Introducing the Frontier Markets Institute
Frontier Markets represent over 30% of the world's population and 15% of the world's GDP. Yet they make up a mere 0.3% of the world's global market cap. These are economies which have historically been characterised by their issues: infrastructure gaps, weak institutions, opacity, illiquidity, harsh histories, unfavourable geographies, and occasional political instability. Simultaneously, these are regions which today also exhibit immense potential and opportunity:
Nations which are classified as ‘developing’ and ‘frontier’ will make up the majority of the world’s productive and working population by 2050. For example, today, over 60% of Africa’s population is under the age of 25. By 2030, young Africans are expected to constitute 42% of global youth. This is where the global future will be.
There is a tide of urbanisation taking place. 68% of the world population is projected to live in urban areas by 2050, according to the UN. Alongside this, there will be the need to create new institutions, companies, infrastructure, and jobs which enable this urbanisation to be fruitful.
The previous two decades have given birth and momentum to several infrastructure level technologies that can enable innovative frontier specific business models and can help developing markets leapfrog their peers (i.e Smartphones, Fintech, Starlink, etc).
Many of these regions are in the early innings of entering growth arcs similar to yesterday’s emerging markets, such as Asia’s Four Tigers. They’re also in the early innings of building crucial and valuable infrastructure and digitisation, which presents many well defined opportunities for investors.
We are entering the early stages of a significant shift in the world’s patterns of production. There is increasing demand for the materials that underlie clean energy production, and those materials exist in large abundance in many of these frontier regions. Similarly, there will be a need for new manufacturing hubs as global trade policy shifts. Two striking examples of this are the demand for 300+ new rare earth metal mines to meet electric vehicle demand, and the potential for new manufacturing networks in Latin America, backed by US capital.
The final, far more intangible opportunity with frontier markets is the potential for outsized positive impact, and the experience of adventure in pursuing such impact. During the early days of the internet, Silicon Valley was the new frontier of commerce. There were many new pathways to be unlocked, and the creative space of opportunity was large. Today, Sand Hill Road funds predictable and marginal SAAS products, as opposed to seeking true frontiers. Within frontier markets, there is no established playbook, and we believe that it is within this blank space that there exists opportunities lies for pioneers willing to stomach the risk, overcome obstacles, and build the future.
All of the above paints a picture of an investment landscape with no shortage of opportunities to be unearthed, problems to be solved, risks to be navigated in increasingly sophisticated ways, and a new horizon of returns, growth, and rewards for those eager to navigate this frontier.
The Frontier Markets Institute is a new vehicle for exploring and accelerating this emerging landscape. We are in our earliest stages as a think tank - and we see our current goals as existing in three broad strokes:
We want to map the current ecology of participants and activities across a range of frontier markets.
We want to understand and form a differentiated worldview on how to move frontier markets ecosystem forward.
We want help those involved in these markets; be it policymakers seeking regulatory inspiration, or entrepreneurs looking for market specific guidance or help with fundraising.
We’ll be starting off with three main projects:
Our podcast where we interview leaders who are shaping these markets.
We’ll be going on a listening tour, where we seek to better understand the views of participants in these markets to inform our future direction.
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