Imara opens up African investment bonanza for SA saver-investors

Huge investment gains in China this last 20 years could be replicated or topped in some high-potential African frontier markets in the coming decades and South Africans deserve an opportunity to share in the bonanza.

This was the upbeat African assessment from Imara S.P. Reid as the Illovo-based stockbroker opened up its ‘Africa direct’ service to the investing public at large.

The firm identified the retail opportunity after observing the growth of Africa-wide investment facilitation services offered by Imara Africa Securities, it’s institutional trading division to big institutional investors, fund managers and major investors from North America, Europe the Middle East and South Africa.

The retail platform opened up by Imara S.P. Reid will ensure that institutional investors no longer have exclusive access to Africa-wide investment opportunities.

Via Imara S.P. Reid, South African retail investors gain direct access to 17 stock exchanges across Africa. They will be able to buy shares and/or bonds on these exchanges and develop their own African investment portfolios without recourse to unit trust funds.

Simon Reid, Head of Imara Africa Securities, said the long-term opportunity was particularly attractive for those looking to cash in on “the African century”. Short-term gains could also be exciting.

In the six months to the end of April, the Ghana stock exchange was up 61.31%, the Uganda exchange was 28.81% higher, Kenyan shares showed similar gains while Nigerian equities were up 25.06%. Zimbabwe’s Industrial Index showed a 2445% gain for the period.

Unfortunately, the vast majority of South African retail investors had missed out on recent growth opportunities.

FAIS-regulated Imara S.P. Reid Stockbrokers has now addressed this gap in the market.

Retail investors looking for direct Africa exposure first become clients of Imara SP Reid and complete the standard FICA and Know Your Client processes. After that, their investment capital is kept in the JSE Trustees Fund in high-yield money market instruments until their share or bond transactions are complete.

They can then track performance via the firm’s online systems.

Reid said commitment to African markets clearly entailed investment risk and past performance was no indicator of future results. However, Imara S.P. Reid was confident there was huge pent-up demand for direct exposure to African equities and, in some cases, bonds.

He added: “We know because we developed the retail service in response to individual requests from clients.

“In the six months to the formal launch of our ‘Africa direct’ service we received more than R150 million from retail investors eager to diversify into African markets.”

Imara S.P. Reid has custodial and execution capabilities on 17 stock exchanges across Africa. Trades are executed, data recorded and performance tracked by the firm’s computerised trade and track system.

Reid noted: “Since the system first developed by Imara Africa Securities went live two years ago it has enabled many major institutions and large global clients to take substantial positions in selected African markets.

“Many large investors regard Africa today in much the same light as they regarded China in the early 1990s. China was then a new, exciting, but little explored investment market with a population of about one billion consumers.

“Last year, Africa’s population also topped the one billion-mark. Those consumers – many of them young and upwardly mobile – are driving up domestic demand for a wide range of goods and services. Meanwhile, infrastructure projects, agriculture and resources create additional opportunities.”

These strategic factors have attracted huge inflows from some of the world’s most sophisticated investors.

“Now the ordinary investor also has a chance to diversify into Africa’s frontier markets,” said Reid.

“The wealth-building opportunity is substantial, but we don’t view Africa as a get-rich-quick environment.

“Some income investors will be keen to explore the potential for higher yields, but we believe the investors who maximise the African opportunity will be those who embrace Africa as a diversification opportunity, buy equity in good companies at attractive valuations and stay invested for the long haul.”

Imara S.P. Reid and Imara Africa Securities are members of the pan-African Imara financial services group.

• Imara is an independent, Botswana-listed investment banking group that prides itself on objective decision-making in the service of its clients. The company is mid-sized and has offices in Angola, Botswana, South Africa and the UK and associate offices in Malawi, Mauritius, Zambia and Zimbabwe. Imara has also partnered with Chapel Hill Denham in Nigeria, Sterling Bank in Kenya, Namibia Equity Brokers and Mac Capital in Dubai.

The Group is an active participant in Africa's financial markets and maintains extensive research coverage of regional equities.

Imara provides a range of specialised financial products and services that can be broadly categorised as:

 Asset management (institutional and private client)

 Corporate finance and advisory services

 Securities

 Trust and administration services

Imara Group subsidiaries are regulated by: NBFIRA in Botswana, the FCA (UK), the FSB, JSE, SAFEX (South Africa), US SEC, FSC BVI, ZSE and Reserve Bank of Zimbabwe, the FSC (Mauritius) and the Reserve Bank of Malawi.