The best way to get corporate heavyweights in the same room is to host an event based on something close to their hearts—making money.
This is why investors from across South Africa flocked to the Michelangelo Hotel on September 14, for the Nigeria Business Opportunities Roadshow. The speakers, all dressed to the nines, wooed the crowd with words like ‘high returns’ and ‘economic growth’.
The roadshow was hosted by two Nigerian-based companies, AiQ Capital Management Limited and Detail. AiQ Capital offers financial and management advisory services as well as a hospitality and retail fund. Detail is a legal consulting firm specializing in cooperate and commercial law. It aids businesses in areas such as structuring partnerships, due diligence, as well as regulatory and corporate compliance.
According to Uzoma Nwankwo, CEO and MD of AiQ capital, Nigeria’s progressive economic climate is ripe for investors.
In 2011, Nigeria’s GDP was $247 billion with a growth of 7% driven by non-oil production. Industries including agriculture, manufacturing and services contributed to this growth. The Nigerian informal sector is the greatest employer of Nigeria’s workforce but is not reflected in GDP data.
“That is why you’ll find a street vendor with three children, two houses and a car, and wonder how he’s able to sustain his lifestyle when the country’s GDP per capita is $1,600,” says Nwankwo.
Almost all of Nigeria’s sectors need investment. The power sector may be one of the most needy, as production is dependent on it. Nigeria needs 10,000MW yet produces a mere 6,000MW.
The country loses $500 million annually to medical tourism as medical care is poor. Last year, 250,000 Nigerians traveled to India for medical care and each paid at least $30,000 on transportation, accommodation and hospital bills.
Then there’s the hotel industry. According to a biannual study by Hogg Robinson Group (HRG), hotels in Lagos are ranked as the second most expensive in the world; they charge an average of $341 per night, behind Moscow, Russia, where they charge $407. Debbie Peters, who heads the AiQ Capital Hospitality and Real Estate Fund, says that there is a desperate need for quality branded hotels in the middle market.
“The 20-year-old four star hotels are below international standards and charge very high rates,” she says.
“The middle class, roughly 40 million people, is the fastest growing market in Nigeria forming the biggest market for hotels,” says Peters.
According to the website howwemadeitinafrica.com, the risks involved in investing in Nigeria include: choice of partners, corruption, poor legal systems, difficult logistics, poor infrastructure and insufficient power to name a few. A common mistake investors make is partnering with corrupt people. Although it is vital to have a local partner for logistical reasons, local knowledge and market penetration, many potential partners claim to have connections in government, false credentials or undisclosed interests, which could affect one’s reputation.
On the upside there’s a population of 160 million people which has potential for a consumer boom. This year the country’s estimated GDP growth is 8%—placing it in the same league as India, China and Indonesia.
Investors at the Michelangelo Hotel appeared enthused by Nigeria. Patrick Katabua, from AfRES (African Real Estate Society), said that he had been to Nigeria and knows the need for affordable accommodation.
“There are so many overseas companies coming to invest in Africa. The potential in our countries is booming and if we do not invest we will lose out,” says Katabua.
Sandile Mabuza, CEO of Mbuza Capital & Maika Holdings, was attracted to the possibility of high returns and is looking to invest in infrastructure and property. Mabuza’s main concern is the lack of strong institutions to protect investors.
The Nigerian minister of trade and investment, Olusegun Aganga, recently reported that 18 of the 20 countries he visited in the last year had shown interest in investing in the country. Among those countries were the United States and Japan. This gives testament to Vision 20:2020 made by former President Olusegun Obasanjo to make Nigeria one of the 20 largest economies in the world by 2020.
Whether one should invest or not isn’t the most significant question at this time. Rather ask how to go about investing, who to partner with and understand the risks involved. The ball is ultimately in your court.
Cryptocurrency for Africans
George Gordon is on a quest to revolutionize the financial system. The director of Africa Master Blockchain Company talks digital currencies, blind risks and board games.
What is this new African cryptocurrency you are offering?
Where the majority of current digital currencies are based on speculative models, AfriUnion Coin (AUC) and the AfriNational Tokens (ANT)are designed for a transactional purpose allowing international payments, remittances, foreign direct investment as well as day-to-day transactions at local retail stores and other outlets. While the option for speculative trade is available with AUC, the focus is not around that.
Each African country will have a specially-designed ANT which will allow users to pay for goods and services and bills easily through completely digital means without requiring any bank account. AUC and ANT will be fully interchangeable to one another and there will be no fees for the user.
It’s the natural next step for digital finance from mobile banking which most Africans are accustomed to. The ability to freely have the power to send and receive money locally and internationally will allow the freedom of choice and spending power many Africans don’t have currently.
What is your own investment philosophy?
I am a gambler! I believe in taking risks and putting things on the line. That being said, blind risk or whimsical guesses don’t get you very far. Always acquire enough information to understand to a reasonable level what the thing you are planning on investing is or how it works and then trust your instinct and gut feel.
What advice would you give entrepreneurs wanting to invest in blockchain?
First, do some research in terms of what the blockchain technology is being applied for or created in terms of its application to an industry or project. Thereafter, check the white paper for the design of the platform as well as its functionality and applicability to what it is trying to achieve. If it aligns with your personal investment rules, then go for it,however, remember that blockchain is continuously evolving and thus you need to explore outside the usual and standard.
First cash-less, now card-less. What is the future of online banking?
If we are looking into what is currently science fiction, I would say the future is digital contact lenses that will be able to connect you to all your social media accounts, internet, news as well as make payments by just looking at QR codes or specialized barcodes to approve and accept payments.
Now, realistically we are not far off from such innovation and technology, but for the time being, I think the next step is scanning of QR codes at retailers and having the transaction automated from your wallet to the retailers digitally.
What is your most prized investment and why?
My mind. I believe that the work I have put into developing my mind, and continue to do so every day, is the number one investment that I have ever done. It allows me to look at things in a unique perspective as well as provides me with the tools to push boundaries and create new opportunities.
Money, success, fame? Which is most important to you?
I would have to say success… because it is most likely going to bring the other two as well, right? But success in the form of starting something and letting it grow and succeed and knowing that something new exists because of your efforts.
What do you spend your money on mostly?
Board games. I love board games and believe it’s a fantastic way to expand your mind as well as have fun with friends.
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Offering The American Dream
Gar Lippincott and Daniel Ryan of Atlantic American Partners were in South Africa recently looking for high-net-worth individuals wanting to invest in the US.
It’s a warm spring day in September, and Gar Lippincott and Daniel Ryan have just arrived in South Africa. It is Lippincott’s first time in the country, and he is jet-lagged.
A little over two months ago, he was booked to fly here from the United States (US) but was turned back at immigration.
“At Atlanta airport, the lady looked at Daniel’s visa and let him through and she looked at my visa and she said ‘I am afraid you can’t get on the plane because you have to have a blank page on your passport’. I said ‘I have three blank pages’ and she said ‘no, it’s supposed to be the one that says visa on it’. She said it’s the rules in South Africa so I had to sadly go back home… now when I was coming, I was told that’s not an issue anymore so I am happy they have made traveling into the country easier,” says Lippincott.
With a brand-new passport, he’s here with Ryan looking for people who want to invest in the US in exchange for a green card.
Lippincott, the Managing Partner of Atlantic American Partners, says he has always been keen on South Africa for its growth opportunities and prospects.
“From what I understand, the things that are causing short-term decline in the economy in South Africa are set up to provide long-term growth and hopefully people will understand this,” he says. Ryan, the company’s Managing Director of Emerging Markets – Africa, agrees: “I lived in Malawi for 12 years and South Africa is still considered the shining one throughout the continent. Even with all the problems, everyone still wants to come here because of the opportunities.”
According to an AfrAsia Bank report, South Africa comes second to Mauritius in boasting the highest number of high-net-worth individuals.
These are the kind of people Ryan and Lippincott target through their work at Atlantic American Partners. The company has real estate investors and professional private equity fund managers that manage money for banks, insurance companies, and pension funds. In addition, they help people get US green cards and ultimately US citizenship through the US government’s EB-5 Immigrant Investor Visa Program.
“Basically we look for people who want to move to the United States and we help them do so legally by investing and the nice thing is, with our program, they are also able to get a nice return on investment,” he says.
According to Lippincott, for a $500,000 investment that creates 10 jobs for American workers, you could get a green card in about two years and be a US citizen in about six or seven years. “Twenty seven countries have an investor visa program but with most of them, it’s essentially a fee you pay, or you need to be actively engaged in the day-to-day operation of a business. For example, you invest $1.5 million in Australia, but you need to hire employees and generate a certain amount of revenue. One of the biggest advantages with our program is you actually invest the $500,000 into a fund. We act as a trustee of that money and within five to seven years, they get that money back with a bit of return on investment and you are a permanent citizen in the US.”
Atlantic American Partners invests the money in real estate developments like hotels, apartments and student accommodation.
“What’s nice about the program is it doesn’t only cover the investor; it covers the spouse and children under 21. Our biggest family was a Hungarian family with seven children so they got nine green cards for $500,000,” says Lippincott.
The company says it has had positive response in South Africa. “Two months ago, we were here and we had scheduled six presentations for 100 people and we ended up speaking to 450 people. Most were business people, people worried about the economy, people worried about the political future of South Africa and people concerned about the education future of their children,” says Ryan.
According to Lippincott, despite the news of the clampdown on immigration, the US economy is booming and will perish without immigration. In the era of Donald Trump and his anti-immigrant views, that’s heartening news indeed.
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