Putting Africa’s hard-earned savings to work

FOREIGN direct investment in Africa and commitments of donor funding may make headlines, but a largely unreported – and highly positive – story is quietly unfolding across the continent’s capital markets.

The domestic savings of countless African families are being mobilised via a growing array of savings and investment products, innovations with the potential to accelerate economic growth and national prosperity. Stanlib Africa – part of the Johannesburg-based Stanlib and Standard Bank groups – is fast emerging as a key facilitator of the process in jurisdictions from Windhoek to Kampala.Demand for a new wave of wealth products is illustrated in neighbouring Botswana by the response to concepts such as pula-denominated money-market funds.Savers used to low interest rates on deposit accounts suddenly discovered that the new product delivered returns of an entirely different order of magnitude.Stanbic Investments – the name of Stanlib subsidiaries across Africa – launched its pula money-market fund in October 2004.In less than a year it attracted 1,1 billion rand from private investors and institutions.A similar product has been launched in Namibia followed by the introduction of an income fund, a unit trust that uses an even wider spread of fixed-interest instruments.This fund attracted N$360 million in its first six months and by September 2005, total Namibian assets under Stanlib Africa management had reached N$3,6 billion, 23 per cent growth for the year.Stanbic Investments supports local economies.The local ‘floor’ of the new managed flexible fund is a minimum 30 per cent investment in Botswana instruments.The lower local limit in the Namibian income fund is 35 per cent.An array of benefits accrues to markets in which Stanlib Africa operates.Gary Spinas, Managing Director of Stanlib Namibia, explained: “By trading in government bonds, quasi-government bonds, Treasury bills and corporate bonds we assist the development of capital markets while supporting pillars of the local economy.”Another benefit is market education.We cannot sell our products without a huge educational drive because the traditional alternative – the savings account – is so well entrenched.Returns are much lower, but after so many years the savings account concept is well understood.To compete we educate and communicate.”Currently, 11 staff members oversee a Namibian client-base of more than 8 000 clients, with total funds under management of N$3,7 billion.Their active management of both retail and institutional business is facilitated by the deployment of desktop systems that enable local professionals to add value to the affairs of local clients.Stanlib Africa – part of the Johannesburg-based Stanlib and Standard Bank groups – is fast emerging as a key facilitator of the process in jurisdictions from Windhoek to Kampala.Demand for a new wave of wealth products is illustrated in neighbouring Botswana by the response to concepts such as pula-denominated money-market funds.Savers used to low interest rates on deposit accounts suddenly discovered that the new product delivered returns of an entirely different order of magnitude.Stanbic Investments – the name of Stanlib subsidiaries across Africa – launched its pula money-market fund in October 2004.In less than a year it attracted 1,1 billion rand from private investors and institutions.A similar product has been launched in Namibia followed by the introduction of an income fund, a unit trust that uses an even wider spread of fixed-interest instruments.This fund attracted N$360 million in its first six months and by September 2005, total Namibian assets under Stanlib Africa management had reached N$3,6 billion, 23 per cent growth for the year.Stanbic Investments supports local economies.The local ‘floor’ of the new managed flexible fund is a minimum 30 per cent investment in Botswana instruments.The lower local limit in the Namibian income fund is 35 per cent.An array of benefits accrues to markets in which Stanlib Africa operates.Gary Spinas, Managing Director of Stanlib Namibia, explained: “By trading in government bonds, quasi-government bonds, Treasury bills and corporate bonds we assist the development of capital markets while supporting pillars of the local economy.”Another benefit is market education.We cannot sell our products without a huge educational drive because the traditional alternative – the savings account – is so well entrenched.Returns are much lower, but after so many years the savings account concept is well understood.To compete we educate and communicate.”Currently, 11 staff members oversee a Namibian client-base of more than 8 000 clients, with total funds under management of N$3,7 billion.Their active management of both retail and institutional business is facilitated by the deployment of desktop systems that enable local professionals to add value to the affairs of local clients.