African Stocks: Investing in the Last Great Emerging Market

A massive middle class and rapid technology-enabled development could turn African stocks into growth darlings over the next two decades.

Rendered graphic of the globe showing Africa
(Image credit: Getty Images)

China is done.

OK, OK. That might be a little over the top. Perhaps we could say that China's time as the world's greatest growth darling is done. So if you want access to emerging market stocks with blistering "China-like" economic growth, African stocks are the last great investing frontier.

That might sound ridiculous at first. But then, in 1978, when China first began its economic reforms, it might have seemed ridiculous to believe that China would grow to become the world's second largest economy a generation later. And yet, here we are!

Africa is developing a real middle class for the first time in its history. By some estimates, Africa's middle class is already well more than 300 million people. More conservative estimates put the number closer to 170 million people. But we don't need to split hairs: Even at the lower end of the estimate, we're talking about a lot of consumers.

Of course, "middle class" in Africa might mean something very different than middle class in suburban New Jersey. Africa is a frontier market in the truest sense of the word, and much of the continent is at a very low level of development. But that's exactly what makes Africa exciting. It's a lot easier to grow at China-like rates when you're effectively starting at zero.

Technology is also allowing developing countries to skip entire levels of development. Much of Africa will never have wired internet, let alone wired phones. It's vastly cheaper and quicker to throw up cell towers, so that's the direction they'll go. And they'll have none of the cost of maintaining legacy infrastructure.

Think about banking and finance. You likely take your bank account for granted. But only about a third of Africans have access to formal bank accounts. This creates massive opportunities for disruptive fintech operators to step in and eliminate the need for a bank account altogether. If your first experience with payments was something that looked like PayPal, Venmo or Apple Pay, and that became the norm … why would you ever bother with a bank?

These are the kinds of opportunities that are alive and well in Africa. Today, we're going to look at three of the best African stocks (and two funds!) that will take advantage of them.


Data is as of April 13.

Charles Lewis Sizemore, CFA
Contributing Writer,

Charles Lewis Sizemore, CFA is the Chief Investment Officer of Sizemore Capital Management LLC, a registered investment advisor based in Dallas, Texas, where he specializes in dividend-focused portfolios and in building alternative allocations with minimal correlation to the stock market.