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Speaker 1: The Money Show, Investment School twenty six, twenty four minutes

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Speaker 1: now to eight o'clock. My timing has already gone on.

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Speaker 1: The weekend hasn't even started. So when we look at

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Speaker 1: where we're going to put money for the longer term,

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Speaker 1: where would you look around? Well, yes, everyone will say

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Speaker 1: AI stocks and all the rest, but actually we probably

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Speaker 1: need to spend a lot more time looking at the

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Speaker 1: investment case closer to home. And I'm talking specifically about Africa,

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Speaker 1: and tonight we're focusing on this for Investment School this evening.

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Speaker 1: Africa's next decade? Where will the real returns come from?

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Speaker 1: Kill Tebo Bosco is a portfolio manager for Africa for

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Speaker 1: Marsi Asset Management. He's in the studio now, kill Tebe,

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Speaker 1: thanks very much indeed for coming in. Kira bilber Noniana

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Speaker 1: is the VIP clients manager of Prime XBT who's joining

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Speaker 1: us as well tonight. Kier thank you, gentlemen. Let me

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Speaker 1: just sort of start all the question for you, kil

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Speaker 1: We know how some of the world's fastest growing economies

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Speaker 1: are actually on our continent. They're kind of very near

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Speaker 1: to us in so many ways, and yet people and

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Speaker 1: you think of sort of American money, or European money

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Speaker 1: or Japanese money. They're not really putting that money into Africa.

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Speaker 1: You're a fund manager. Why do you think people have

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Speaker 1: a misconception?

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Speaker 2: Yeah, thank you, Steven. Their first big misconception about investing

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Speaker 2: in Africa is actually people's assumption that Africa is a country,

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Speaker 2: not a continent. Yes, at the end of the day,

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Speaker 2: Africa is a continent with fifty four unique countries. You

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Speaker 2: have the old rich West, you have the agriculturally endowed East,

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Speaker 2: which is actually becoming a fintech hub, and then in

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Speaker 2: the Southern Africa you have a more you can say,

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Speaker 2: diversified economies mostly and cut by the South Africa. And

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Speaker 2: the other perception is that of risk. You know, there's

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Speaker 2: a perception out there that Africa is riskier than it is,

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Speaker 2: and it's actually a perception. There's been a study that

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Speaker 2: has been done that has looked at the data for

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Speaker 2: the past hundred plus years that actually shows that if

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Speaker 2: you look at dead in the world, Africa has the

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Speaker 2: lowest default rate in the world for the past hundred years,

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Speaker 2: less than three percent, compared to South America at fourteen percent,

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Speaker 2: and it is Europe around seven percent.

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Speaker 1: You know, I mean, yeah, that's it. That perception of

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Speaker 1: Africa is a risky place for money. It's really persistent.

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Speaker 1: I mean it's a very persistent kind of perception that

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Speaker 1: the rest of the world can't seem to shake off.

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Speaker 3: Yes, I think ordinarily comes back down to data availability,

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Speaker 3: and I think when the market looks at when the

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Speaker 3: market it looks at Africa as a continent, it's can

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Speaker 3: we get real data in order to be able to

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Speaker 3: price risk? And for me, it's just a simple go

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Speaker 3: on Google or go on internal trying to find the

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Speaker 3: data on Africa. And I think then then investment analysts

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Speaker 3: and money managers off shore and I'm speaking outside of

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Speaker 3: the African continent, then go where's this data? How are

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Speaker 3: we going to price the risk? And ordinary And what

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Speaker 3: I've also also learned is, I mean you need you

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Speaker 3: need a real FaceTime value with African markets because the

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Speaker 3: markets in Africa are so fragmented. As Ko said, they're

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Speaker 3: fifty four different markets which have fifty four different cultures

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Speaker 3: and fifty four different ways of doing business. And when

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Speaker 3: you put this whole continent as one country, you often

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Speaker 3: come to come to the fact that you're going to

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Speaker 3: take a South African strategy implemented in Nigeria, and once

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Speaker 3: it fails, you say Africa is a failure. And I

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Speaker 3: think it's a different way of looking at this market

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Speaker 3: as well that the world needs to look and it

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Speaker 3: needs to look at themselves in as capital.

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Speaker 1: Yeah, I mean it's a bit like saying sort of

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Speaker 1: you know, Russia and Britain are the same country. I

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Speaker 1: mean they're obviously not would be the sort of one

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Speaker 1: way of looking at it, just because they're sort of

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Speaker 1: based on the same kind of continental shelf. KEO. When

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Speaker 1: you talk about real returns in Africa, I mean, are

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Speaker 1: you talking just about financial returns or are there other

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Speaker 1: returns Because we know there does need to be lots

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Speaker 1: of investment in infrastructure, for example, in education things like that.

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Speaker 1: So where I'm going with this is that the returns

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Speaker 1: are financial, but maybe not just financial.

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Speaker 2: Yes, financial returns are real on the continent, you get them.

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Speaker 2: I mean, we have been investing on this continent for

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Speaker 2: the better part of the lust fifteen years ourselves, and

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Speaker 2: we have generated a real USBO financial returns. But then

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Speaker 2: there are other retents that we don't talk about. They

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Speaker 2: just general economic development and the impact that we have

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Speaker 2: seen on the continent. I mean, you look at the

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Speaker 2: past fifteen years since I've been investing in this country,

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Speaker 2: you can see the impact of the investment that has

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Speaker 2: gone through. I mean to look at Kenya ten years

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Speaker 2: ago in and you look at Kenya today, two different countries.

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Speaker 2: You go to Naarobi today, you'll be surprised. You should

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Speaker 2: see people more than an hour from Naarobi to the

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Speaker 2: airport today you can do that in thirty minutes. Those

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Speaker 2: are the real impact of investments outside the financial returns.

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Speaker 1: Does that make for people who are really only interested

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Speaker 1: in their money? Does that make a difference do you think?

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Speaker 1: I mean, there are ways you can if you're selling

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Speaker 1: the case for Africa, use that quite compellingly that they

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Speaker 1: want their own money to grow first.

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Speaker 2: Yes, Like I said, there are real returns on the continent.

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Speaker 2: I'll make an example. We did huge work actually in

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Speaker 2: our team at MAZI looking at investments in Africa for

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Speaker 2: the past ten years to end of twenty twenty five.

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Speaker 2: You look at the data. I mean, you look at

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Speaker 2: Ning's growth of the company's in US dollars, including all

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Speaker 2: the evaluations that have happened in the continent in the

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Speaker 2: past ten years. Africa has given you ning's growth in

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Speaker 2: US dollars, and most importantly, you look at the dividends

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Speaker 2: that you have received, cumulative dividence that you have received

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Speaker 2: in the past ten years on the continent, most of

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Speaker 2: the companies have paid you more than their share price

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Speaker 2: two three times. There the are today's share price in dividends,

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Speaker 2: yet it derated.

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Speaker 1: Garabille. We talk and when we think of things that

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Speaker 1: have changed in Africa, we can really talk a lot

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Speaker 1: about fintech because so much has happened there. You look

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Speaker 1: at impsa flatter wave on the JC, now Optasia. How

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Speaker 1: much more does this have to grow? Now? On one level,

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Speaker 1: it might be easy to say, well, the early adopters

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Speaker 1: have earlyly adopted that we have the systems running. But

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Speaker 1: if you actually look at the share price of fintech companies,

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Speaker 1: I mean they're racing ahead because clearly the market believes

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Speaker 1: that actually the best is still before them.

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Speaker 3: And when you look at Africa's fintech, it's really basic

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Speaker 3: because I don't think there's any unicorn which is coming

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Speaker 3: out of it, because we still have real life problems

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Speaker 3: to solve, and this fintech solves something as simple as remittance,

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Speaker 3: just moving money across border between expats maybe who are

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Speaker 3: from Zimbabwe working in South Africa or people sending money

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Speaker 3: from all this sees two uh to to to their

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Speaker 3: families locally. And I think it's it's the it's the

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Speaker 3: it's this sort of environment which gives rise even to

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Speaker 3: Web three types of types of technologies. I mean, I'm

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Speaker 3: just talking about one of the deals which was recently

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Speaker 3: done by Tether, which is a US issuer of stable coins,

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Speaker 3: which one of the fits that the most popular stable

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Speaker 3: coins around is the U S D t coin investing

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Speaker 3: in a in a company like Kotani Pay and katany

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Speaker 3: pay is not a non listed asset, but it's it's

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Speaker 3: it's it's easing treasury flows within the African continent where

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Speaker 3: they are some shortages of US dollar using Web three

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Speaker 3: technology and stable coin infrastructure. And I mean this grows

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Speaker 3: right across I mean, as you say Safari Com, you

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Speaker 3: go into a financial Momento where master col just did

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Speaker 3: just just did initial investment into empty and Moment which

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Speaker 3: was quite significant. And this just shows the potential of

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Speaker 3: a young, young, young continent with the median age of nineteen,

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Speaker 3: which is digitalizing and has less access to financial services.

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Speaker 1: You know te but I mean that must be right.

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Speaker 1: I mean you would think the case for investing in

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Speaker 1: fintech in Africa right now is an incredibly strong one

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Speaker 1: and probably will be for at least the next twenty years.

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Speaker 2: Yes, that's true. I mean if you think about it,

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Speaker 2: I mean Yabile has already mentioned the how basic the

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Speaker 2: current offerings are, but it does just that's the pipeline, right,

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Speaker 2: It's just the infrastructure at the base, if you think

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Speaker 2: about it, just doing the simple things access, giving people excess,

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Speaker 2: moving money from yan Johannesburg to grandmother or relatives in

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Speaker 2: the rural areas. That is just the basics. But this

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Speaker 2: pipe needs to work. The future here is the ecosystem

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Speaker 2: is what can we do with insurance, financial services, other

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Speaker 2: sophisticated financial services products that loans, like payments. It's just

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Speaker 2: already there in some other countries when it comes to payments,

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Speaker 2: like in Kenya with embassaway. Now you find someone who

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Speaker 2: is a distributor of let's say a beer can pay

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Speaker 2: the manufacturer here in the case maybe in the case

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Speaker 2: of South Africa and equivalent to sab they can pay

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Speaker 2: with embassa and when they on sell to the Atlantes.

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Speaker 2: The Atlants pay their minute in ampasas, so no cash

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Speaker 2: moves around it. It's already there. They are just signing

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Speaker 2: up the dimensions now and we talk about investments now.

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Speaker 2: With fintech, people in future will be able to people

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Speaker 2: who didn't have access, for example, to the Johanness Back

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Speaker 2: stock exchange, will be able to invest in the Joinespepers

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Speaker 2: stock Exchange or even South African bonds or other investment

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Speaker 2: us at classes that they didn't have through the use

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Speaker 2: of their phone due to fintech. That's what the opportunities

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Speaker 2: that it provides with daily pricing and people can see

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Speaker 2: their returns on a day to day basis, on a

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Speaker 2: real time basis. In the morning when they wake up,

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Speaker 2: they know exactly how much they make. They can easily

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Speaker 2: withdraw their money, easily put money in. That's where the

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Speaker 2: future is going here.

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Speaker 1: We need to talk about agriculture because agriculture is huge

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Speaker 1: in Africa and it's going to get bigger, there can

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Speaker 1: be no doubt about it. You would think that there

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Speaker 1: will be a lot more funding from institutional investors there.

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Speaker 1: It's something holding capital back.

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Speaker 3: Yeah, and I think it's some mistakes which governments are

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Speaker 3: making because for me, the African Continental Free Trade Agreement

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Speaker 3: trade areas should be the multiplier of that across across

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Speaker 3: the African continent. I just think right now you're finding

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Speaker 3: you're finding that in most pension funds, specifically Nigeria Ghana,

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Speaker 3: there's there's a lot of prescribed assets which does not

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Speaker 3: allow investment investment into growth stocks and uh and agriculture

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Speaker 3: is some of these growth stocks and and and the

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Speaker 3: problem with that is that going into the future, you

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Speaker 3: need to unlock some of that capital to be able

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Speaker 3: to go and invest in in such in such deals

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Speaker 3: when we come home as well. I mean, there's so

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Speaker 3: little funds that focus just purely as on ex South

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Speaker 3: Africa Africa play. And with that being said, it is

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Speaker 3: because of trying to madge shareholder expectations to short term

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Speaker 3: returns and looking at Africa as a long term player

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Speaker 3: looking for long term funding. And I think specifically in agriculture,

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Speaker 3: there's so many stocks right now which I think of

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Speaker 3: the really valued, specifically in coffee production, in soft commodities

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Speaker 3: such as palm oil, which I think in the future,

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Speaker 3: had capital been unlocked, you'd see the rerating of some

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Speaker 3: of those shares across the continent.

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Speaker 1: We saw what coffee prices did last year with that

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Speaker 1: big shortage as well. Your investment school on the Money Show.

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Speaker 1: It's eleven minutes now to eight the time. Killon not Tebo,

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Speaker 1: Basco's portfolio manager for Africa for MASI Asset Managers. Kira

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Speaker 1: bill Ware Noniana, there's the VIP clients manager at Prime XBT.

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Speaker 1: We take your calls too and your voice notes seven

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Speaker 1: two seven O two one seven O two.

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Speaker 2: The Money Show Investment School.

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Speaker 1: Nine minutes now to eight the time, talking about the

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Speaker 1: investment case for Africa, Africa's next decade, where will the

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Speaker 1: real returns come from? Killon not Teblo, Basco's portfolio manager

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Speaker 1: for Africa at Masia Asset Management. Kill bill Ware Noniana

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Speaker 1: is the VIP clients manager at Prime XPT keio uh.

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Speaker 1: We spoke about fintech and we spoken about agriculture, but

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Speaker 1: infrastructure energy are going to be big issues and even

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Speaker 1: for a long time here. Energy is going to be

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Speaker 1: quite a big issue and lots of different ways to

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Speaker 1: see it. Some of those projects are quite going to

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Speaker 1: be quite big. Those infrastructure issues, they're going to require

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Speaker 1: quite a lot of complex funding. If you're a funder.

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Speaker 1: Do you just put your money in and leave it

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Speaker 1: there for twenty years? Are you sort of patient or

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Speaker 1: do you need do you need to do it in

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Speaker 1: a different way.

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Speaker 2: Let me start, Steven, Let me start with just their

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Speaker 2: need for infrastructure.

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Speaker 1: I mean the.

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Speaker 2: Future economy or the Fourth Industrial Revolution or whatever economy

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Speaker 2: you call it. I mean today we're talking about AI,

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Speaker 2: we're talking about fintech, we're talking about cryptocurrencies, all those things,

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Speaker 2: e commerce, they still need traditional infrastructure to work. AI

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Speaker 2: does not work without power and abundance, soft and hip power.

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Speaker 2: That's what countries need. E Commerce is not going to

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Speaker 2: work without functioning roads. I mean, if you order pizza now,

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Speaker 2: you want to a piece us to arrive in time,

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Speaker 2: still fresh and not messed up by the road. Yeah right, yeah,

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Speaker 2: So we still need Africa still need traditional infrastructure. Talking

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Speaker 2: about funding or how these projects are funded, firstly, there

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Speaker 2: are currently the world has moved on. There are a

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Speaker 2: lot of innovative funding solutions out there in terms of

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Speaker 2: how to fund infrastructure. Of course, firstly the governments and

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Speaker 2: other financial institutions like the IFC needs to help in

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Speaker 2: terms of the risk in the products. But also we

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Speaker 2: have a lot of infrastructure funds coming out there. In

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Speaker 2: for example that Marsica. Currently we do have an infrastructure

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Speaker 2: fund that invests specifically on infrastructu approach. Yes, the long

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Speaker 2: NAT they take a very long time, but the keshlows

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Speaker 2: are there, the cashlows are positive, and the returns are attractive.

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Speaker 1: Yeah, how do you see it? I mean, this is

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Speaker 1: part of a big international change, and we still have

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Speaker 1: millions of people who don't really have basic electricity, so

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Speaker 1: we need that. We need renewable energy too, but the

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Speaker 1: first and most important thing is to get cheap power

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Speaker 1: to people.

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Speaker 3: And that's true. And I mean if you had to

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Speaker 3: do a heat map in terms of where electric electrification

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Speaker 3: is almost close to saturation, it's probably only in Sadek,

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Speaker 3: And I mean this will be South Africa, all the

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Speaker 3: countries surround in South Africa. Once you enter Central Africa,

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Speaker 3: you go towards West Africa, those numbers look a little

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Speaker 3: bit more dire. So you'll need investment into renewable energy

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Speaker 3: because we have great solar power microgrids. But I mean

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Speaker 3: it's all going to come back down to to terms

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Speaker 3: of these loans. And for me, the problem with I

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Speaker 3: would created an infrastructure funding right now. Is is that

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Speaker 3: juxtaposition between shareholders needing returns right now and these projects

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Speaker 3: being long term returns because you can't fund a forty

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Speaker 3: year development project through a ten year loan because now

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Speaker 3: those cash flows are going to be out of QUILTA

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Speaker 3: and somebody who's going to require a higher rates of

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Speaker 3: return for the tenure loan to be taking on forty

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Speaker 3: year risk. And for me, it's what Ko says that

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Speaker 3: I've seen needs to come to the table. You find

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Speaker 3: the African Development Bank needs to come to the table

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Speaker 3: as well as governments. They need to find ways in

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Speaker 3: order to work with the private sector in order to

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Speaker 3: de risk some of these infrastructure projects which I think

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Speaker 3: the African continent is going to need an abundance of.

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Speaker 3: When we look at the population growth rate being projected

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Speaker 3: to be about two and a half billion in ten

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Speaker 3: years time.

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Speaker 1: It's so interesting to see how it's going to plan out, Kyo.

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Speaker 1: The African Continental Free Trade Area. Now, let me just

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Speaker 1: put my political point first. Every African president will talk

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Speaker 1: about it and embrace it, and the bigger the economy,

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Speaker 1: the more that countries people will oppose it. Right, and

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Speaker 1: that's the case with South Africa. I mean, if you

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Speaker 1: had to campaign in South Africa for the free movement

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Speaker 1: of people, you're.

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Speaker 2: Going to battle.

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Speaker 1: Okay, So it can seem to me sitting here in

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Speaker 1: Johannesburg that in fact, this free trade area isn't doing

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Speaker 1: very much. I know, the rest of the continent is

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Speaker 1: very different, so it's very uneven. Is it really going

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Speaker 1: to change anything?

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Speaker 2: Yes, I mean it is still very elyly. Talking about

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Speaker 2: the Africa Free Trade Agreement is still very ely in

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Speaker 2: terms of execution, but long term we are very positive

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Speaker 2: on the prospects of it. Let me take it a

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Speaker 2: step back and just talk about the challenges that we

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Speaker 2: have in Africa. If I manager an Africa fund, if

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Speaker 2: I'm selling a share or that asset in Morocco and

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Speaker 2: I'm trying to buy a similar share or even a

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Speaker 2: different share in Egypt, I have to go through the

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Speaker 2: the dollar. Why can't Moroccan Durham cross the Egyptian path.

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Speaker 2: That's just the first issue with the African trade right there.

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Speaker 2: You know. I mean, if I'm selling to I'm selling

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Speaker 2: products to Namibia, what do the Namibia require a dollar?

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Speaker 2: Why do they require dollar vis a visa? You know?

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Speaker 2: Why does it require me to go to Europe to

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Speaker 2: get to Morocco. Those are the simplest things or the

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Speaker 2: blockages or the stumbling blocks to Africa Free Trade. We

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Speaker 2: solve those issues. Visa requirements to go to Nigeria. You

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Speaker 2: can never get a visa more than six months. The

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Speaker 2: longest you're gonna get as a South African as six months.

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Speaker 2: Why can I get a ten year visa to go

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Speaker 2: to Nigeria because I go to Nigeria every year? You know,

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Speaker 2: those are the kind of and this are the simple

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Speaker 2: winds that are gonna unlock the Africa Free Trade. Then

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Speaker 2: that comes the infrastructure, the roads, the railway lines, you

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Speaker 2: know that we've already talked about.

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Speaker 1: That's the news we build.

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Speaker 2: You look at Southern Africa now, it's very easy to

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Speaker 2: will power across you can will power from South Africa

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Speaker 2: all the way to a DRC visa visa. We need

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Speaker 2: more of that, more integration on the continent for this

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Speaker 2: Africa Free Trade to work, and that will increase the

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Speaker 2: pace of execution.

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Speaker 1: Here we've got literally thirty seconds left, But the demography

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Speaker 1: matters and Africa's Africa's population is growing, its working population

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Speaker 1: will be huge by twenty fifty. Sometimes that's the demographic dividend.

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Speaker 1: We have to make decisions right now to make sure

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Speaker 1: we get the best use of that.

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Speaker 3: And for me, it's a political question more than it

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Speaker 3: is an economic one. You have juxtaposed you have politicians

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Speaker 3: in office who are not good probably going to be

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Speaker 3: there for that economic dividend, trying to make decisions on that.

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Speaker 3: And for me, it's going to come back down to

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Speaker 3: the youth. I'm still part of the youth, but I

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Speaker 3: do believe that it's going to be How then do

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Speaker 3: we solve the solvables, as Ko said, stuff like three

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Speaker 3: currency crosses in order just to get to local currency.

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Speaker 3: Looking at travel, you're looking at you're looking at just

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Speaker 3: political will to to to deregulate, to go back to

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Speaker 3: public private partnerships, seeing that being done well in Egypt,

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Speaker 3: which is really giving them quite a dividend. And these

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Speaker 3: are the sort of hard decisions which are going to

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Speaker 3: be need to be made today by today's politicians in

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Speaker 3: order for the youth to take okay of that dividend

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Speaker 3: in twenty two thirty years time.

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Speaker 1: Quir bilwain no Janaviap Clients manager at Prime xbt Quna

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Speaker 1: Tebo Bosseerco portfolio Manager for Africa Masiaset Management. Thank you