Hitch Your Investments to Africa’s Demographic Freight Train

Last month, I explored the implications of Africa’s demographic dividend for stock investors.

I don’t want to belabor the topic, but if that series of posts was interesting to you then take a moment to read through “Africa’s Demographic Freight Train,” by Greg Barker of the Mauritius-based asset manager, Sustainable Capital. I found it fascinating.

All Aboard the Growth Train!

Here are some of the report’s key points:

  • Population trends are highly predictable. Like a freight train, they are rarely derailed. This makes them a highly useful complement to “bottom-up” stock analysis.
  • Economic growth tops out when a nation’s population is dominated by young adults and brakes sharply as the overall population ages.
  • Photo by Dirk Huijssoon

  • Stock market returns generally reach their peak when the population is dominated by adults in their late-40s. This age group sees retirement on the horizon and prepares for it by saving and investing, thus driving up share prices.
  • Bond returns hit their max when a population grays. Retired folks begin to shun stocks and replace them with fixed income investments.
  • African nations are among the youngest in the world, putting them at the very beginning of the above cycle. Their current age distribution resembles that of the US circa 1960.
  • Infrastructure constraints and instability resulting from high unemployment are the biggest threats to Africa’s economic and capital market growth.
  • African banks, real estate companies, and consumer goods companies are particularly attractive ways to board the demographic freight train.

There’s loads more to digest in the report, so if you’ve read this far, please do have a look.

Related Reading

15,013,767 Reasons to Be An Afro-Optimist

Why Invest In Africa? The Demographic Dividend

Here’s Why the 21st Century Belongs to Africa

5 Countries Near the Demographic Sweet Spot

Comments

  1. Dark.iNiTro says:

    I agree with you. Whole continent have big opportunities for growth and become active player in world.
    I only think that countries must be united like EU to archive big aims and improve efficiency of trade and drive up investments.
    In near future I will try to get on this train with opening broker accounts in different stocks exchanges.
    Roman, St.Petersburg, Russia.

  2. Hi – These points that you have raised regarding demographics are probably the most important reasons for investing in emerging markets. I study demographics in depth and that is why I came looking for an Investment site about Africa.

    Also, I found a site where you can lend money to African business people. It is not so much to make a return, but you can get a feel for what african business people are up to and how they are doing. An African investment gauge if you like.

    The site is called Zidisha.org.

    Regards,

Speak Your Mind