March 10, 2011

Africa: The Best Ground Floor Opportunity for Returns Over the Next Twenty Years

Recently, Nile Capital Management's Chief Investment Officer and Managing Principal Larry Seruma gave an interview with Wychick Investment Advisors' 'Dollars and Sense' Radio Show, in which he discussed the performance and potential of African markets. You can find the interview here under the third and fourth segments on February 20th, 2011. The interview was also mentioned in Wychick's biweekly newsletter, in which the opportunity for investing in African markets was favorably compared to the opportunities in China and Russia in the 1990s. From Wychick's Newsletter: "Back in 1995, Templeton Funds released two closed-end mutual funds; one invested in China (Templeton Dragon Fund - TDF) and the other invested in Russia (Templeton Russia Fund - TRF). As a relatively new broker at that time, I was actively looking for new investment opportunities to show my clients. Though today, with the benefit of hind sight, investing in Russia or China back then seems like a 'no-brainer'; clients sixteen years ago wanted nothing to do with these 'backwards, Communist, piddly go-nowhere economies'. Though the two Templeton funds have had many rough time periods - including the Russian debt crisis in 1998 and the Hong Kong transition - a $10,000 investment in the Russia fund would be worth $98 thousand today and a $10,000 investment into the China fund would be worth $162 thousand.

So with that as a back drop, I think there are some merits to Larry's fund. Having just completed my second visit to Africa (Kenya), I can tell you that there is a lot of activity going on there. Everyone has a cell phone; and since only 10% of Kenyans have a bank account, a common method of money transfer is to send credits from one cell phone to another - the recipient just goes into a local convenience store and collects the cash. Cell phone reception in the middle of the African veldt is better than it is between Bend and Portland, Boise or Reno. I could seamlessly draw money out of my U.S. bank accounts through African bank ATM's. I know of no other markets that are as underdeveloped as Africa; Thailand, Mexico, South America and Asia are at least one decade ahead of where Africa (with the exception of South Africa) is today - the point is, if you want a truly 'emerging market', Africa provides the best ground floor opportunity to potentially see some incredible returns over the next twenty years."

For more information about investing in Africa, please contact Nile Capital Management at (646)367-2820 or

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