By Ayuure Kapini Atafori
A Standard Chartered survey conducted between July and August 2020 among a panel of the world’s top 300 investment firms with total assets under management (AUM) of more than US$50 trillion found that only three per cent of their AUM is invested in Africa.
And that lack of investment in emerging markets puts the chances of meeting the 2030 the United Nations’ (UN) Sustainable Development Goals (SDGs) deadline at risk; and of those already investing in Africa, 93 per cent say they will likely increase their investment in the future.
Africa is not getting the investment needed to help the world meet the SDGs) by 2030, new research from Standard Chartered has revealed. The survey, the $50 Trillion Question, investigates how some of the world’s largest asset managers – with a combined US$50 trillion in AUM – are investing at this critical time for the global economy and the environment.
The research shows that almost two thirds (64 per cent) of the panel’s AUM is invested in the developed markets of Europe and North America, while just three per cent is in Africa. Asia, which includes several developed markets, takes 22 per cent, while just two per cent, and five per cent of the assets are invested in the Middle East and South America respectively.
The risk posed by emerging markets was flagged as a major barrier to investment. More than two-thirds of investors believe emerging markets are high-risk, compared to 42 per cent who believe the same for developed markets. More than half of the panel (53 per cent) believe returns from investment in Africa are low or extremely low, with almost three in five investors (59 per cent), saying that they are deterred from investing because they lack in-house specialist teams.
Optimistic about Africa
In contrast, those already investing in Africa are optimistic about the region, with 93 per cent saying they are likely to increase investment in future. About 54 per cent of Africa investors said their investments had performed as well as – or better than – their developed market investments over the past three years. The figure for emerging markets overall was 88 per cent.
However, COVID-19 may have made it even harder for emerging markets to get the investment they need. Some 70 per cent of investors believe the pandemic has widened the capital gap further.
The research points to a growing focus on sustainability, with 81 per cent of investment firms now taking a disciplined approach to environmental, social and governance investment. However, this is not translating into investment in the SDGs. Only 13 per cent of the assets managed by our respondents is directed towards SDG-linked investments.
Difficult to measure
Some 55 per cent claim the SDGs are not relevant to mainstream investment and 47 per cent say investment in the SDGs is too difficult to measure. However, one fifth of investors admit that they were not aware of the SDGs.
Respondents point to regulatory changes, favourable tax treatment, evidence of higher returns, better data for measuring impact, and increased demand from retail investors as the top five factors that might spur on more SDG investment.
Sunil Kaushal, Regional CEO, Africa & Middle East, Standard Chartered, said there is still an investment gap in Africa to realise the SDGs and this creates an opportunity for the entities to make a difference where it matters the most. “A significant surge in private-sector investment – alongside public investment and commitments – will be required to bridge the gap and hit the SDG targets over the next ten years. Right now COVID-19 has made the imperative to act even stronger in the region.
“There is no single answer to The $50 Trillion Question, but it is evident that investors need to expand their focus beyond developed markets. Africa, and emerging markets generally, offers investors a unique opportunity: strong returns combined with the chance to have a significant, positive impact in the long term.”
‘Opportunity 2030’
The $50 Trillion Question study follows the publication of ‘Opportunity 2030: The Standard Chartered SDG Investment Map’ which first revealed the multi-trillion dollar opportunity for private sector investors to help achieve the SDGs in emerging markets.
The $50 Trillion Question Investor Panel is made up of asset managers from the world’s top 300 asset management companies. With combined assets AUM worth more than US$50 trillion (the equivalent to half of global GDP), how the asset managers in the survey choose to invest will have a huge impact on humanity’s ability to solve some of the world’s biggest problems. This study is based on in-depth interviews with the panel, conducted between July and August 2020.
The below shows the panel broken down by AUM, role and location, all of which ensure it is representative of the global top 300 asset managers.
| The $50 Trillion Investor Panel | ||
| by AUM | by generalised job role | by location |
| 19 per cent are top 10 firms (over USD1 trillion)
46 per cent are top 11-50 Firms (USD1 trillion to USD350 billion) 23 per cent are top 51-150 firms (USD350 billion to USD90 billion) 12 per cent are top 151-300 firms (USD90 billion to USD20 billion) |
42 per cent are fund managers
41 per cent are strategists 17 per cent are emerging market specialists |
42 per cent are based in North America
42 per cent are based in Europe 8 per cent are based in Japan 3 per cent are based in China 5 per cent are based elsewhere |
Standard Chartered PLC is a leading international banking group with a presence in 60 of the world’s most dynamic markets and serving clients in a further 85. Th Group’s purpose is to drive commerce and prosperity through its unique diversity, and its heritage and values are expressed in its brand promise. Standard Chartered PLC is listed on the London and Hong Kong Stock exchanges.
