Investors considering entering African frontier markets should do so sooner rather than later to take advantage of the growth opportunities in the area, warned one expert.
There has been a series of high profile product launches in the African market over the past year, including Standard & Poor's S&P Pan Africa, S&P Africa Frontier and S&P Africa 40 indices last month, which have contributed to a heightening of awareness of investment opportunities in the region.
Stichbury said growth and development were evident in the continent, making investment attractive - particularly in much-needed infrastructure and consumer goods.
As an example of this, last month China signed a US$9bn deal with the Democratic Republic of Congo, which will see it provide some 2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145 health centres and two universities in exchange for exclusive mining rights to 10 million tonnes of copper and 400,000 tonnes of cobalt.
In terms of indicators of economic development, IMF estimates show a predicated average 6.8% growth in the region this year; the number of democracies grew from ten in 1980 to 34 by the end of last year; 38 Sub-Saharan nations have started privatisation programmes; and there are 50 African IPOs slated by the end of the year, half of which seem likely to be completed.
Stichbury said over a 22-month period there had been in excess of 125% return on a cumulative basis for the listed equity portion of AIG's Sub-Saharan Africa Strategy. "The potential risks are high, but the potential rewards are also high," he noted.
"Africa represents pure alpha relative to other markets," he said, but warned opportunities may no longer exist by the time the mainstream investors become aware of them and take action.
"The rewards are there for those who get in early," he stated. "Do you want to be first or last to the party?"
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