Imara Holdings was last week upbeat about the economic prospects of the African continent as it launched its new product ÔÇô the Africa Opportunities Fund ÔÇô aimed at luring funds from the sub-regional into regional economic activities.
The fund, which got Bank of Botswana’s approval recently, is looking at medium term investments within the region, with low risk and an estimated return of about 15 percent per annum.
“The greatest opportunities are all here in Africa. Africa presents the best investment opportunities in this century and going forward,” John Leggard, a director at Imara Holdings said.
His comments come at a time when most of the African countries are registering a growth rate of four-to-five percent in the past five years which is supported by a single digit inflationary ratesÔÇöin exception of Zimbabwe ÔÇö and strong performances by their stock exchanges.
“ Political and economic change will be key for Africa and we believe the same is happening in Africa.
“The other most important thing working in favour of Africa was the G8 initiative that wipped out Africa’s debt,” he added.
The Group of Eight most industrialized countries reached an agreement in 2005 at its summit in the United Kingdom to wipe out Africa’s debt in support of Britain’s Commission for Africa. The commission’s aim is to help Africa, the poorest continent on earth, to reduce poverty within the next nine years and help to make it compete favourably in the international economy.
He said, in the African context, pension funds are no longer looking at treasury bills since they are increasingly becoming white vanilla and in turn are more interested in stock exchanges to get higher returns.
Some of the most interesting developments are in the mining sector which is supported by strong demand in the commodity market largely helped by the demands from Asian countries, especially China and India. The moves have resuscitated economies of countries, such as Zambia, where a number of mining houses are now looking at the stock exchanges to raise capital.
“The greatest problem that we have in Africa is that of policy uncertainity, which, in turn, has motivated companies to look for quicker returns,” he said.
Speaking at the same occasion, Imara Asset Management Botswana Managing Director, Maleho Mothibatsela, said the new product has been able to outperform a number of benchmarks, including the MSCI on US dollar terms.
He said, in a bid to enhance the image of the fund and its excess to other developed markets, they have applied for the Irish listing which is expected to be approved before the end of the year.
Ireland presents a lot of incentives since it has an International Financial Services Centre (IFSC) and the fund will be able to tap into the European market.
Mothibatsela has said Botswana pension funds will now become a focus area for the fund’s marketing effort which attracts European private and institutional investment to Africa.
“Within Africa we sense growing sentiment ÔÇô specifically in stable, growth-oriented jurisdictions such as Botswana ÔÇô that it is time for Africans to demonstrate their faith in the future and in the progress being achieved by the reform-minded, high-potential economies of Africa.
“The Imara African Opportunities Fund is the ideal vehicle for participation in the strong investment upside we have seen this last year in several African markets. We’re delighted that the registration has been granted and we have a chance to introduce Botswana institutions to the exciting investment potential across this continent of ours,” he said.
This comes at a time when the pension fund industry in the country is valued well over P 23 billion and has limited opportunities for investment.