African equity exchange-traded funds have soared over the past year, as the resource-rich continent is growing fast, with low debt levels and a youthful and increasingly middle-class demographic.
Global consultancy Ernst & Young believes Africa is the second-most-attractive investment destination, behind the U.S. And Arthur Childs from Arch Financial Planning regards the best place to venture into for large capital investments is the African construction industry.
Four reasons to invest in the African construction industry are:
1) Africa’s construction industry has exciting deals: As the continent grows there is also an increase of population that also has an increase in infrastructure demand.
2) Expanding economy: The International Monetary Fund predicts that seven out of 10 of the world’s fastest-growing economies between 2011 and 2015 will be in Africa. Many sub-Saharan countries’ growth is predicted to rise from 5 to 5.5% per year as they emerge from the financial crisis.
3) Low debt levels: According to the world bank 2014 report Africa has better debt to GDP levels than some developed countries, for instant U.K.’s debt level is 77% whereas Nigeria’s is just 16% and Kenya at 12%.
4) Africa’s construction Industry has low correlation compared to other markets:
Africa’s construction industry is relatively uncorrelated to developed and emerging equity markets, with a correlation of 0.27. Deloitte’s report on the construction industry 2014 considers that the construction industry has not been fully exploited and offers lower competition rates.
