The Emerging Powerhouse that Nobody’s Talking About

Todays top stocks to buyForget what you think you know, many investors are unaware this region is attracting hundreds of billions of dollars per year from governments around the world…

Opportunity is found by understanding what others don’t. And this one investment opportunity that you definitely won’t want to pass up:

Sub-Saharan Africa.

For years, much of what we know in the Western world about this bright and vibrant region of 49 countries is summed up from the depressing and often shocking images we see on TV.

Shanty towns, poverty, civil war, corruption, malnourished population, disease, famine, blood diamonds, pleas for donations, sponsors for suffering children, or on occasion…even a request to buy a goat or a cow for an entire village… you name it, the list could go on.

In fact, we regularly hear news of major uprisings or wars in the region – leaving many of us to wonder whom in their right mind would ever want to invest there?

Well for starters, us.

President Obama just announced that he’s writing a $7 billion check for six countries that the White House has singled out for promoting good governance — Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.

Why would the government do that?

Because sub-Saharan Africa is currently undergoing a monumental transformation that western media shows little to none of — and what it does show are usually acts of violence or misfortune.

But what we see on TV is only a small snippet of what’s really happening across these vast and resource-rich lands.

I strongly believe that very soon – in stark contrast to what we think we know – there’s going to be some very positive news coming out of this region for a change… and there’s going to be plenty of it.

Turning the Lights On

Let’s begin with emerging market growth.

While the U.S. economy continues to crawl at a snail’s pace, Sub-Saharan Africa as a whole galloped at a rate of 5 percent in 2012, according to the International Monetary Fund (IMF).

This year’s growth is expected to hit 5.5 percent.

In their annual Regional Economic Outlook report, the IMF highlighted some key drivers for Africa’s renaissance:

  • Growth among oil exporting and low-income countries
  • Inflation falling across most of the region
  • Improvements in local climate conditions and tighter monetary policy
  • Increase of local investments in export-oriented sectors
  • End of flooding in Nigeria and drought in other regions
  • Gradual wind down of conflicts

Not surprisingly, all these factors are contributing to shrinking poverty levels, a growing middle class and higher incomes.

Now, this rate of growth is an accomplishment in of itself.  But keep in mind African countries have enjoyed strong economic performance despite the fact that electricity still remains scarce in many parts of the continent.

It’s hard to fathom, but for more than three-quarters of the population in Sub-Saharan Africa – electricity is a luxury.

So if you thought a 5 percent growth was impressive – just imagine if more people had access to electricity?

According to the Office of the US Trade Representative, the 49-country region consumed $21 billion in US goods in 2011 – a whopping 23% increase from 2010.

With more power, that amount could jump exponentially.

That’s why President Obama has pledged a $7 billion “Power Africa” initiative over the next five years to double electrical access for the six key countries.  The pledge is in addition to $9 billion in private funds – bringing the grand total to $16 billion.

By bringing lights to 20 million more households and commercial units, Obama is banking on a significant ROI.

And it’s not just America that’s pouring in billions of dollars into Sub-Saharan Countries.

According to Bloomberg, China has pledged $20 billion in loans to Africa over the next two years.   The Chinese also paid for and built the African Union’s $200 million headquarters in Addis Ababa, Ethiopia that opened last year.  In 2011, trade between the two regions tallied close to $139 billion.

Not to be outdone, Japan is pledging a $32 billion, 5-year commitment of its own in a bid to tap the continent’s precious natural resources.

Clearly, nations across the globe are in a race to pursue resources, markets, and influence on the continent — and they’re not afraid to invest hundreds of billions of dollars to do so.

The problem we investors face is that infrastructure stocks with strong exposure to African development on easily accessed exchanges are few and far between.

Rest assured, I’m keeping a close eye developments and when I see companies I feel are the best stocks to buy, I’ll let you know.

In the mean time, if you want exposure to African growth, beer companies are a great way to do it. Diageo (DEO:NYSE), the world’s largest distiller, and SABMiller (SAB:LON), the world’s second-biggest brewer are two companies investing in and pursuing the African market.

Yours in profits,
Todays top stocks to buy
John Holt
for Top Stock Millionaire
Follow me on Google+, Facebook, and Twitter

Similar Posts: