1. Todd Moss, Vijaya Ramachandran, and Scott Standley Why Doesn’t Africa get More Portfolio Investment? Frontier Stock Markets, Firm Size, and Asset Allocations of Global Emerging Market Funds

2. Why relevant?  Finance & development debate  Push vs Pull determinants  Inform efforts to promote cap flows Market failure? Market works?

3. Frontier equity markets  15 mkts  SA dominates  Others small, low liquidity  Few large blocks available  But not unusual

4. Log market capitalization vs. Log GDP

5. Log value traded vs. Log market capitalization

6. Regional Funds

7. GEM fund investment, 1995-2005

8. South Africa GEM investment, 1996-2004 (3 year moving averages)

9. GEM investment in Frontier SSA (1996-2004, 3yr moving averages)

10. Share of GEM investment vs. Log market capitalization No country with market cap under $50 bn receives more than 1% of total GEM investment Market cap = $50 bn

11. Share of GEM investment vs. Log value traded Value traded = $10 bn No country with value traded under $10 bn receives more than 1% of total GEM investment

12. Log GEM investment vs. Log market capitalization

13. Log GEM investment vs. Log value traded

14. Share of GEM funds vs. Log market capitalization

15. >90% of funds and >$150 bn market cap Outgrown asset class <10% of funds and <$20 bn market cap

16. Share of GEM funds vs. Log value traded

17. >90% of funds and >$75- 100 bn value traded Outgrown asset class <10% of funds and <$2 bn value traded

18. Why are SSA firms small? Cost Structures, Firm-Level Average by Country (Eifert, Gelb and Ramachandran, 2005)

19. Why are SSA firms small? Gross and Net Value Added per Worker, $ Adjusted (Eifert, Gelb and Ramachandran, 2005)

20. Why are SSA firms small? Percentage of Annual Revenues Lost in Unofficial Payments (World Bank Investment Climate Assessments, various)

21. Conclusions  Target regional funds  Leverage JSE  Focus on supply constraints/barriers to firm entry and growth  Privatization?  Private equity?  SME finance?

22. END  END

23. Log GEM investment vs. Log market capitalization

24. Share of GEM investment vs. Log market capitalization Market cap = $50 bn No country with market cap under $50 bn receives more than 1% of total GEM investment

25. Log GEM investment vs. Log GDP

26. Share of GEM funds vs. Log GDP

27. >90% of funds and >$200 bn GDP 10%-90% of funds and $60-$200 bn GDP Outgrown asset class <10% of funds and <$60 bn GDP

28. Share of GEM investment vs. Log GDP GDP = $100 bn No country with GDP under $100 bn receives more than 1% of total GEM investment