PricewaterhouseCoopers (PwC) has revealed new research which indicates that economic growth and a rise in wealth across the African continent will produce a compound annual growth rate (CAGR) of nearly 9.6% by 2020.

The report by the professional services network, entitled 'Africa Asset Management 2020', studied the current extensive growth of the asset management industry across twelve African countries of varying degrees of development. Traditional assets under management (AuM) in these twelve domains are predicted to rise from a reported $293 billion in 2008 to $1,098 billion by the year 2020.

Contributing factors to this rise were cited as due to future increases in the demand for pensions and life insurance products, and retail investment funds; as well as the expansive nature of new technology which will bring the price of new products down.

“The countries, which represent a sample from Northern, Eastern, Western and Southern Africa, were assessed by a range of relevant indicators in order to capture their true investment potential," said Dariush Yazdani, Market Research Centre Leader at PwC Luxembourg. "The countries were categorised into three groups: advancing markets, promising markets, and nascent markets. In addition, the report outlines and analyses the future game changers for investment into Africa as a whole as well as addressing the impacts for these specific markets.”

Ilse French, PwC Africa Asset Management Leader, continued:  “As Africa has entered the 21st century, economic growth has surpassed expectations and stimulated investor interest across a broad range of asset classes. Although the fund industry in Africa is, in most countries, still developing and has much to prove, global and local asset managers are likely to become more active as the industry continues to flourish.”

PwC has also stated an expected rise in global AuM to around $101.7 trillion by 2020, with the significant growth of the African markets estimated to represent a share of between 75% and 95%.

"Africa’s demographic dividend, its growing middle class, its increased use of technology, and its rapid urbanisation will all have a part to play in the development of the asset management industry in Africa”, commented Yazdani.

With reference to additional findings made by the report, that the volume of investable assets is expected to continue to rise up until the predicted year, Yazdani added:

"Retail investors form a small proportion of investors in asset management. However, the report suggests that the number of retail investors in these markets could be increased by way of education
about products, encouragement of a savings and investment culture, and overall economic growth."

 

Photo By PwC (Dariush Yazdani, Market Research Centre Leader at PwC Luxembourg)