A GROWING CONSENSUS REGARDING INVESTMENT OPPORTUNITIES IN AFRICA

(Distributed through BlackNews.com)

By Robert G. Roach, Jr.

The excellent business and investment prospects of Africa are being recognized publicly, finally! Larry Seruma and his investment team at Nile Capital Management recently published a White Paper (“A Time To Invest In Africa”) which discusses the prospects and underlying trends of the Africa investment thesis. In future blogs, I will delve into further detail of specifics underlying the Africa investment opportunity. However, I should note that Nile Capital Management offers one of the few pure Africa plays available to investors through its actively managed mutual fund. Mr. Seruma has also been featured in two articles discussing Africa including The Wall Street Transcript (”TWST Investment Strategies Report“) and Black Enterprise (”The First African-Focused Mutual Fund“).

I believe there are five compelling reasons why all investors should take a serious look at Africa:

* A China play: China’s investments in Africa are facilitating a reduction in political risk by forcing governments to improve property rights, the foundation for a sound investment environment. China’s investments have included significant infrastructure projects including transportation, power generation and natural resources. As an example, China has recently funded development of ten major hydropower projects in Africa with an aggregate capacity of 6,000 megawatts. Infrastructure is not mobile and many African governments are learning that political stability will allow them to attract and negotiate better terms with foreign investors. In addition, China has increased its trade with Africa from $10 billion in 2000 to $90 billion in 2009.

* Value: African markets are attractively valued from a P/E perspective relative to developed and developing economies. For example, the Sub-Saharan markets (as of June 2010) had an estimated price to earnings ratio of 12.8x compared to 18.6x in the US and 14.5x for the MSCI Emerging Markets Index.

* Growth: According to the IMF, 12 of the 28 fastest growing economies (in terms of average real GDP growth 2010-11) are in Africa including Ghana (12.32%), Congo/Brazzaville (9.36%), Angola (7.65%), Liberia (7.46%), Ethiopia (7.31%), Nigeria (7.15%), Mozambique (7.0%), Tanzania (6.45%), Democratic Republic of Congo (6.22%), Malawi (6.13%), Uganda (6%), and Zambia (5.94%). Sub-Saharan Africa is projected to generate 5.9% real GDP growth in 2011 and MENA (Middle East North Africa) has a 4.8% growth estimate. This compares favorably to the US (2.6%), Europe (1.9%), Russia (3.3%) and South America/Mexico (4.0%). The only region showing more attractive growth is Asia driven by China (9.9%) and India (8.4%). Renaissance Capital developed an analysis based upon cumulative estimated GDP growth between 2010 and 2014. On that basis, nine of the fifteen fastest growing economies are in Africa (see Table 1 below).

* Uncorrelated Returns: African assets have historically generated a low correlation of returns with other global asset classes. A composite of African markets including South Africa, Nigeria, Kenya, Mauritius, Ghana, Egypt, Morocco and Botswana, had a correlation of .59 with the S&P 500 from January 2002 through June 2009. During that same time frame, the MSCI EAFE (Europe, Asia, & Far East) and the MSCI Emerging Markets indices had correlations of .89 and .82 respectively with the S&P 500. For those who have happily forgotten their statistics, here is a link to a definition of correlation from Investopedia (correlation definition).

* Money Flows: There has been significant growth of investor interest in emerging markets within the past decade. This has created an opportunity for Africa, which has quietly experienced impressive economic momentum. That momentum should be sustainable as Africa’s GDP growth is projected to be around 6% annually over the next few years (approximating its historical GDP growth over the past decade). Analysts expect a continued surge in money flows to emerging markets. The surge in money flows will be driven by investors’ perception that returns in the US and developed markets will not be very rewarding. In addition, investors are concerned about the continued economic issues facing developed economies due to over leverage, rising budget deficits, high unemployment and loose-money central bank policies. Money flows to emerging markets is a sustainable trend and Africa should be a long-term beneficiary.

Rank / Country / Cumulative Economic Growth 2010-2014, %
1 Liberia 67.7%
2 Turkmenistan 59.1%
3 China 58.0%
4 Mongolia 55.8%
5 Ghana 52.4%
6 Qatar 48.1%
7 Timor-Leste 44.7%
8 Ethiopia 43.7%
9 India 43.4%
10 Botswana 43.1%
11 Mauritania 42.9%
12 Angola 41.2%
13 Tanzania 40.0%
14 Congo, Democratic Republic of 39.7%
15 Uganda 38.6%

Source: Renaissance Capital

The investment opportunities in Africa were highlighted in a recent Barron’s cover story, “The Final Frontier.” The headline said it all: “Investors will lose a huge opportunity if they avoid vibrant and changing Africa. Fast growth in a continent of misconceptions.”

A main theme behind the Barron’s article is that misperceptions derived from Africa of the past are adversely obscuring investors’ ability to see the opportunity that Africa represents today, possibly to their own detriment. Some very interesting analogies were made:

* During the recent financial crisis, the US and UK have effectively nationalized more companies (including firms like GM, Chrysler, AIG, Citigroup, Royal Bank of Scotland, and Northern Rock) than African nations have in the past nine years;

* In Africa, banks have not needed to be bailed out, no large companies have folded, and there have been no accounting scandals;

* With 5-8% annual growth in many African economies, “investors can find banks, brewers, supermarket outfits and mobile phone companies with good prospects, decent balance sheets and relatively low P/Es (especially compared to their growth potential).”

There has also been additional press and “smart money” sniffing out the Africa story. Some examples:

* McKinsey & Company has released research touting the economic growth and business opportunities in Africa stating that “strong prospects await global companies that invest in the continent’s consumer, agricultural, natural-resource, and infrastructure sectors.” (click here for McKinsey Research).

* Boston Consulting Group has recently released a report titled “The African Challengers: Global Competitors Emerge from the Overlooked Continent.” This report discusses “forty fast-growing and globalizing companies highlighting Africa’s economic awakening…ranging from $350 million to $80 billion in annual sales.”

* David Rubenstein, co-Founder and Managing Director of the Carlyle Group was recently featured in a Wall Street Journal article discussing his “bullishness” on Africa (click here for WSJ article).

During these troubling economic times, wise investors are reassessing their portfolios while seeking strategies to generate risk adjusted return, portfolio diversification and low correlation of asset returns. If investors (or their advisors) are not considering Africa in their analysis, then the question should be asked, why not? There is a growing body of “smart money” that sees the opportunity created from strong GDP growth, a wealth of natural resources, an increase in political stability, a young demographic, and uncorrelated asset returns relative to developed and emerging markets. Investors should take the time to evaluate the Africa investment opportunity and the vehicles available to capitalize on the long-term trends. With 10-year US Treasury yields inching towards to 2.5% and commensurate single digit projected market returns, how can you not take a serious look at the last great investment frontier?

Robert G. Roach is the COO/CFO of Nile Capital Management, LLC., an investment manager that manages funds focused on Africa including a Pan Africa mutual fund (www.nilefunds.com). Mr. Roach has more than 25 years of investment and investment banking experience. He received a BA in Economics from Dartmouth College and an MBA in Finance from the Booth School of Business at the University of Chicago. Mr. Roach may be contacted at robert.roach@nilecapital.com.

Reprint from the Sentencing Project – Racial & Justice News

Since the U.S. criminal justice system records race data for each phase of the system  across most jurisdictions, we know the racial breakdown for the use of drugs, police stops, arrests, legal representation trial sentencing, and parole. After looking at the available data, Bill Quigley, Legal Director for the Center for Constitutional Rights, points out 14 examples of what he describes as a “race-based institution.” 

His examples are listed below:

1.    Although blacks comprise 13% of the population, and 14% of monthly drug users, they account for 37% of drug arrests.
2.    Black and Latino motorists are more likely to be stopped and frisked by the police compared to whites. 
3.    Blacks are arrested for drug offenses at rates 2 to 11 times higher than the rates for whites. 
4.    Blacks are more likely to be detained while awaiting felony trials. 
5.    Blacks are more likely to be represented by a public defender, with high caseloads and limited resources.       
6.    African Americans are routinely excluded from criminal jury service.
7.    As is true of most defendants, most African Americans never get a trial, and have to make a choice about accepting a plea or risking a possible lengthy sentence.
8.    The U.S. Sentencing Commission reported that black offenders receive longer sentences than white offenders.
9.    Two-thirds of people in the U.S. with life sentences are non-white.
10.    African Americans account for 56% of people in state prison for drug offenses.
11.    The U.S. Bureau of Justice Statistics concluded that a black male born in 2001 has a 32% chance of going to jail; Latino males have a 17% chance and white males have a 6% chance. 
12.    Despite black youth accounting for 16% of the juvenile youth population, they are 28% of juvenile arrests, 37% of youth in jails, and 58% of youth sent to adult prisons.
13.    The U.S. leads the world in incarceration and black males comprise the largest share of American prisoners.
14.    Research shows that 17% of white job applicants with a criminal record received call backs from employers, compared to 5% of black job applicants. 

Quigley argues that from start to finish the criminal justice system is inherently racist. Further, the stigma of criminality is analogous to Jim Crow; those convicted of crimes are legally discriminated against, thus creating a permanent underclass of warehoused individuals.

Inspirational Vickie Winans Tribute Caps an Evening of Commemoration at Historic Dusable Museum Attended by Chicago Dignitaries and Industry Insiders

(L-R): CCP Chairman, Don Jackson; Grammy-winning gospel artist Vickie Winans; US Senator Roland W. Burris; CCP President Erma Gray Davis and actor/author Greg Alan Williams (Preacher’s Kid; Drop Dead Diva) arrive at the Central City Production’s 40th Anniversary Gala.
Photo Credit: Maury Phillips, WireImage/courtesy of The FrontPage Firm

Chicago, IL (BlackNews.com) — On Thursday night, Chicago dignitaries, gospel industry insiders and notable community figures gathered at the Dusable Museum of African American History to honor television programmer Central City Productions, Inc. (CCP)’s 40th Anniversary. The distinguished event was hosted by ABC 7 Chicago’s Emmy award-winning news anchor Cheryl Burton, sports anchor and reporter Jim Rose, and WGN 9’s Bob Jordan. Commemorating over four decades of television history for CCP, attendees enjoyed an integrated video montage showcasing each decade’s greatest moments, musical tributes and commentary from special contributors. Live performances included show-opener Grammy Award-winning songwriter/producer Darius Brooks and gospel music legend Vickie Winans, whose illustrious career took off in tandem with CCP’s original Stellar Music Awards.

Winans captivated the audience with her rendition of “How I Got Over” and credited Jackson as an important factor in her success and longevity in the business. In her remarks, she stated “because of him, my career is set and I appreciate that. He hired me to host, present and perform [on the Stellar Awards]. Don has the magic formula to keep things going.”

The red carpet function was also attended by notable supporters which included singer and former CCP show host Jerry Butler, comedian Akintunde Warnock, actor and author Greg Alan Williams (Blood Done Sign My Name, Drop Dead Diva), AARP State President Merri Dee, celebrity chef Jennifer Gavin (FOX’s Hell’s Kitchen – Season 4), Senator Emil Jones, Jr., Chicago State University’s Dr. Wayne Watson, Senator Roland W. Burris, Deloris Barrett Campbell, Rep. David Miller and countless others.

Rich in tradition, CCP was applauded for its leadership and legacy in African American entertainment. Chicago-native Don Jackson founded CCP in 1970 as Central City Marketing, Inc. The company has since evolved, specializing in urban marketing, promotion, sales, and media production driven by faith and family values. Today, as CEO and Chairman, Jackson maintains this inspiring message, proud to have created a launch pad in Black entertainment. CCP has been a vehicle to success for hundreds of African American actors, musicians and television professionals.

For Jackson, the night’s focus was the celebration of a milestone as well as expressing appreciation for the corporate sponsors who’ve supported the execution of his programming vision. Jackson described the evening as “the culmination of bringing together our valued partners who contributed to our success. Their contributions allowed us to succeed with all of our television shows, especially the Stellar Awards.”

CCP celebrated 40 years as the oldest black-owned independent television production company in the country and over one thousand of hours of premium syndicated urban programming, including the acclaimed Stellar Gospel Music Awards, the Soul Train Music Awards and the Trumpet Awards and programs like Know Your Heritage Black College Quiz Show and Hispanic College Quiz Show Series, The Black Enterprise Business Report, and the Bud Billiken Back-to-School Parade.

Legendary talent has supported Jackson’s movement since CCP opened its doors. In the course of four decades, stars like Dionne Warwick, Sidney Poitier, Prince, Oprah Winfrey, Harry Belafonte, Nancy Wilson, Cicely Tyson, Patti LaBelle, Marla Gibbs, Steve Harvey, Stevie Wonder and Michael Jordan have studded the CCP roster.

Jackson is passionate about creating job opportunities and helping to launch careers. Veteran actor Greg Alan Williams, host of CCP’s Know Your Heritage Black College Quiz Show says, “Don gave me a chance to launch my career as a television host. He has been very inspirational in my career.”

After nearly a half-generation of producing niche-targeted programs and providing hundreds of job opportunities, Jackson’s greatest endeavor is the upcoming Black Family Television Network (BFT) – a faith-first and family focused programming platform. Jackson explains, “It will be faith-based and launch in 2012. We will find and use African American talent like producers, writers, directors and actors. That’s our mission.”

Kicks Off National Child Passenger Safety Week September 19-25

Illinois Secretary of State Jesse White will unveil a new Public Service Announcement (PSA) to air statewide to ensure children are properly restrained in child safety seats.  There will be a demonstration of how to properly install safety seats as well as a display of safety seats. September 19 through 25 marks National Child Safety Seat Week.

White will release the PSA Friday, September 17 at 10 a.m., at the James R. Thompson Center, 100 W. Randolph, in Chicago.

According to the press release, eighty percent of child safety seats are improperly installed in Illinois.  Traffic crashes are the leading cause of death and injury for young children.

State law requires that children under the age of eight must be secured in an appropriate child restraint system.

One of the most effective measures a person can take to help prevent an injury or death in a crash is to have children restrained in the appropriate child safety restraint.

Alleges Executive director has worked Cook County property tax system while promoting Claypool

Letters To Editor

Cook County Democratic Party Chairman Joe Berrios on Wednesday called for the Better Government Association’s Board of Directors to investigate whether its executive director is using the organization to curry political favors and launder campaign money for former Democrat Forrest Claypool.

 He also called on BGA Executive Director Andy Shaw to step down until the board completes the investigation. ”Andy Shaw preaches about ending corruption and pay-to-play. Yet he has turned the BGA into a propaganda arm for eccentric millionaires – a group of uber-wealthy Chicago property owners who want tax breaks from Forrest Claypool if he is elected,” Berrios said. “At the same time, Mr. Shaw is enriching himself by receiving tax breaks from the current Cook County assessor.”

Berrios, the Democratic nominee for assessor, called on the BGA’s Board of Directors to:

-Release a list of all donors who have contributed over $1,000 since Shaw took the position in June 2009. According to information contained on the Illinois Board of Elections website, many of the large donors to the BGA from whom Shaw has solicited tax-deductible contributions are also large donors to Claypool, who is running as an independent candidate for Cook County Assessor. The BGA is a 501(c)(3), which means it is prohibited from favoring one candidate over another. Recent reports the BGA published in Chicago Magazine suggest it has done otherwise.

-Investigate whether Shaw knowingly and unjustly enriched himself by allowing his business to receive unjustified property tax benefits from current Cook County Assessor James Houlihan, whose hand-picked successor is Claypool.

 ”The BGA has no trouble talking about attorneys giving checks to my campaign for $1,500, but refuses to talk about rich property owners giving not only to the BGA, but to Mr. Claypool. The BGA has also chosen to ignore almost $500,000 in campaign contributions Mr. Claypool received for a sweetheart no-bid parking contract he made,” said Berrios, referring to a 400-year parking lease arrangement that Claypool struck with Ogden Plaza Garage Co. The parking garage company is owned by a Wall Street media mogul who decided to go into the parking garage business.

“It is one of the clearest cases of corruption out there, but Andy Shaw has refused to touch it because he is also working the system,” Berrios said. Shaw and his wife, Mary, own Windy City Urban Inn, a bed and breakfast featured in several hotel magazines and websites. It is marketed by the Shaws as a “new way to do business.” The operation includes a main house with five guest rooms, and a coach house with three apartments. However, it is divided into two separate pins at the Assessor’s Office, and Shaw knowingly received an improper assessment because he’s using it for commercial purposes, which means that it should be classified at 25 percent rather than the 10 percent at which he’s currently assessed, Berrios said.

This spring, Shaw put the business up for sale for $3 million – more than twice its assessed value, according to published reports. According to information obtained through the Freedom of Information Act, Shaw’s proposed assessed value was $94,251. However, less than six months before putting it on the market, Shaw’s wife, Mary, appealed the assessment. The Shaws’ attorney, Stephanie Park, asked for a reduction to $85,891, documents show. However, Assessor Jim Houlihan went above and beyond that, giving the Shaws a 20 percent reduction. The final assessed value of the property was $75,691, according to documents filed at Houlihan’s office, documents show.

“Mr. Shaw received benefits far beyond than he was entitled. Someone at the Assessor’s office decided to do him a favor,” Berrios said. “He got even more than his lawyer asked for – and that just doesn’t happen. There is the appearance that he got a break in exchange to help Assessor Houlihan’s candidate, Forrest Claypool.”

Berrios noted that Shaw, who preaches transparency, had only his wife on the appeal form, and then accepted the large reduction. The attorney, Park, has contributed to Houlihan’s campaign funds. ”Andy Shaw knows how government operates, and he worked the system,” Berrios said.

 The BGA has issued one-sided reports about the Cook County assessor’s race which show that the organization is attempting to persuade voters to elect Claypool, who is the candidate backed by the organization’s major contributors, Berrios said. According to the Internal Revenue Service website, 501(c)(3) organizations are limited or prohibited in engaging in political activities such as voter education or registration activities with evidence of bias that favor one candidate over another, or oppose a candidate in some manner.

 ”As a 501(c)(3) organization, the BGA is required to remain impartial toward candidates. However, they have failed to do so,” Berrios said. “And its non-profit status is questionable at best. I hope the Board of Directors and their contributors take this into consideration before taking their next steps.”

All documents obtained through the Freedom of Information Act regarding Windy City Urban Inn will be available for download at www.forrestclaypool.org later today.