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hopeless no more

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Annual meetings of the African Development Bank (AfDB), Africa’s premier financial institution, are no longer what they used to be. While Africa remains the world’s poorest continent, the narrative and attention it receives has changed in the past decade. And nowhere is this more visible than in the conversations at the annual meetings of the AfDB, rated AAA by all the major rating agencies—Standard & Poor’s, Moody’s and Fitch.
In Marrakesh, Morocco, this year, a record 3,000 delegates showed up, ranging from the owners of the bank—the finance ministers of the 53 African countries—to non-governmental organizations and the ubiquitous consultants from around the world. Africa’s newest country, South Sudan, is not yet a member.
The mood was buoyant, as befitting a continent that is growing faster than any other. The bank forecasts economic expansion across Africa will average 4.8% this year and climb to 5.3% next year. If you exclude South Africa, the continent’s largest economy, the advance tops 7% at a time when most of Europe is in recession, the United States is battling anemic growth at around 2% and the Chinese locomotive is slowing.
“Now is the time. After 10 years of improved stability, sound macroeconomic policies and blossoming trade links, growth has made African nations freer than ever to choose their own development paths and implement active policies for economic transformation,” says the bank’s vice president and chief economist Mthuli Ncube.
This is a far cry from the doom and gloom of the two decades ending in the 1990s, when the London-based Economist published its now infamous `Hopeless Continent’ cover, which to be fair, was recanted years later.
According to the International Monetary Fund, seven of the 10 fastest-growing economies are African—Mozambique, Zambia, Ethiopia, Nigeria, Ghana, the Democratic Republic of the Congo and Tanzania. Growth has been broad-based, with 27 of the region’s 30 largest economies expanding since 2000. Mckinsey & Co. notes that Africa already has a bigger middle class than India.
While some suggest this is due to China’s resurgence, there is little doubt that painful economic and political reforms carried out in the 1990s and Africa’s new leaders are responsible.
The private sector believes in the reforms and sustainability of the continent’s new growth path and is, in many instances, outpacing government initiatives through investments on the ground. Aliko Dangote, Africa’s richest man, is pouring $7.5 billion in his businesses in the next four years.
Acha Leke, a director at Mckinsey & Co. in Johannesburg, says that Africa has gone from battling to generate growth, to the challenge of how to improve the quality of jobs and ensure that the rising tide carries all boats.
This was reflected at this year’s meeting, the theme of which was Africa’s Structural Transformation; it aimed to ensure that future growth is equitable and sustainable. While economic expansion has lifted some people out of poverty, the majority of Africans remain desperately poor, according to AfDB.
“Structural transformation is about improving the quality of African growth by diversifying the sources of that growth, and expanding economic opportunities for all. In many ways it is about turning natural wealth into created wealth,” says AfDB president Donald Kaberuka.
The governors, economists and other delegates addressed how to use wisely the continent’s vast natural resources; how Africa’s cities of the future might look and strategies to take advantage of the world’s youngest population.
To ensure the current economic growth is sustained, the AfDB approved a 10-year strategy, built on infrastructure development, regional economic integration, private sector development, skills, technology and improved governance and accountability.
“The strategy reaffirms the bank’s strategic choices around infrastructure, economic integration and the private sector. It charts the way towards inclusive growth that spans age, gender and geography,” says Kaberuka, who is in his second and final term.
The 2013 meetings were also notable for the launch of the bank’s Africa50 fund. It will address Africa’s infrastructure funding gap, which is estimated at more than $50 billion annually.
Africa’s positive economic outlook is set to further improve, especially with new mineral discoveries. But some warn that Africa must guard itself against the Dutch disease, a conflict fuelled by the fight for resources, which would set it back and dash both Kaberuka and Ncube’s dreams of making Africa the new workshop of the world.

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Economy

Cryptocurrency for Africans

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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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Investment Guide

King Price CEO On Why He Invested On Insurance

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King Price Insurance’s CEO Gideon Galloway, who built an insurance company in South Africa worth over $226 million in six years, talks investments, industry trends and how self-driving cars will change the entire car insurance landscape.

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Economy

Offering The American Dream

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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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