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Emerging Markets: Mutual Fund Opens Opportunities for Investment in Africa

"Africa is generally not the misery-stricken place it is portrayed. Instead Africa is a growing economic region with rising business centers and a growing consumer class.”

| BY Donald Liebenson

Is Africa a missed opportunity for investors in emerging markets?

In comparison to other continents and countries, primarily Europe and China, it barely registers among U.S. Millionaires interested in investing overseas, according to Spectrem’s Millionaire Corner research.

The horrific news out of Nigeria is only the latest example of negative perceptions that tarnish Africa’s image around the world and that make it difficult to encourage business and investment there.  But that is not the Africa that Robert Scharar, President of Houston financial planning and investment firm, FCA Corp., knows.  During one trip there, the van in which he was riding got a flat tire, stranding him out in the country. “A man comes walking by and asked if we would like some help,” Scharar recalls. “He said there was a phone five kilometers (back where he came from). We asked, ‘But aren’t you heading in the other direction?’ He said, ‘Yes, but you need help.’ Time after time I run into that kind of hospitality.”


FCA Corp has more than two decades of experience as an investor in Africa. Scharar launched the Africa Fund (CAFRX), which is believed to be one of only two open-end Africa funds available in the United States which focus exclusively on Africa and whose management is based in the United States.  Launched in 2011, the Africa Fund is one of five international Commonwealth mutual funds on which he serves as Senior Portfolio Manager. The others are Australia/New Zealand, Japan, the Global Fund and Real Estate Securities Fund.

“Africa has been a difficult place to invest, but that is becoming less so with each passing year, and we see Africa today as an opportunity,” Scharar says. “One of the misperceptions about Africa is that people talk about it as if it was a country and not a continent. The people differ, the terrains differ, the cultures differ. There are a lot of opportunities and a lot of success stories. If you go to South Africa, for example, you have an established stock market has been around for 150 years. There are many world-class companies that trade on that stock exchange, such as SABMiller Breweries. You’ll find in many African counties global accounting firms that have been in residence there for up to 70 years, which is longer than in China.”

News about Africa is dominated by natural disasters (famine), man-made tragedies (wars) or controversies (diamonds). Scharar cautions against painting Africa with a wide brush. “The business and political climates are improving,” he states. “There is more transparency in government. Yes, there is corruption in some places, but that is not unique to Africa. The southern region of Africa has really made great strides to make it easier to do business in the region. We’re seeing a lot more cross-border cooperation.”

In addition, he continued, the accounting by African companies is done on international accounting standards. “You can get reports and other information. Business regulation is not unreasonable there. Information is reasonably reliable. There are legal frameworks for enforcing agreements and contracts. There is redress.”

Those who do their research into the country will find “a rapidly expanding population of younger, more educated people,” Scharar observes. “You have a growing consumer class with the same aspirations as we do in terms of improving their lifestyles and families’ well being, and you are seeing innovative ways that demand is being met.”

Beyond oil and gold, Africa has other resources that can be developed successfully, “There is an abundance of land that is farmable, much more so than people realize,” Scharar says. “Much of the country has access to water to grow crops.”

Among the hottest sectors in which to invest are communications, transportation, retail level delivery of financial products, and infrastructure, Scharar notes.

According to projections by the International Monetary Fund, Africa will have the worlds’ fastest growing economy of any continent over the next five years. It is one of the few regions that avoided recession in 2009. But while there is much value in Africa, there are also lingering concerns about the risks involved in investing there. “Africa has long been seen primarily as a region of economic stagnation, civil war, disease and poverty,” Scharar says. “Although this may still be true in a few areas, it is generally not the misery-stricken place it is portrayed. Instead Africa is a growing economic region with rising business centers and a growing consumer class.”

Related story: International investing pros and cons.

About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.