“Don’t put all your eggs in one basket” is probably the most important rule of investing. For example, anyone who invests all of their assets in a single asset class or geographic region is exposed to a high risk of loss. Investors distribute the risk of loss through risk diversification. Losses on one investment can be offset by gains on another.
East Africa is particularly well suited for risk diversification because it is one of the fastest growing and most stable frontier markets in the world. This enables East Africa to absorb economic shocks better than highly developed economies.
Comparison of growth regions Africa
African Free Trade Area (AfCFTA)
The African Free Trade Area (AfCFTA) is probably the most important African joint project. The intra-African tariffs are currently 6.9%. This and other trade barriers , such as different product standards, are one reason why intra-African trade currently only accounts for 17% of all-African trade. Due to AfCFTA, common standards are created and 90% of tariffs on goods are abolished. This creates a $ 2.5 Afrika fonds investieren sales market.
SIGNIFICANT INCREASE IN INTRA-AFRICAN TRADE
Due to falling costs and the corresponding increase in competitiveness, a significant increase in intra-African trade is expected – African industrialization will continue to advance. The manufacturing industry in particular benefits. A significant strengthening of the middle class is also expected. East Africa will benefit particularly strongly from AfCFTA because it is already economically strong.
Change of mentality
The African continent is characterized by a culture of donations that has lasted for decades. Because the western world has felt called to do “good” in a variety of projects. However, this has led to mental dependencies on the African side that inhibit innovation and initiative. However, Africa is now in a state of upheaval.
The President of the East African country Rwanda, Paul Kagame, summed up the change in African mentality: “We in Africa have now understood that trade and investment, not financial aid, are the pillars of our development.”
Other African leaders also embody this change. The Ghanaian President Akufo-Addo underlined : “We can no longer align our policies with what we can get from the western world. This has not worked in the past and will not work in the future. It is our responsibility to develop our nations independently. “
A good example of the move away from the dependency mentality is the creation of the African free trade area. A more abstract example is the planned renaming of Lake Victoria in East Africa. The petition in the neighboring countries Kenya, Tanzania and Uganda is justified by the fact that the lake is a regional cultural asset and should not bear the name of a person who was an advocate of the slave trade.
africa mentality change kagame rwanda mlc properties
Interview with Rwanda’s President Kagame
Investors who want to participate in the African boom can fall back on various equity funds and ETFs. The following equity funds have a weighting of around 10% in Kenyan stocks and thus East Africa: DWS Invest Africa LC , JPM Africa Equity and Robeco Africa Fund . The ETF DB X-Trackers MSCI EFM Africa TOP 50 Capped Index also invests in Kenya with around this weighting.
There are also alternative investments. For example, GreenTec Capital invests in innovative and sustainable African startups, including in East Africa in digital logistics solutions or innovative and sustainable feed solutions for fish. The provider MLC Properties enables investors to participate financially in real estate projects in the East African countries Rwanda and Tanzania via the limited partnership MLC Properties East Africa.