Lessons Learned


Despite warning signs about investing in Africa and the Caribbean, there is much to cheer about. South Africa’s benchmark Top-40 index has risen nearly sharply this year, outperforming many developed and emerging markets. Excess liquidity in Trinidad and Tobago’s financial sector continues to keep interest rates low and economic growth is expected to continue this year. Investors chasing big returns have been undeterred by frequent terrorist attacks in Kenya, whose economy continues to be resilient.


What’s not to like in Africa! The continent is attracting quality investment that is expected to guarantee meaningful and sustained growth, with a growing middle class that holds great potential for direct foreign investment. Africa, it seems, has come a long way in terms of reducing risk premiums. Hard lessons learned from the 2008 global financial crisis are helping the continent to plan for the future, which is expected to be better for investors. Stock market gains are driven more by high-end investments fleeing from growing risk in China and Europe. Global shipping firm DHL believes that U.S.-Africa trade is set to continue growth in the upcoming years, as the two regions take advantage of U.S. policy that encourages sustainable development through increased trade and investment.


The Caribbean is taking a page from Africa. Jamaican Prime Minister Portia Simpson Miller used one of the many events on the margins of the United Nations General Assembly in late September to declare that her country is open for business. Addressing a group of philanthropists and business leaders in New York, the prime minister encouraged investment in Jamaica, which she said was open for business in a way that other Caribbean nations were not. In Trinidad and Tobago, the economy is projected to grow at 1.6 percent this year from 1.2 percent in 2012, according to the country’s finance ministry. The International Monetary Fund also projects a GDP growth of 2.5 percent in 2014 for T&T, which would be its second consecutive GDP growth. Moreover, plans to list several state companies on the local stock exchange would provide opportunities for medium- to longer-term investment.


Danger lies ahead, though. South African bonds tumbled recently after consumer confidence dropped to the lowest in 10 years as gasoline prices rose and labor unrest escalated. The country’s economy is struggling with ongoing labor strikes in various sectors, as well as weak fundamentals, which could make 2014 an interesting year for investors.