When New Star launched the Heart of Africa fund amid a blaze of publicity in November 2007 it seemed what we once called the Dark Continent would become the next big investment story.
Little more than a year later, however, dealing in the fund was suspended as investors spooked by the financial crisis and rocked by instability in Ghana and Nigeria fled to safer shores. A now stricken New Star closed the fund - down by more than 50 per cent - in early 2009, suggesting all bets were off as far as retail exposure to Africa was concerned.
So there was an element of surprise when three years later emerging markets guru Mark Mobius decided the time was right to embark on an African adventure.
The Templeton Africa fund was launched in April 2012 to capitalise on what Mr Mobius saw as rapid growth prospects driven by an “improving investment environment, better economic management and rising demand for the continent’s resources”.
The Templeton Africa fund is just one of several specialist Africa funds to have launched over the past three years, over which time the assets held in Africa-focused equity vehicles have soared past the £1.5bn mark.
That figure seems certain to rise quickly as investors dismayed by sluggish emerging markets performance turn in growing numbers to the next frontier. And Africa is in many ways a typical new frontiers market, with its investment potential framed in terms of a young and rapidly growing population that is becoming increasingly urbanised.
“The African Development Bank estimates that the urban share of Africa’s population has doubled from 19 to 39 per cent over the past 50 years; the continent’s population is set to rise to at least 2.4bn by 2050,” says Neal Caldwell, investment manager at Anderson Strathern Asset Management.
Indeed, Morgan Stanley research last year estimated that sub-Saharan Africa will account for 30 per cent of the growth in the world’s population of 20 to 64-year-olds over the next two decades.
As Mr Mobius said on the launch of the Templeton Africa fund, “there are of course many challenges to investing in Africa, but it is all about growth”.
His view is underscored by strong GDP forecasts. The African economy (excluding Libya) is forecast to grow by 4.8 per cent this year and by 5 to 6 per cent in 2015, according to the African Outlook 2014 report for the Organization for Economic Co-operation and Development (OECD) and the United Nations, up from 4.2 per cent in 2013.
The rate of growth will be strongest in western, eastern and central regions, which will expand by 6 per cent or more, it said.
