AFRICA IS THE NEW FRONTIER OF EMERGING MARKET. President Donald Trump must have ran across this news and it infuriated him.
Although White House statement regarding Trump’s comments stated, “the president did not use profanity to describe America’s trading partners. “Like other nations that have merit-based immigration, President Trump is fighting for permanent solutions that make our country stronger by welcoming those who can contribute to our society, grow our economy and assimilate into our great nation,”
Contrary to President Trumps outlandish sentiments, Africa is the new frontier of emerging market investors. It is home to ﬁve of the fastest growing economies in the world with fourteen economies that have a GDP exceeding 5%.
African trade has increased three fold over the past decade reaching USD 1.5 Trillion. This extraordinary growth is expected to continue at 10% annually. African trade represents only 3% of the global trade at present. With minimal default rates, African trade is in line with the international default rates of less than 0.1%, despite higher costs of borrowing.
According to Africa Trade Finance Ltd an Appointed Representative of Gallium Fund Solutions Limited,
which is authorised and regulated by the Financial Conduct Authority states:
We believe the availability of funding and supply from international lenders does not meet the upsurge in demand tied to infrastructure projects across all sectors.
In our opinion this shortage of ﬁnancing continues to create a funding gap, which provides an opportunity for investments to beneﬁt from higher yields compared to other emerging economies.
We conclude this shortage provides an opportunity for partnership between traditional and non-traditional lenders.
According to Emerging Capital Markets: The Road to 2030
The most significant improvement was observed in China (the score improved by 1.3 points over eight years) followed by Turkey, the Philippines, South Africa and Saudi Arabia. Meanwhile, Hungary and Korea underwent a meaningful deterioration in local perceptions (by 0.7 and 0.6 points, respectively) and Russia, Malaysia and Indonesia registered a minimal (0.1 point) erosion in domestic opinion. As of the 2013/14 survey, South Africa, Malaysia, Taiwan, India, Chile and Saudi Arabia score the high- est on domestic perceptions of overall financial market development while Russia, Egypt, Korea, Hungary and Colombia have the least favorable survey results. Figure 1 Emerging market share of global GDP (%) Source: IMF forecasts, Credit Suisse research Figure 2 Emerging market share of global equity and sovereign and corporate bond markets (%) Source: Thomson Reuters, WFE, BIS, Credit Suisse research
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Courtesy of Africa Trade Finance