In this sound bite-based information age, the big news headlines emanating from Africa focus largely on negative stories: Boko Haram kidnapping school girls and exploding car bombs in Nigeria, the Westgate Mall attack and other Al Shabaab terror activities in Kenya, Mali’s separatist battles with religious zealots, South Sudan’s war-ravaged starvation crisis and ceaseless pirate hijackings in Somalia. The headlines continue to reiterate The Economist’s May 2000 cover story, which dubbed Africa the “Hopeless Continent,” a region teetering on the brink of collapse with terrorism, disease, corruption and coups the norm rather than the exception.
The broader reality of Africa today is very different from this seemingly ubiquitous negative narrative. While the deplorable acts by extremists must be given the utmost attention to resolve, they should not be allowed to distort the tremendous success occurring across the continent.
In December 2011, The Economist cover story, “The Hopeful Continent: Africa Rising,” highlighted recent successes on the continent including the rapid growth of many African countries, the increasing education level of the population entering the workforce, the enthusiasm for technology which is boosting growth and attracting the attention of international investors such as China and other non-Western countries.While Africa still faces its share of challenges, it is the missing headlines that are the real story for Africa. And it is a story of opportunity, entrepreneurialism, and hope. "How many network newscasts have been interrupted to announce that, amongst countries with more than 10 million people, 6 of the world's 10 fastest growing economies in the past decade have been African? Or that 7 of the fastest growing economies for the next five years are expected by the IMF to be from Africa?"
If only the less dramatic stories could catch the attention of today’s mile-a-minute viewers and readers: Ugandan woman can afford first cell phone. Nigerian man opens first bank account. Sierra Leone student finds employment. Kenya farmer buys crop insurance. It is these stories and the drivers behind them that excite us as investors. They may not sell newspapers or boost ratings, but they more accurately depict the transformation that is occurring on the African continent.
The drivers of this growth are numerous throughout the 55 countries that comprise this misunderstood continent. The three C’s of Frontier Markets investing – consumption, construction, and commodities – are common drivers of growth throughout the continent. Likewise, technology has had transformative effects on economic growth as well as serving as a force to combat some of the political challenges that plagued the continent for much of the last century.
Africa is now open for business. For those investors and entrepreneurs willing to look beyond the headline risk, opportunities abound.
LaGuardia is co-founder and managing partner of LR Global, a Frontier Markets investment firm founded in 1997. LR Global manages over $200 million in Frontier Markets equities globally. Meghji is founder and CEO of M-III Partners, LLC, a New York-based merchant bank and private equity firm focused on sub-Saharan Africa. Meghji is originally from Kenya but has lived in North America for the past 25 years.
