“Africa is about 15 years behind Asia but you can superimpose its own pattern of growth on Africa. Companies such as the Indian telecoms group Bharti Airtel have already identified this opportunity and expect much of their future growth to come from the continent,” Plamen Monovski, chief investment officer of Renaissance Asset Managers, has told the Sunday Telegraph.
Monovski was commenting on Russian-based investment bank Renaissance Capital’s launch of two Africa-focused funds, the Pan African Fund and the Sub-Saharan Fund.
“Both funds are equity funds and they look to capitalise on the absolutely enormous opportunity of Africa, which we see as one of the most attractive destinations globally,” he said in an interview with CNBC Africa.
“We have been very thoughtful in launching these funds. We thought, ‘which are some of the best opportunities that would make money for our clients in the long term?’ To us Africa is a no-brainer, it is incredibly cheap . . . The GDP growth is broad-based, and there is a very substantial political change. The trend of improvement in governance is established now and the world focus is now gradually shifting to Africa. You can see media attention is picking up, and that is always helpful in driving foreign direct investment,” he said.
Answering a question by CNBC on which industries and sectors hold the most opportunities for these funds, Monovski said that the firm sees potential in the African consumer. “A lot of people think that African growth is commodity-based. To us this is simply not true. Just a third of [Africa’s] growth is commodity-based. The majority of it is really the new large consumer force in the world, which of course is poorer than other places in the world but the assets we are buying are appropriately priced,” he explained.
Commenting on company reporting problems and stock exchange regulatory issues in many African countries, Monovski said: “Of course regulation and reporting are imperfect but I have no doubt that as time progresses, as wealth in the region increases, and as more international investors try to access those opportunities, they will demand stronger regulation. And again, the imperfect regulation is in the price of the assets. If regulation was like in the developed world . . . the share prices would not be trading at those levels.”