00:00I know we talk a lot, though in the past, about some of the investment opportunities on the continent.
00:06But there seem to be two big developments over the last few months that seem to be maybe signaling a more bullish environment.
00:12One, what Katie just mentioned here with the idea of total growth rate for the continent, potentially outpacing Asia.
00:18But also some interesting stats that we got a few months ago out of the African Finance Corporation
00:23that talked about something more than a trillion dollars in effective dry powder sitting on the sidelines
00:29that investors are looking to deploy.
00:31And I'm curious as to whether you are in that category of folks with that sitting on that type of dry powder.
00:38No, absolutely I am, Romain.
00:41What I will say is that I've been investing in Africa for about 26 years,
00:46and there seem to be about 15 to 18-year cycles.
00:50So when the dollar goes up, EM currencies come down and African currencies have come down.
00:55So we've talked a number of years of macro issues in Africa, inflation, devaluations, and general malaise.
01:04Last year, all that changed.
01:06So we're talking about 54 countries, and they're different.
01:09But if you look at inflation, five countries have lower than 4 percent inflation.
01:14And generally, even in the countries that were high inflation, they've come down.
01:18We talked last year, Egypt had 36 percent inflation.
01:22It's down to 12.5.
01:25Devaluations have turned into appreciation.
01:27Egypt currency grew 7 percent against the dollar.
01:32There are seven or eight countries that are more than 10 percent against the dollar.
01:36As a result, also, you talked about GDP growth.
01:39Yes.
01:40Last year, Africa was supposed to be higher than Asia.
01:43It was not much difference, 4.1 versus 4.4.
01:48But this year, that's supposed to flip.
01:51So you've got GDP growth and better macro.
01:55And the fact is, the dollar going down against African currencies makes dollar investments more profitable.
02:04And so for us, that is a great opportunity to invest.
02:09Well, I have to ask you on that last point on the dollar.
02:11I mean, one reason why we saw some relative outperformance in the broader EM space, including in some of those African nations,
02:16was because of the weakness in the dollar last year, as well as the fact that most central banks, other than the United States, were aggressively cutting rates.
02:24And I am curious, there's the expectation that that dollar weakness will reverse this year.
02:28And there's expectations that we could get multiple rate cuts out of the U.S. this year.
02:32Does that complicate the investment picture for you?
02:36Well, I started talking about the longer term trends.
02:39If you look over the last 70 years, the dollar goes up in a cycle of 15 to 18 years and EM goes down.
02:47We actually hit the end of that cycle.
02:50And the dollar, with ups and downs, generally is expected to go down, according to some economists.
02:56So over the next 15-year cycle, we expect the EM currencies, Africa currencies, to stay stable or actually appreciate.
03:05What do I think in terms of investment if the dollar changes this next year?
03:11The fundamentals in the African countries aren't changing.
03:14So I talked about inflation, GDP growth, and there are lots of other, you know, more micro factors that lead to better investment climate.
03:23And one of those is that in some of the largest stock markets in Africa, and we're talking about Morocco, Algeria, Kenya, South Africa, 50% growth, 50% growth versus 20% in the NASDAQ and 16% in the S&P.
03:44So that means we've been able to IPO in late last year.
03:48We had a 5x IPO in dollars in the Johannesburg Stock Exchange just late the year before we had an IPO in Morocco.
03:57That was 37 times oversubscribed, and we'll end up being about a 3x.
04:02So those fundamentals are still there now.
04:06And it's interesting to hear your point on IPOs.
04:10I mean, you think about what's going on in the U.S. IPO market.
04:13You're seeing a lot of crypto names came through in 2025, but also a lot of AI-related names.
04:20When it comes to, you know, these African economies, what types of companies are you seeing potentially tap the public markets here?
04:26So it's interesting, the IPO for us in Morocco was an agribusiness company, but the IPO in South Africa is a fintech.
04:38So it is a tech company, and we're going to see more and more IPOs in that sector.
04:44If you start it off, because we're also in venture capital, in venture capital, digitalization is obviously a big thing, and AI is now coming in.
04:53This is the first year it's coming in.
04:54In our private equity bucket, there's also digitalization across all the buckets, whether it's a specialty chemicals company that has apps,
05:05and all the revenues migrate on the app, and, you know, it's more efficient, increased EBITDA,
05:11or whether it's a straight-on microcredit company that's turned into a fintech and is using digitalization.
05:18So on the stock markets, you will see some IPOs more on digitalization in the venture capital side, AI.
05:27That will come in Africa, but with a little bit of a lag.
05:31And, Runa, you made the interesting point that, you know, you think about the direction of the dollar, the trajectory of the dollar.
05:36It's not necessarily going to change the fundamentals of some of the companies that we're talking about here.
05:41But talk to us about tariffs.
05:43You know, we're awaiting a big tariff decision by the Supreme Court, potentially coming tomorrow,
05:47on the legality of some of President Trump's tariffs.
05:50But how has that sort of factored into the picture of investing in Africa?
05:56So this is a very little-known fact.
05:59It hasn't.
06:00And the reason is about 4% of the trade of the exports in Africa is with the U.S.
06:06It was very different 20 years ago, but the trade with the U.S. has declined.
06:12The EU is the biggest trade partner, and then China after that.
06:16So the tariffs have made very little difference.
06:19There's a tiny country, Lesotho, unfortunately made a big difference there.
06:24For the rest of Africa, not much of a difference.
06:26And when you see even individual companies, the citrus industry, citrus companies in South Africa couldn't export to the U.S.,
06:35they pivoted immediately their BRICS country and exported to China.
06:39So it's made very, very little difference.
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