Africa is probably the most exciting story of the future when talking about frontier markets, Carlos Hardenberg, Senior Vice President, Director of Frontier Markets Strategies, Templeton Emerging Markets Group, has said.

“But investors may need to be patient and to understand some of the unique aspects of doing business there as well as the risks,” he added.

For the Templeton Emerging Markets Group, frontier markets represent “exciting long-term investment opportunities”.

“We see favorable fundamentals including strong economic growth, abundant natural and human resources, favorable demographic profiles, the potential for rapid technological progress, and potential benefits from improving infrastructure and improving standards of governance,” said Hardenberg.

With the exception of South Africa, all of the countries on the African continent are considered to be frontier markets.

Hardenberg said that Nigeria is an important market for the Group in terms of the range of potential opportunities.

“There’s no question that Nigeria has faced a number of challenges, with virtually no power grid and poor infrastructure. The power production of the entire country is probably similar to one street in New York City,” he said.

“However, the ability of the Nigerian people to operate under the most difficult circumstances is astonishing. What has really surprised me in my travels there is how people not only in Nigeria but throughout Africa have been embracing mobile telecommunication and the Internet. Many people with hardly any food or a roof over their heads have smartphones and use mobile payments for various goods and services,” he added.

Hardenberg said that mobile banking is quite sophisticated in Africa due to the unavailability of physical banks or ATMs to a vast population.

He also mentioned the Chinese influence on the continent, building roads, ports, airports and tunnels, and becoming local partners with African businesses: “While Africa’s commodities are of interest to the Chinese, many are staying in Africa and setting up their own retail businesses there. It’s a symbiotic relationship.”

Hardenberg noted that the fall in commodity prices in the past couple of years has been a challenge for African countries, particularly those dependent on oil revenue.

“However, it could also be viewed as an opportunity for these countries to reform and diversify their economies,” he said.

“It forces governments to become more disciplined, to improve income collections and find ways to expand the economy and its coffers through more diverse ventures, not only through the sale of a single commodity,” he said.

“We are seeing a number of large multinational companies establish a presence in Africa for the first time—particularly in countries with improving infrastructure and ease of doing business—to access its large, vibrant and youthful populations,” he added.

The Templeton Emerging Markets Group is one of the pioneers of emerging market investing.

Established in 1987, the Group has over 25 years of experience and now manages £26.8bn ($37.97bn) in emerging markets assets for retail, institutional and professional investors across the globe.

The Group manages the $85.29m Templeton Africa Fund, which showed a negative performance in 2015 (-27.08%).

With the current portfolio of 34 companies, the Fund has the largest exposure to Egypt (21.58%), Nigeria (19.75%), Kenya (16.66%) and South Africa (8.12%).

As of December 31, 2015, the Fund's top holdings include Nigerian Breweries, Eastern Tobacco, Kenya Commercial Bank, Sonatel, Zenith Bank, Egyptian International Pharmaceutical Industries and East African Breweries.