Developing and inefficient markets will have blips but this is transient and for patient investors there are long-term rewards for those who remain in Africa, this is according to Fungai Tarirah, Portfolio Manager at Rudiarius Capital Management.
He said there were benefits for those who invested in the region with long-term prospects.
He added that challenges investors were facing in Nigeria, with regards to getting out their investments, should learn from what investors faced in other economies on the continent.
“Foreign investors are struggling to get their money out of Nigeria. This is similar to what investors faced in Egypt in the aftermath of the Arab Spring uprising,” he said.
“What we have seen in African stock markets over the last two years is significant decline in share prices. In some cases the decline has been in the region of 70 per cent. If one looks at 2009 a lot of developed markets investors where in search of huge yields, a lot of money surged in risky markets including African equities. Now the reverse is taking place.”
Tarirah warned access to foreign currency remains the top concern for top portfolio investors. Other than the currency issue he said there were other concerns.
“Global dynamics has been one element that has seen liquidity in most of the markets moving outward.”
He however warned that challenges in the region were not necessarily a mirror of what all economies were facing arguing that some industries were still performing well under these conditions.
“What we are seeing now is that Uganda has been able to push electricity penetration from nine per cent to 17 per cent and they are looking to double that in four years. Companies involved in this process are getting yields,” he said.
For more on this, watch the interview below with Tarirah and Ronak Gopaldas, Head of Credit Country Risk, RMB.