Africa’s journey from when it was tagged as the “The Hopeless Continent” on the cover of The Economist in May 2000 to December 2011, when the same publication put “Africa Rising” on its cover (and then “Aspiring Africa” in March 2013) has been anything but boring. Africa has become the newest destination for emerging markets investors. From 2000, according to the World Economic Forum, “half of the world’s fastest-growing economies have been in Africa.” Ghana and Ethiopia showed real GDP growth of over 8% in 2018. 


  • Over the last 20 years, Africa has gone from being seen as a “hopeless continent” in terms of its financial potential, to an interesting prospect for emerging market investors.
  • The continent has extensive natural resources, a young and increasingly educated workforce, more stability in terms of governance, and more prospects for economic growth than in years past.
  • For new investors looking to make a small investment, mutual funds or exchange-traded funds make the most sense.
  • More experienced investors may also consider American depositary receipts (ADRs) as a way to participate.

Vast Natural Resources

The African continent is incredibly rich in natural resources. It has huge, untapped reserves of natural gas and oil (10% of the world’s reserves) and largely unexploited hydroelectric power. It is home to vast gold, platinum, uranium, iron ore, copper and diamond reserves. Currently, only 10% of Africa’s arable land is being cultivated, yet it holds around 60% of the world’s cultivable land. As such, Africa has become a magnet for foreign direct investment (FDI).

Africa also has the advantage of a large and relatively cheap educated labor force. The continent is undergoing a demographic transformation, with youth as its theme; there is a very high proportion of Africans in their 20s and 30s with fewer dependents – both old and young – that will play out over the next decade.

There is stability in terms of governance; the countries that witnessed terrible periods of unrest have emerged as success stories. There are better policies in place, trade has improved and so has the business environment.

According to the World Economic Forum, by 2030, over 40% of Africans will belong to the middle or upper classes, and there will be a higher demand for goods and services. In 2030, household consumption is expected to reach $2.5 trillion, more than double that of 2015 at $1.1 trillion. 

Much of that $2.5 trillion will be spent in three countries: Nigeria (20%), Egypt (17%) and South Africa (11%). But Algeria, Angola, Ethiopia, Ghana, Kenya, Morocco, Sudan, and Tunisia will attract companies seeking to enter new markets. The sectors expected to grow the most in the next 30 years are food and beverages, education and transportation, housing, consumer goods, hospitality and recreation, healthcare, financial services, and telecommunications.

Stocks Mirror the Economy

Sub-Saharan Africa has around 29 stock exchanges representing 38 countries including two regional exchanges. These exchanges have a lot of disparity in terms of their size and trading volume. The continent has a handful of prominent exchanges and many new and small exchanges that are characterized by small trading volumes and few listed stocks. Efforts are being put in place by all countries to boost their exchanges by improving investor education and confidence, improving access to funds, and making the procedures more transparent and standardized. The table below depicts the dollar-adjusted returns (as of 2018) of select stock exchanges in Sub-Saharan Africa (listed alphabetically).

Botswana Stock Exchange-1.2%-13.6%-24.9%-28.7%-31.0%-18.5%
Dar es Salaam Stock Exchange-2.2%-4.0%-18.5%-21.5%9.0%-15.8%
Egyptian Exchange-9.7%-9.0%-20.9%N/AN/A-12.3%
Ghana Stock Exchange-6.0%8.9%10.3%-38.8%N/A3.5%
Johannesburg Stock Exchange-10.0%-19.4%-15.3%-26.4%58.3%-31.0%
Lusaka Stock Exchange-0.5%-13.7%-3.8%-51.3%-37.3%-16.1%
Malawi Stock Exchange-3.0%33.1%31.8%18.3%N/A28.0%
Nairobi Securities Exchange-4.5%-9.2%5.2%-9.1%73.1%-14.5%
Namibian Stock Exchange-2.4%1.1%20.5%30.2%171.8%-12.6%
Nigerian Stock Exchange-1.1%-12.2%-39.0%-62.2%-71.7%-15.8%
Rwanda Stock Exchange-2.5%-4.6%-36.4%N/AN/A-6.5%
Stock Exchange of Mauritius0.3%1.9%23.7%-1.9%61.3%0.1%
Uganda Securities Exchange-3.4%1.7%-8.9%-26.7%32.9%-13.4%
Zimbabwe Stock Exchange28.9%-0.6%291.4%144.2%N/A58.1%


How To Invest

African stock markets come in different flavors, and they require deep understanding to select the appropriate stock exchange. Investing through a mutual fund or exchange-traded fund (ETF) is a better bet for small investors looking to taste a bit of Sub-Saharan Africa.

Direct Access

The way to directly access African stocks is to open a local brokerage account. This can be a bit complicated, as investors need to shortlist stocks, as well as stock exchanges. Some of the brokerage firms that cater to foreign investors interested in a single country include:

Tanzania: Orbit SecuritiesVertex Securities;

Kenya: Faida Investment Bank;

Ghana: CAL Brokers, FirstBanc Brokerage Services and Stanbic Bank Ghana Brokerage 

Nigeria: Zenith SecuritiesMeristem and Cowry Securities;

Zimbabwe: EFE Securities and Lynton Edwards;

South Africa: Nedbank Online Trading and Sanlam iTrade.

Some of the noteworthy companies across different exchanges are KenolKobil Ltd.Dangote Cement PLCCRDB BankNational Microfinance Bank (NMB), African AllianceBank of Kigali, Bralirwa Ltd., Equity BankKCB BankARM CementEcobankUBA PlcCIC InsuranceBritamCourteville Business Solutions PLC and Naspers Ltd.

The Johannesburg Stock Exchange (JSE) is the largest stock exchange in Africa by market capitalization.

ETFs and Mutual Funds

Investing via ETFs and mutual funds comes with the built-in advantage of ease (traded on U.S. exchanges), diversification and professional management. Some of the prominent ones are:

  • The Market Vectors Africa Index ETF (AFK), which tracks some of the largest and most liquid stocks in Africa. It holds about 114 stocks and has a country allocation of Egypt (21.4%), South Africa (20.7%), Nigeria (15%), United Kingdom (12.6%) and Morocco (6.6%).
  • The SPDR S&P Middle East & Africa ETF (GAF) is allocated 78.39% to South Africa, followed by the United Arab Emirates (8.23%), Qatar (7.72%), Egypt (3.97%) and Morocco (1.61%).
  • The iShares MSCI South Africa Index (EZA) is allocated 99.5% to mid-sized and large companies in South Africa in the financial, consumer discretionary and telecommunication services sectors.
  • The Market Vectors Egypt Index ETF (EGPT) gives access to Egypt, the third-largest economy in Africa, with an allocation of around 85%. The remainder is spread to geographically diversify across Luxembourg, Canada, and Ireland.
  • The Global X Nigeria Index ETF (NGE) concentrates on Nigeria with financials, consumer staples, energy, materials, and industrials as the top sectors.
  • The Cloud Atlas Big50 ex-SA ETF (AMIB50:SJ) is an ETF domiciled in South Africa. The exchange-traded fund invests in 50 representative companies across the African continent, excluding South Africa, through 15 African stock exchanges.

Mutual funds that invest in Africa include the Alquity Africa Fund (ALQAFBG:LX), Investec Pan Africa (INVPNAS:GU), Neptune Investment funds II – Neptune Africa Fund (NEPAFRB:LN), JPM Africa Equity (JPMAACU:LX), Commonwealth Africa Fund (CAFRX) and Nile Pan-Africa Fund A (NAFAX).

For market participants new to investing in African companies, mutual funds and ETFs are the safest bet, followed by the American Depositary Receipts of select companies.


American depositary receipts (ADRs) are a good way for investors in the United States to pick select African stocks trading on U.S. exchanges. Many of these are natural resources plays, such as AngloGold Ashanti (AU), DRD Gold (DRD), Gold Fields (GFI), Harmony Gold (HMY), Randgold (GOLD), Sibanye Gold and Sasol (SSL). All of the previously mentioned companies are in mining, with the exception of Sasol, which is in the oil and gas business. In addition, MiX Telematics (MIXT) is in the logistics technology business. There is a wider universe of African stocks that trade on the Pink Sheets or over-the-counter (OTC) market. Pink sheets are less regulated and are traded in thin volumes.

The Bottom Line

Africa still has a lot to combat. Political and social unrest, lack of infrastructure and poverty are common problems. But the bigger picture portrays the continent’s progress; increasingly, there is political stability, economic growth, and advances in its banking systems, with better accounting and transparency. There is increasing demand from its growing middle class, and local companies are filling that need expanding. Nobody can predict the growth trajectory with accuracy, but Sub-Saharan Africa is poised for growth.

Disclosure: The author did not hold any of the mentioned stocks/funds at the time this was written.


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