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Summary The Market Vectors Africa ETF provides diverse exposure to Africa’s growth, and strategically invests over 40% of its assets in the banking industry. Earnings for 9 out of 10 of the fund’s top ten holdings increased, as the fund’s price sharply dropped in 2014. The Global X MSCI Nigeria ETF is extremely undervalued at the moment, and presents a unique buy opportunity for those willing to risk investing in a low oil price environment. The Market Vectors Africa Index ETF (NYSEARCA: AFK ) is the simplest and most efficient solution for investors to gain exposure to Africa’s economic growth. The fund has experienced a sharp drop in price since 2014, which is not at all correlated to the financial earnings of the fund’s major holdings. This has created substantially low valuation for the fund. Moreover, the economic outlook for Africa is favorable, with overall projected growth in the country’s that the fund invests into. Demographics in this region are also favorable, as the population is growing by more than 2% and 43% of the population is younger than 15. Moreover trends of urbanization are rising, although approximately 70% of the population earns their income from agriculture. That being said, Africa certainly has challenges ahead of it, and this fund is most appropriate for investors who are willing to take a long term horizon, and confidently hold if the fund experiences a further drop in price. Growth projections for this region have been lowered to 4.2%, with a slightly higher forecast for 2016 and 2017; this is due to concerns with the impact of low oil prices on Algeria and Nigeria, and difficulties in electricity supply in South Africa. While fully acknowledging these threats, I still remain bullish on Africa and believe that some options listed on U.S. Exchanges, although there are not many, provide ample opportunities for investors to gain exposure to Africa’s future growth. AFK data by YCharts 12 Month Economic Outlook Overall, the economic outlook for the five main countries that the fund invest into looks favorable. Average annual GDP growth was recently 3.65%, and is projected to increase to 4.1% in the next 12 months, an accurate projection of the projections for Sub Saharan Africa. Consumer Spending is projected to increase by around 3.3% for these countries, with the highest growth being in Morocco and Kenya. Areas of concern include the projected decrease in exports, and the issues previously mentioned with South Africa and Nigeria. Annual GDP Growth Annual GDP Growth Projection in 12 Months 12 Month Consumer Spending Growth Projection 12 Month Export Increase Projection Nigeria 3.96% 5.08% 2.3% -1.4% Egypt 3% 5% -0.4% -10.9% South Africa 2.1% 2.1% -2% 3.3% Morocco 4.3% 2.76% 7.3% -1.8% Kenya 4.9% 5.46% 9.4% -5.4% Top Fund Holdings By examining the fund’s top ten holdings , it is clear to see the sharp drop in fund price was not correlated to the fund’s financial performance, and has created an excellent buy opportunity. While the fund’s price dropped substantially in 2014, all companies, except for Nigeria Breweries PLC, were able to increase in net income. Banking industry The baking industry in Africa has a very favorable outlook and substantial growth ahead, which is another positive driver for this fund, which invests around 40% of its assets in this industry. Financial performance of the fund’s holdings was excellent, with the five companies having an average of 14.8% increase in net income during 2014. The widespread introduction of mobile banking throughout Africa has been a huge catalyst for the industry’s growth, and the high unbanked population in Africa provides room for further growth in this industry. The holdings in the banking industry in this fund have extremely attractive valuation, and represent a positive compliment to the high valuation of Nigeria’s consumer product industry. Unfortunately none of these companies are listed on U.S. exchanges, but can be considered a positive driver for the fund Nigeria Focus While the negative impact of Boko Haram and low oil prices should certainly be considered negative drivers for Nigeria, the country has key strengths in multiple industries that offsets this risk. The rise of the consumer products industry and banking industry in Nigeria, coupled with massive infrastructural developments, have resulted in an economy that is more diversified and less vulnerable to oil prices. While Its export earnings are highly dependent on the price oil, the country’s GDP is extremely diversified, with oil only attributing to 14% of the country’s GDP. The consumer products industry is on the rise, although valuation is a concern, and the banking industry also displays ample potential. Oscar Onyeama, CEO of Nigerian Stock Exchange, made the following statement about the declining price of oil’s impact on Nigeria’s economy: The effects of the declining oil prices can be felt in nearly all areas of our national life; from the pressure on the naira, which has led to the central bank of Nigeria’s spending over $4.7 billion to defend the national currency, through the impact on the capital markets with foreign investors taking a wait and see attitude in the last couple of months, to federal government budget deficits. While the decrease in oil prices has certainly put a strain on Nigeria’s economy, there is certainly growth and attractive valuation to be found in other industries. The Global X MSCI Nigeria ETF (NYSEARCA: NGE ) is an excellent way to gain exposure to Nigeria, has a wide variety of industries developing outside of the oil industry. Its current valuation is among the lowest of ETFs in Asia and Africa, and has substantial growth ahead of it. Investors who are willing to take the risks associated with geopolitics and the country’s dependency on oil prices, will be rewarded with the fund’s low valuation and high growth potential. While general exposure to Africa, through AFK, is the most conservative endeavor for investors, specifically identifying opportunities in Nigeria provides the opportunity for higher returns, by taking advantage of the fund’s current low valuation; it currently has a P/E of 9. Conclusion The Market Vectors Africa Index ETF is an excellent means for investors to gain exposure to Africa, due to its diversified holdings and low valuation. Investors who prefer a higher risk and less diversified investment approach, should strongly consider the Global X MSCI Nigeria ETF. Both funds have received an undeserved drop in price, and present an excellent buy opportunity for investors with a long term vision for Africa’s growth. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.