Africa is a strong growth story
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The earlier ‘wait and evaluate’ attitude towards Africa has been replaced with immediate action. With new capital flows from a broader and deeper pool of investors, African portfolios are thriving today and poised for sustained growth tomorrow.
Significant investment growth into Africa - coming soon
Institutional investors are rapidly growing their portfolios with fully half planning to increase investment through year-end 2025. With another 33% in dry powder standing by to fuel longer-term growth, it’s clear that the institutional investor view of Africa markets has shifted from curiosity to core strategy.
Development organizations are acting even faster, with 62% planning to invest over the next 12-24 months. Their increased investment may help the small percentage of abstaining institutional investors overcome any remaining uncertainties.
The African portfolio is growing fast
At the heart of the African growth story is the mid tier portfolio.
While the largest investors hold their African investments at a steady state, the strongest momentum is coming from mid-tier managers, who have concrete plans to increase allocations by nearly $300m in Africa during the next two years – a 40% increase.
The growth in investments from these specialist fund managers not only provides a significant capital inflow but, more importantly, it signals a growing acceptance of African investments amongst more local investment managers across North America and Europe in particular.
...with fund managers at the heart of the Africa growth story
Importantly too, it is asset managers who are the engine of the African growth story today.
While long-established asset owners and development organizations largely hold steady, asset managers expect to increase AUM by a stunning 75%. As we describe below, it is not only active portfolio managers who are bullish - but also passive (ETF) managers who increasingly see African markets as viable and worthy of their time. The broadening of institutional channels into Africa is happening - adding greater diversity of investors and increasing market resilience as a result.
Equally, wealth managers cannot be overlooked. The 5X growth of the wealth portfolio into African markets is small (in absolute terms) but it constitutes a collective source of new liquidity that is critical for Africa's growth. Directed predominantly into the region's private securities markets (see below), these wealth assets are dynamic, free of the regulatory constraints faced by mutual fund vehicles and hence able to focus rigidly on real growth opportunities.