’Ivoire, Senegal, Ghana and Ethiopia are the best examples, with broad-based economic growth, young populations and rising urbanisation.
This positive outlook forms the core of the Middle Africa Fixed Income Currency and Commodities (FICC) Guidebook 2016, which Ecobank, the continent’s leading Pan-African bank, is launching. The Middle Africa FICC Guidebook contains an economic outlook for the region, an overview of the key sectors (financial, energy & soft commodities), and a detailed country-by-country guide of 41 countries in Sub-Saharan Africa.
Chi Onwurah, MP for Newcastle upon Tyne Central and Chair of the All-Party Parliamentary Group (APPG) for Africa, was one of the keynote speakers at the Middle Africa FICC Guidebook launch. She said, “The impact of Brexit on the global economy cannot be overestimated. But while we are faced with huge challenges, we also should look at opportunities for Africa. The EU’s trade agreement with Africa has been criticised for its negative effects on African industry and agriculture. The UK could be in a position to develop a more mutually beneficial policy.”
Edward George, Head of Ecobank Group Research, whose team created the guidebook, said: “Today, we only hear about the downward economic spiral in Nigeria, South Africa and Angola. But this masks the real story going on elsewhere on the continent, which is about impressive and dynamic growth. Despite the danger posed by low commodity prices and falling demand from China, new trends are transforming the region’s economies, particularly in telecommunications, fintech and services. Yes, the ‘Africa Rising’ story may no longer apply across the board, but a more textured and sober ‘Africa changing’ economic narrative is replacing it. Africa is not a country: it is 54 countries, and they are growing at different speeds and diversifying in different ways, offering opportunities for business and investment.”
The change in perception about African markets is driven in part by investors’ search for yield, which has been reflected in the rise of African sovereigns accessing the Eurobond market.
The Middle Africa FICC Guidebook provides essential information drawn from local knowledge on foreign exchange markets, interest rate products, and commodity markets, helping investors to navigate through the risks.
“Investing in Sub-Saharan Africa does come with risks, just as anywhere else in the world. Understanding these risks and how to manage them is the critical difference between success and failure,” says George.
As the UK assesses how to navigate through the challenge of a vote to leave the European Union, it is essential that investors and businesses understand the opportunities that Africa’s new economic frontiers present.