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FINANCE

AFRICAN LIONS

Ten years from now, everyone will be talking about “African Lions.” Investing in them now will lead to massive gains.

TED BAUMAN

BANYANHILL.COM

 

When I speak of investing in “African Lions”, I don’t mean the legendary king of the jungle. You see, the global economy’s center of gravity is shifting. Over the past few decades, it’s been transformed by the economic revolution in East Africa.

First there was Japan’s rapid post-war development. Then came South Korea, Taiwan, Hong Kong, and Singapore. These were called the “Four Asian Tigers.” Then, spectacularly, China.

In the decades to come, the east of another continent – Africa – will be the world’s premiere growth hot spot.

Part of this is pure mathematics. Countries starting from a law base always grow faster than those further along. And since two-thirds of GDP growth is determined nu population growth, Africa’s bubble of young people will guarantee high growth rates.

The three English-speaking countries in East Africa – Kenya, Tanzania, and Uganda – have good literacy levels and a large, young, cosmopolitan middle class. Mobile banking access across the region – which facilitates fast payments and thus commerce – has created a vibrant local economy in both urban and rural areas. East Africa was connected to the global fiber optic network in 2009. This gives the region strong data infrastructure. Combined with a strong stock of technical skills, this has boosted the tech sector, attracting foreign investment.

My investment vehicle of choice is an exchange-traded fund (ETF) called the VanEck Vectors Africa Index ETF (NYSE: AFK). AFK includes Africa’s top companies. Ten percent of its holdings are in Kenyan companies.

I predict that in coming years we’ll see more ETFs with exposure to the African Lions.