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Bringing It All Back Home

African idealists like Marcus Garvey dreamed of the day when the people of the continent would invest their pooled capital into building the continent. Now, it seems the free market may have found a way to hasten this dream.

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With austerity afflicting many Western markets, it may come as some comfort that so much of the money that flows into Africa from around the world each year comes from Africans. The members of the African diaspora remit around $40 billion back to their home countries every year. With interest rates in the West at historical lows and inflation still high, deposited money is losing value.

Guinean-American Eric Guichard grew up between West Africa and the USA. He worked in the international financial sector and then in the fund management industry. Now based in London, Guichard is working to position his latest venture—Homestrings— in the middle of remittance flows.

Global remittances reached record highs in 2012, totaling $351 billion. “Where it hit me was when I saw the actual global number in transfers and how disorganized that market is—no one is really looking at that mass as a potential source of patient capital,” Guichard says.

A George Washington University study showed that the majority of remitters wanted to use the money to invest at home. In fact, many already do through informal mechanisms—transferring the money to a relative, who then puts it into property or a small business.

Those informal structures work, but are inefficient and rely a great deal on trust. The remitter loses control over the money once it is out of his or her hands. There are a growing number of managed investment funds that target emerging and frontier markets, including in Africa, but few have subscription levels that are accessible to the average retail investor.

Defying the characterization of the members of the African diaspora as poor, the George Washington University report shows that many have above average incomes and significant annual investment portfolios, transferring tens of thousands of dollars each year. They are savvy and the majority use the internet not only for news about their home countries, but also to look for money-making opportunities.

“Being from Africa, and being one of those remitters, I knew that if there was a platform that gave me control and empowered me to choose where I wanted to put my money, I would potentially put all my discretionary capital in that platform,” Guichard says. “If I could choose to invest in this bridge, this healthcare clinic, invest in those sovereign bonds, partake in Actis’ real estate private equity funds at thresholds that are achievable by me, of course.”

Guichard built a platform to do just that. Homestrings is an online portal that connects the diaspora to opportunities back home.

Systems that collect and pool cash from individuals to pump into projects in the developing world already exist—Kiva, for example, has funded a large number of initiatives. However, it is still not permitted to gather cash for investment returns.

Homestrings allows qualified investors to sign up and see investment opportunities—initially projects for co-investment and private equity funds listed on an online portal. There are currently 18 funds listed, targeting Africa, the Caribbean and India. The first “Diaspora bond”, a local currency instrument for international investors, was added this year, with Kenya the first to list.

The result is a traditional mutual fund structure meshed with crowd-funding platforms and online retail systems like Amazon. When social media features are added to it in the next few months, users will be able to review investment opportunities much like Amazon users can rate and discuss their purchases.

“Ultimately, the ideal would be that there are deals that are proposed by the investors, vetted by the members, then organized by Homestrings—a completely self-directed investment platform,” Guichard says.

“Our experience since the launch in August has been quite uniform. We’ve seen registration rates of about 50-100 per month, and that’s with no social network push,” Guichard said. “That’s pretty remarkable for us, the level of interest is that high, and it’s primarily reflective of the three major diaspora groups—Kenyans, Ghanaians and Nigerians, working mainly in professional jobs as doctors, lawyers, financiers.”

Those professionals—of which there are now around 500—have an average of $25,000 to invest per year, according to the company’s own surveys of them.

With the first diaspora bond now listed, and two more—Ghana and Ethiopia—in the pipeline, Guichard is excited about the prospect of financing much-needed infrastructure in Africa, and about offering individuals access to bonds that are normally the preserve of large institutions or local high net worth investors. For their part, governments in Africa have increasingly turned to local capital markets to raise finance for specific projects.

For an international buyer, the process would be long and arduous, requiring regulatory clearance in the destination country and a brokerage account.

“There exists no formal network where people can systematically do due diligence and then invest in their own country’s sovereign bonds targeted at specific projects without going through all kinds of bureaucratic difficulties,” Guichard says.

Homestrings has set up the requisite accounts in Kenya and interested parties just need to register on the platform.

Real estate will be the next step. Guichard hopes to connect developers and investors on Homestrings, systematizing what is already a major use of remittance money. Currently, the process of buying and building at home is long, costly and relies heavily on trust. By allowing professional developers to link up with diaspora capital, and then allowing the diaspora to buy units once they are built, Homestrings takes a great deal of risk out of the system.

“I think the basic proposition is an empowerment proposition,” Guichard says. “You can sit here and look at real estate in Notting Hill, plug in your laptop, use your wi-fi and choose what real estate company you want to select, and look at their catalogue of investments.”

At the heart of the prospect, Guichard claims, is a whole new way of profiling customers in the financial industry.

“We started out with the fact that the way the current financial industry is organized, you are looking at individuals based on age, based on zip codes, based on professions, and based on levels of income, which we see as being a horizontal definition,” he says. “But if you were to look at people in terms of their affinity, in terms of their ethnic allegiances, in terms of their desire to stay connected to where they’re from, then you have a whole new definition of financial services.”

There is also, he says, the potential to change the way that development is financed—crowdsourcing, for profit, long-term capital to drive economic growth in Africa.

Entrepreneurs

From The Arab World To Africa

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Sheikha Hend Faisal Al Qassimi; image supplied

In this exclusive interview with FORBES AFRICA, successful Dubai-based Emirati businesswoman, author and artist, Sheikha Hend Faisal Al Qassimi, shares some interesting insights on fashion, the future, and feminism in a shared world.

Sheikha Hend Faisal Al Qassimi wears many hats, as an artist, architect, author, entrepreneur and philanthropist based in the United Arab Emirates (UAE). She currently serves as the CEO of Paris London New York Events & Publishing (PLNY), that includes a magazine and a fashion house.

She runs Velvet Magazine, a luxury lifestyle publication in the Gulf founded in 2010 that showcases the diversity of the region home to several nationalities from around the world.

In this recent FORBES AFRICA interview, Hend, as she would want us to call her, speaks about the future of publishing, investing in intelligent content, and learning to be a part of the disruption around you.

As an entrepreneur too and the designer behind House of Hend, a luxury ready-to-wear line that showcases exquisite abayas, evening gowns and contemporary wear, her designs have been showcased in fashion shows across the world.

The Middle East is known for retail, but not typically, as a fashion hub in the same league as Paris, New York or Milan. Yet, she has changed the narrative of fashion in the region. “I have approached the world of fashion with what the customer wants,” says Hend. In this interview, she also extols African fashion talent and dwells on her own sartorial plans for the African continent.

In September, in Downtown Dubai, she is scheduled to open The Flower Café. Also an artist using creative expression meaningfully, she says it’s important to be “a role model of realism”.

She is also the author of The Black Book of Arabia, described as a collection of true stories from the Arab community offering a real glimpse into the lives of men and women across the Gulf Cooperation Council region.

In this interview, she also expounds on her home, Sharjah, one of the seven emirates in the UAE and the region’s educational hub. “A number of successful entrepreneurs have started in this culturally-rich emirate that’s home to 30 museums,” she concludes. 

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Kim Kardashian West Is Worth $900 Million After Agreeing To Sell A Stake In Her Cosmetics Firm To Coty

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In what will be the second major Kardashian cashout in a year, Kim Kardashian West is selling a 20% stake in her cosmetics company KKW Beauty to beauty giant Coty COTY for $200 million. The deal—announced today—values KKW Beauty at $1 billion, making Kardashian West worth about $900 million, according to Forbes’estimates.

The acquisition, which is set to close in early 2021, will leave Kardashian West the majority owner of KKW Beauty, with an estimated 72% stake in the company, which is known for its color cosmetics like contouring creams and highlighters. Forbes estimates that her mother, Kris Jenner, owns 8% of the business. (Neither Kardashian West nor Kris Jenner have responded to a request for comment about their stakes.) According to Coty, she’ll remain responsible for creative efforts while Coty will focus on expanding product development outside the realm of color cosmetics.

Earlier this year, Kardashian West’s half-sister, Kylie Jenner, also inked a big deal with Coty, when she sold it 51% of her Kylie Cosmetics at a valuation of $1.2 billion. The deal left Jenner with a net worth of just under $900 million. Both Kylie Cosmetics and KKW Beauty are among a number of brands, including Anastasia Beverly Hills, Huda Beauty and Glossier, that have received sky-high valuations thanks to their social-media-friendly marketing. 

“Kim is a true modern-day global icon,” said Coty chairman and CEO Peter Harf in a statement. “This influence, combined with Coty’s leadership and deep expertise in prestige beauty will allow us to achieve the full potential of her brands.”

The deal comes just days after Seed Beauty, which develops, manufactures and ships both KKW Beauty and Kylie Cosmetics, won a temporary injunction against KKW Beauty, hoping to prevent it from sharing trade secrets with Coty, which also owns brands like CoverGirl, Sally Hansen and Rimmel. On June 19, Seed filed a lawsuit against KKW Beauty seeking protection of its trade secrets ahead of an expected deal between Coty and KKW Beauty. The temporary order, granted on June 26, lasts until August 21 and forbids KKW Beauty from disclosing details related to the Seed-KKW relationship, including “the terms of those agreements, information about license use, marketing obligations, product launch and distribution, revenue sharing, intellectual property ownership, specifications, ingredients, formulas, plans and other information about Seed products.”

Coty has struggled in recent years, with Wall Street insisting it routinely overpays for acquisitions and has failed to keep up with contemporary beauty trends. The coronavirus pandemic has also hit the 116-year-old company hard. Since the beginning of the year, Coty’s stock price has fallen nearly 60%. The company, which had $8.6 billion in revenues in the year through June 2019, now sports a $3.3 billion market capitalization. By striking deals with companies like KKW Beauty and Kylie Cosmetics, Coty is hoping to refresh its image and appeal to younger consumers.

Kardashian West founded KKW Beauty in 2017, after successfully collaborating with Kylie Cosmetics on a set of lip kits. Like her half-sister, Kardashian West first launched online only, but later moved into Ulta stores in October 2019, helping her generate estimated revenues of $100 million last year. KKW Beauty is one of several business ventures for Kardashian West: She continues to appear on her family’s reality show, Keeping Up with the Kardashians, sells her own line of shapewear called Skims and promotes her mobile game, Kim Kardashian Hollywood. Her husband, Kanye West, recently announced a deal to sell a line of his Yeezy apparel in Gap stores.

“This is fun for me. Now I’m coming up with Kimojis and the app and all these other ideas,” Kardashian West told Forbesof her various business ventures in 2016. “I don’t see myself stopping.”

Madeline Berg, Forbes Staff, Hollywood & Entertainment

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Entrepreneurs

Covid-19: Restaurants, Beauty Salons, Cinemas Among Businesses That Will Operate Again In South Africa As Ramaphosa Announces Eased Lockdown Restrictions

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South Africa’s President Cyril Ramaphosa addressed the nation announcing that the government will further ease the country’s lockdown restrictions.

Restaurants, beauty salons, cinemas are among the businesses that will be allowed to operate again in South Africa.

The country is still on lockdown ‘Level 3’ of the government’s “risk adjusted strategy”.

President Ramaphosa also spoke on the gender based violence in the country.

“It is with the heaviest of hearts that I stand before the women and the girls of South Africa this evening to talk about another pandemic that is raging in our country. The killing of women and children by the men of our country. As a man, as a husband, and as a father to daughters, I am appalled at what is no less than a war that is being waged against the women and the children of our country,” says Ramaphosa.

Watch below:

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