While many multinational companies, countries and foreign investors are latching onto Africa — the hottest and most promising emerging market of the moment — Afriq-Invest founder and CEO Ade Okunubi is working to help investors in Africa take advantage of U.S. stock market offerings.
Founding the U.S. and Seychelles-operated company last year, the online platform was created to offer U.S. company shares at comparable costs. According to Okunubi, African investors can stand to benefit from diversifying their portfolios.
Why African Investors Should Trade U.S. Stocks
Essentially, potential investors log onto Afriq-Invest, choose from three account types — self-directed, market exposure or custom — place a trade, and subsequently track the performance of their portfolios. These account types offer active trading, mutual fund investment and customized investment opportunities. Afriq-Invest allows 24/7 access, however actually funding these accounts — through bank wire deposits — cannot be completed online.
“A key tenet in investing is diversification and Afriq-Invest allows Africans to do just that. As I’ve shown on our homepage, high inflation, low liquidity and currency depreciation among other factors negatively affect the risk-adjusted returns local investors get in Africa — even though those markets have been rising the last few years,” Okunubi told AFKInsider.
According to Afriq-Invest’s website, as compared to Ghana’s GSE Composite Index at 13 percent and Nigeria’s NGE All Share Index at 8 percent, the U.S.’s S&P 500 Index has only seen a 1.5 percent price inflation over the last 12 months.
In addition, the GSE’s average daily traded value of $500,000 and NSE’s $29.3 million is meager in comparison to the $600 billion traded within the U.S.’s S&P 500 Index.
“From my experience with Nigeria, there are very few low cost and more importantly, low maintenance investment options in Africa right now,” he added.
“If you want to invest excess cash, you either buy government bonds that barely provide a suitable real return after inflation or you buy land which requires high cost professional services like lawyers and brokers — and that’s before you improve the land or keep people from illicitly reselling it.”
A gateway to a stable investment and trading environment, these options and figures were largely motivation for Afriq-Invest’s founding. Born in Washington D.C., Okunubi often traveled to his family’s homeland of Nigeria — one African country, which in his opinion, shows promise when it comes to the success of a business like Afriq-Invest.
Prior to earning his MBA at Harvard University — where he was further introduced to Africa’s vast economies — Okunubi worked as an equities trader for three years. After grad school he moved on to mergers and acquisitions, gaining more experience with both securities markets and high volume trading.
“Africa’s markets are on everyone’s radar now and are coming of age but there is a lot of work to be done before those markets become as dynamic as the Western markets. My experiences in the U.S. markets can be of benefit to my clients who are interested in investing their wealth in the U.S.,” Okunubi said.
“This will also benefit African markets in the long run by making local investors more exposed and better prepared to support their local firms,” he said. “When those firms look to go public they wont need to head to London or Dubai like they do now — there will be an investing public ready to receive them.”
Learning Investment Basics From ‘The Street’
And learning the basics of investment isn’t even the most difficult aspect, he says. For the most part, Okunubi learned from his experience in corporate and on Wall Street. However, he didn’t discount the convenience of the web. For that reason, he made it a point to integrate informational resources on his site.
“The internet has greatly reduced the time and cost of acquiring information so anyone, anywhere can learn the basic concepts that form the foundation of investing,” he said. “Our account holders are also able to conduct research on any company they want right on the site so they don’t have to go hunting for financial reports and filings.”
As for now, Okunubi is focused on catering to Afriq-Invest users and adjusting the site’s offerings to their needs. If account holders lean toward custom investment, the business will “pivot that way,” he said. Active traders are Afriq-Invest’s most common type of user at the moment.
Trusting an Online, Foreign Investment Platform
The toughest hurdle, Okunubi admits, is convincing potential investors to trust Afriq-Invest’s offerings. Investment fraud and financial corruption remain issues across Africa, so customers are often weary when stepping up to take part in a guided investment venture.
Okunubi hopes to leapfrog the trust burden by word-of-mouth expansion and partnerships with large banking institutions.
“Right now I am working to create a community of users that are enjoying the benefits of investing in the U.S. Hopefully Afriq-Invest grows to the point of being a ‘financial super store,’ where Africans can invest in any security they want from any country they want — right in the comfort of their own home, for the lowest cost possible,” Okunubi said.
“The long-term impact I hope to have is to help my users learn how investing over the long-term can meaningfully grow their wealth and they become better and more informed investors. This will positively benefit African markets as those capital markets open up and come of age.”