LONDON – Nicolas Clavel, portfolio manager at commodities fund Scipion Capital Ltd., is brushing aside worries about impacts on investment in Africa from last month’s terrorist attack on a natural gas complex in Algeria.
“In terms of investment in Africa, I don’t essentially think that there would be a major impact from it,” Clavel said.
The assault by Islamic militants on the complex in Ain Amenas killed a number of workers there, including 10 Japanese.
“Africa is a big place” with more than 50 countries that are “extremely diverse,” Clavel said.
“I think it is a security issue, so certainly there will be a tightening of security around plants of existing investment and future investment,” he said. Investment will be made in Algeria as long as anyone out there needs oil and gas, he added.
Clavel said private equity is “the biggest channel of money into Africa” for Japanese and other foreign institutional investors. Private equity will be good for those looking at five- to seven-year investment, he said.
But conditions for stock investment in Africa are expected to remain tough in the near future. For institutional investors, the issue with most of the bourses in Africa, except South Africa, is liquidity, Clavel said.
Clavel noted that debt levels are very low in most African countries, a plus for investment in local currencies. Still, he warned that hedging some African currencies is “very difficult and sometimes impossible.”
Yet Clavel said Africa is a good place for investment because market systems there are based on French or British systems and are thus efficient, and African countries have had “a tradition of capitalism for a long time.”