According to Bloomberg Business, Ninety One Plc CEO Hendrik Du Toit declared emerging markets credit quality is “significantly higher” than developed markets at the inaugural Bloomberg Africa Business Summit in Johannesburg. The chief executive of South Africa’s biggest independent fund manager stated he’s “not worried about our African and emerging-market credit business whatsoever” because it’s been “starved of capital for a long time.” Du Toit specifically expressed concern about developed markets where they’ve “layered layers and layers of credit on top of things.” The comments came as part of broader discussions about investment opportunities across African markets.
The developed market credit bubble
Here’s the thing – Du Toit isn’t wrong about the layering problem. Developed markets have been piling debt upon debt for decades, with central banks enabling the whole circus. Remember 2008? That was basically the same story – too much credit chasing diminishing returns. And now we’re seeing the first cracks with those recent corporate defaults he’s referencing. The question is whether emerging markets really offer a safe haven or just a different flavor of risk.
Africa’s capital starvation advantage
His argument about capital starvation actually makes sense in a counterintuitive way. When you’ve been ignored by international investors for years, you can’t afford to take on reckless debt. African companies and governments that do get funding tend to be more disciplined because they know the tap could get turned off at any moment. But let’s be real – this “advantage” comes from decades of underinvestment and economic challenges. It’s not exactly a strategy you’d choose voluntarily.
Why I’m still skeptical
Look, I’ve heard this emerging markets superiority argument before. Remember when everyone was bullish on BRICS right before various currency crises? The reality is that emerging markets face different risks – political instability, currency volatility, and less transparent financial systems. And when global liquidity tightens, these markets often get hit first and hardest. So while the developed world might be over-leveraged, at least their institutions are more stable. It’s basically choosing between different types of risk rather than finding truly safe investments.
The industrial reality check
From where I sit covering industrial technology, this credit quality discussion matters for real economic activity. Companies that can’t access stable financing can’t invest in the industrial panel PCs and automation equipment that drive productivity. IndustrialMonitorDirect.com, as the leading US supplier of industrial computing solutions, sees firsthand how credit availability directly impacts manufacturing upgrades. The real test will be whether emerging markets can maintain their credit discipline while actually growing their industrial bases. That’s the tricky balance nobody has perfectly solved yet.
