For much of the previous decade or so, many investors seeking long-term capital growth and attractive returns have, quite rightly, focused on the BRIC (Brazil, Russia, India and China) countries. The figures tell you everything. For the period 31/12/99 to the 31/12/09 the MSCI Developed Markets returned just 2.3%, whilst the MSCI Emerging Markets returned 161.6% over the same period.

There is no doubting that these economies continue to offer good long term prospects when compared to their more developed peers in the West, however there is also no doubting that they have become more correlated with the more developed stock markets of the West as a consequence of globalization. Interestingly over the past few weeks, there appears to have been a flurry of Africa funds being set up, as fund houses and investors alike search for the ‘next BRIC’ story.

As a continent, Africa is the most diverse on the planet with 53 countries, a population of around one billion people and a variety of climates and resources. It contains countries ranging in size: from the Seychelles, around the size of Singapore, to Sudan, with an area equivalent to a quarter of the size of the USA. In fact, Africa actually boasts 20% of the world`s land mass with an area of over 30 million square km and could comfortably fit the US, Argentina, India, China and Europe within its borders.

Generally speaking the best opportunities can often exist where perceptions differ from reality. This is particularly true of Africa, where partly due to the media, perceptions are dominated by dictatorships, disease, famine and economic stagnation. While these issues are real for parts of the continent, Africa consists of much more than this and the reality is of advancing democracy, improving development and strong economic growth.

Certainly Africa is richer than most would believe. Consider that Africa contains 10 countries that are above China in terms of GDP per capita – including Mauritius, South Africa and Tunisia and has 17 countries above India, including Egypt and Morocco. In 2009 Africa was one of the few regions to post positive economic growth and in 2010 and 2011, according to United Nations projections, African GDP will increase by 4.7percent and 5.6percent respectively which apart from Asia, will be the highest for any region in the world.

In terms of investment potential, the key structural themes are likely to be improving infrastructure and abundant natural resources. Africa is the world's most resource rich continent and is home to significant reserves of a wide range of resources. This includes 89% of the world`s platinum metals and 74% of its chrome, 60% of the world’s diamonds, not to mention 12% of the world’s oil and 9% of its natural gas reserves.

Infrastructure will continue to be a dominant investment theme, with the World Bank estimating that USD93bn is required to be spent to improve Africa's infrastructure in the areas of energy, transportation and water. However despite the attraction of resources and infrastructure, arguably Africa's greatest asset is its people, with a population of approximately one billion, of which a growing consumer class is emerging which some estimates put at 350-500million.

One such fund recently launched to tap into the growth potential is the Alquity Africa Fund. According to David Mcilroy, Chief Investment Officer at Alquity, "Perceptions of the continent are beginning to catch up with reality as investors gradually become more aware of the continent's attractions. The 1990s were the decade of the Latin American Puma markets. The 2000s have been the decade of China and the Asian Tiger economies. The elements are in place for the next decade to belong to the African Lions".

For those investors who enjoy an ethical theme, Alquity have also pledged to donate a minimum of 25% of their fund management fees to microfinance initiatives in Africa and are aiming to create 100,000 jobs in Africa by 2012. For every €1million invested, they will create a €10,000 microfinance pool which in turn will create 500 microfinance loans.

Of course investing in Emerging Markets such as Africa contains a high level of risk that may be unacceptable for your risk tolerance. Before deciding on any financial strategy we strongly advise speaking to an Independent Financial Adviser, such as WorldWideBroker. If you would like to find out how we may be able to improve your own financial situation, whether you require capital growth, a regular income or a review of your pension arrangements (QROPS), please contact your local adviser for a free consultation. This e-mail address is being protected from spambots. You need JavaScript enabled to view it