Despite slow economic growth – partly owing to political instability in Africa – Pension funds in the continent are growing and evidently have the financial muscle to invest in large national projects, and fund managers are doing just that.
Infrastructure projects are seemingly the focal point of fund managers investing in Africa, making this a significant break-away from the tradition of primarily investing in local, fixed income bonds.
The African pensions funds are estimated to be holding US$334 billion in assets, and it is reported that just 4 countries hold 90 percent of these assets, and they are Nigeria, South Africa, Namibia and Botswana. This reality sparks fears that significant amounts in investments will be primarily channeled to these evidently lucrative markets and in the process suffocating the rest of the ‘smaller’ countries. The onus is on local fund managers to decide to localise their funds.