BOOK REVIEW: Africa: The Ultimate Frontier Market

THIS book by David Matean, head of corporate finance at Faida Investment Bank in Nairobi, Kenya, is subtitled “A guide to the business and investment opportunities in emerging Africa”. The emerging Africa is sub-Saharan Africa, excluding South Africa. He acknowledges the severe data gaps, but the book is an excellent guide to what has shaped this region in the past 50 years and what opportunities abound in the next 20.

As Africa has progressed from the “hopeless continent” to the “hopeful continent” over the past decade, investment managers and private equity have increasingly been drawn to the region, so this is a timely primer on what makes this region the second-fastest (after Asia, excluding Japan) growing region in the world.

The book is broken into three sections. The first is a description of the mega-trends such as demography, urbanisation and the development of capital markets. The second is laying down the enablers and covers subjects such as infrastructure, technological networking, human resource development, and reforms to the business environment.

The third describes different industries, such as farming, retail, financial services, telecommunications, transport and logistics, and manufacturing, and the opportunity for investment or development. This section was the most fact-packed, but needed the first two parts to provide context and make the case that this progress will be sustainable.

Last year, against a threatening global backdrop, most economies in sub-Saharan Africa turned in a solid performance. Growth averaged more than 5% and export shares stayed high.

Six of the top 10 fastest growing economies in the first decade of this century were in sub-Saharan Africa, while (in growth order) Ethiopia, Mozambique, Tanzania, the Democratic Republic of Congo, Ghana, Zambia and Nigeria will be in the top 10 in this decade, according to International Monetary Fund projections, quoted by Matean.

Good government policies provided space for increasingly robust private sectors to thrive. Institutions were strengthened and made more accountable, while macroeconomic policies were targeted on stability rather than short-term expedience. In addition, military and political conflicts declined, and countries benefited from debt relief.

The tone of the book is optimistic, as the hope is that any investment will result in good returns. In his preface, Matean does note he excluded the challenges, constraints, problems and threats to business in Africa, as there is far too much literature on these already.