The past month has seen a number of interesting developments in the African investment space, but, it being December perhaps we should recap on some of the major themes throughout the year.  

2011 was often a year of celebrations. Sierra Leone and Tanzania commemorated their 50th independence anniversaries, with both arguably in better health than many a year before. In November the IMF said that it expects Sierra Leone's GDP to grow by more than 50 per cent in 2012, while a recent UK-Tanzania investment summit - which a number from our London office attended - saw abundant interest in the country's energy (gas), agricultural and mining (gold, diamonds, rare earths and nickel) sectors.

National elections too have largely been positive stories for the investor, the drawn-out spectre of Cote d'Ivoire and the DR-Congolese elections notwithstanding. It should be some comfort that trouble in these countries had long been predicted, and thus came of no real shock to even the half-seasoned African observer.

Conversely, the positives of a relatively peaceful continuity of power in Africa's most populous country, Nigeria, and change, in Zambia (where the incoming President Michael Sata's previous populist streak has largely been co-opted by existing mining interests) should be congratulated. In their respective regions, both countries are now increasingly well-positioned to be major recipients of FDI.

Economically-speaking, the latter half of the year in particular was disappointing, and so too was this reflected in our equity class performances this past month. Many currencies depreciated significantly, some hand-in-hand with European travails, perhaps suggesting increasing local market correlation with developed markets. In some cases also, a lack of confidence in domestic monetary policy (esp. Kenya, Nigeria and Uganda - see chart below), together with drought-prompted inflationary pressures, has proved a very difficult cocktail to manage.   

Click Image to enlarge. Image: Bloomberg LP

It is, however, worth retaining a sense of perspective in all this volatility. The commodities super-cycle remains alive in Africa despite the best efforts of a double-dip in the West. For instance if one looks at a basket of key commodities, we can see that we are still some distance away from the depths of 2008/9.

Copper (3 month LME)
31/12/2008: 3070

13/12/2011: 7815

Change: 254.56%

Zinc (3 month LME)
31/12/2008: 1208  

13/12/2011: 2003

Change: 165.81%

Coffee (Generic robusta LIFFE)
31/12/2008: 1522  

13/12/2011: 1885
Change: 123.85% 

Gold (Spot)
31/12/2008: 875.32  

13/12/2011: 1665.03

Change: 190.22%

Resilient commodity prices only bolster our belief that African commodity trade finance is a true investment strategy for our time. And It is clear too in this context that, locally speaking, others are getting rich. For instance Forbes magazine, that American arbiter of all things wealth and power, saw fit for the first time last month to publish a list of African billionaires. In the words of the supervising editor, this is "testament to the growing global importance of the continent". We couldn't agree more.  

It remains for me to wish you a splendid holiday and New Year on behalf of all at Scipion Capital.  

Nicolas Clavel 

Chief Investment Officer  

Tel: +44 207 493 6659 

Mob: +44 7932 962 145 

Fax: +44207 499 8808 

E-Mail: [email protected] 

Website: www.scipion-capital.com 

Click image to enlarge

Click image to enlarge