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What the budget speech hints about Africa

Written by Maurice Madiba, CEO Cloud Atlas Investing

26 February 2018

The opportunity right under our noses

In the recent budget speech on the 21st of February 2018 the finance minister announced changes to exchange control increasing foreign exposure allocations for pension funds from 25% to 30% and other institutional investors from 35% to 40%. The allocation into the rest of Africa, however, doubled from 5% to 10%.

 

The rest of Africa, as a region, has been performing exceptionally well over the past year largely driven by structural reforms taking place in the major African economies, as well as a stabilised political environment, that has seen its fair share of stress testing. African economies have spent the past few years establishing their growth prospects in the wake of low-for-long commodities prices, what this will result in, in years to come, is a plethora of stable and diverse economies able to offer investors superior returns.

This is a stark contrast to what investors have heard or experienced in the past. The mind-set around rest of Africa allocations is that of high risk, low liquidity and exorbitant cost. With that said in 2017, Africa ex-SA funds returned on average 33.8% in USD terms.

Prior to this, the opportunity of investing in Africa was reserved for managers in the active space typically domiciled outside of South Africa. Cloud Atlas Investing endeavored to list the first Pan Africa ex-SA Exchange Traded Fund during April of 2017, following this up with the listing of an African Real Estate ex-SA ETF. The opportunity is before all investors and we are making it easier to access. Imagine adding Africa to your portfolio in a way that is de-risked through diversity, safe through the mechanisms offered by Collective Investment Scheme regulation and liquid through indexation, allowing for efficient deployment of capital into and out of African markets.

Learn more about the Cloud Atlas offering: https://cloudatlasinvesting.com/cloud-atlas-offering-analysis-mar-2018/

Learn more about the African property IPO: https://cloudatlasinvesting.com/ami-real-estate-ipo/

Learn more on the circular: https://www.resbank.co.za/RegulationAndSupervision/FinancialSurveillanceAndExchangeControl/Documents/Exchange%20Control%20Circular%20No.%207-2018.pdf

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Views expressed in this article are those of the writer and not those of Cloud Atlas Investing. For comments, suggestions, complaints kindly call +2711-268-1852 or email admin@cloudatlasinvesting.com or visit our website www.cloudatlasinvesting.com.