The global growth narrative entering 2026 is quietly shifting. While Asia remains the world’s largest growth engine in absolute terms, a growing number of forecasts suggest that Africa’s growth gap is narrowing rapidly and, in select scenarios, could rival or even surpass parts of Asia on a marginal growth basis. More important than league tables, however, is what this inflection means for investors.
For equity investors, 2026 may mark a period when African domestic stock markets move from being structurally ignored to selectively re-rated, driven by improving macro stability, reform momentum, and under-owned equity universes. According to Bloomberg data, the Republic of Zambia’s LuSE index Lusaka stock exchange is the 2nd best performing stock globally in US dollar terms. The ZMW Zambia kwacha currency earns 10% yield and is among the 5 best performing currencies globally against the United States dollar. The AFK
VanEck Africa Index ETF (AFK) is trading around USD 27 levels, an exchange-traded fund (ETF) that seeks to track the MVIS® GDP Africa Index, a benchmark of companies connected to Africa’s economy. AFK One of the few ETFs offering AFRICA continent-wide equity exposure, including frontier and emerging African markets.
Why Africa’s growth acceleration matters for equities
Africa’s growth story is no longer just about commodities or infrastructure financed from abroad. Instead, it is increasingly driven by domestic demand, urbanisation, digitalisation, and financial deepening. These forces directly benefit locally listed companies rather than offshore multinationals.
Crucially, many African economies are emerging from a difficult 2022–2024 period marked by inflation spikes, FX shortages, and tight global financial conditions. As inflation moderates, currencies stabilise, and interest-rate cycles peak, the conditions that historically trigger equity re-ratings are starting to appear.
Under-owned markets create re-rating potential
African equity markets are among the most under-allocated globally. Benchmark weights are small, liquidity is limited, and sell-side coverage is thin. As a result, valuation discounts persist even when fundamentals improve.
When macro credibility strengthens, these discounts can compress rapidly. Banks, telecoms, consumer staples, and utilities often dominate local indices, and even modest multiple expansion can drive outsized returns from a low base.
Domestic demand and demographic compounding
Africa’s demographic profile remains unmatched globally. A young, urbanising population supports long-term growth in payments, mobile money, telecom data usage, retail banking, food and beverage, healthcare, and education.
Domestic stock markets provide direct exposure to these trends. In many cases, listed companies operate in highly concentrated industries with strong pricing power, established distribution networks, and improving governance standards.
Financial deepening as a structural tailwind
Banks and financial institutions are central to African equity markets. As financial inclusion improves and capital markets deepen, well-managed banks can deliver durable returns on equity through credit growth, fee income, and digital services.
At the same time, reforms to pension systems, exchange infrastructure, and settlement processes can improve liquidity and attract incremental institutional capital, reinforcing a virtuous cycle for domestic markets.
Selective commodity exposure through national champions
Africa remains central to global supply chains for energy, metals, and construction materials. Domestic stock markets allow investors to access this upside through listed national champions, including miners, cement producers, logistics firms, ports, rail operators, and power utilities.
These companies can often outperform sovereign risk by generating hard-currency revenues, paying dividends, and reinvesting locally.
Where the opportunity is most compelling
The opportunity is not a single “Africa trade” but a selective, diversified approach.
More liquid and institutionally developed markets include South Africa and Morocco, offering scale and liquidity with more moderate growth.
Higher-growth but higher-volatility markets include Nigeria, Kenya, and Egypt, where macro stabilisation could unlock significant earnings and valuation upside.
Regional platforms such as the BRVM in West Africa offer currency stability and regional exposure, though with fewer listed names.
Key risks and how to manage them
Foreign exchange risk remains the dominant variable for USD-based investors. Liquidity constraints, governance standards, and policy uncertainty also require careful navigation.
Risk management is essential. Investors should diversify across markets, size positions conservatively, favour companies with pricing power or FX hedges, and adopt a long-term horizon.
Conclusion
Africa does not need to replace Asia as the world’s primary growth engine for the investment case to work. The more compelling opportunity lies in selective domestic equity markets where macro stabilisation, reform momentum, and demographic growth intersect with deeply under-owned valuations.
For patient investors willing to do bottom-up work and manage risk, African domestic stock markets may represent one of the most asymmetric equity opportunities of the 2026 cycle.
Rainer Michael Preiss
Partner & Portfolio Strategist
Das Family Office, Singapore
