Though Africa’s population dynamics look enviable, large parts of the continent still tragically suffer from extremely poor governance that will continue to limit its potential. Just look at how Zimbabwe’s enviable natural resources and agricultural land have been wasted through appalling political mismanagement.
One final issue to note is the movement of world populations. Many population projections are based simply on the interplay between birth, longevity and death. However, as we have seen in recent times, populations are not immobile. The US has largely been built upon wave after wave of immigrants, which has kept its population growing and brought with it advantages of new, energetic labour.
So while analysis does suggest that higher levels of GDP will be more likely to emanate from emerging economies, it may be that we simply see the developed world attracting people from the developing world in ever increasing numbers.
So choose your emerging markets calls carefully. Look for a demographic tailwind, but also look for strong governance and stable government. It seems clear these factors should deliver enhanced long-term performance, although investors won’t escape volatility.
India has shown a strong combination of structural reform and population growth, and if it can continue down this path, it could become the global powerhouse that it has always threatened, but failed, to be.
Andrew Herberts is head of private investment management at Thomas Miller Investment
