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TRADE WINDS MusT Blow

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Getting Africa out of the development woods will require more than technology and telecommunications. After decades of lost trading opportunities, Africa needs a new trading lens. Personal and institutional initiatives to close the lacuna between ‘extant realities’ and development ideals is desperately needed.

New advanced technologies, progressive policies and new investment models to integrate economic and political systems would certainly help. Africa must open up its markets to African customers. We need to build new factories, generate energy solutions and open up trade corridors across the vast continent.

Intra-Africa tourism barely exists and intra-Africa trade is low, between 10 and 12% of total trade. Trade within Africa needs to surpass trade between Africa and the rest of the world. West Africa now accounts for 40% of the total African, Caribbean and Pacific trade with the European Union.

The Southern African Development Community (SADC) region accounts for about 45% of Africa’s trade with the rest of the world. In East Africa, Kenya’s top 10 export markets are Uganda, Tanzania, Netherlands, the United States (US), Britain, Pakistan, the Democratic Republic of Congo, UAE, South Sudan and Egypt. The five African countries here account for more than 30% of Kenya’s total exports. Kenya’s tea makers are yet to make a serious push into Nigeria, Africa’s largest market.

Ethiopia, Rwanda and Burundi produce excellent Arabica coffee. Most of it ends up in North America and Europe. You will search very hard to find East African produce in stores between Dakar and Douala. European coffee brands however abound.

Africa is largely disconnected from itself due to its poor infrastructure, restrictive immigration policies, corruption, failure to formalize informal trade, and unclear customs and immigration rules. Fresh facts emerging, however, suggest it is improving slightly. Data for 2013/14 shows that intra-African finance is a significant source of foreign investment in low and middle-income countries such as Burundi (79%), Namibia (42%), Rwanda (62%), South Sudan (64%) and Uganda (45%).

National and regional policy frameworks need to be strengthened and harmonized. This is a job for governments, companies and citizens alike.

Easing trade barriers would help. Building on a current system which allows citizens visa-free access to other West African countries for 90 days, the 15-member Economic Community of West African States (ECOWAS) is planning to launch a biometric identity card in 2016. It will be a digital identification card, travel document, and residence and work permit. This biometric passport is expected to resolve the regulatory bottlenecks that penalize local businesses at the expense of their international competitors.

Similar integration plans in other regional economic blocs also exist, aimed at reducing the expense and stress of traveling and trading across Africa.

Kinshasa and Brazzaville are only divided by the Congo River, yet a return ferry ticket cost the equivalent of $40, more than 40% of the average monthly wage for a Kinshasa resident. It costs less to move a container of maize from the flood plains of the Mississippi, US, to Dakar in Senegal, than it is to take the same harvest from Dakar to Tema in southern Ghana.

An ongoing diplomatic détente between Accra and Nairobi seems poised to attenuate these issues.

Puzzled by the poor levels of trade between Ghana and Kenya, Leah Nduati Lee, a Kenyan married to a Ghanaian, organized the very first Kenya Trade Expo in the Ghanaian capital last November. The three-day event smoothed trade relations between the two regional giants, building on the seven agreements signed in 2014 by President John Dramani Mahama and President Uhuru Kenyatta, to consolidate existing economic and trade ties, and deepen institutional cooperation in the energy, ICT, trade, tourism, transport, agriculture and education sectors.

According to Kenya’s Export Promotion Council, the country’s exports to Ghana were worth KSh479 million (around $4.7 million) in 2014, while imports from Ghana were worth KSh369 million ($3.6 million).

During the expo, Kenya’s envoy to West Africa, Ambassador Tom Amolo, said that consensus building between Africa governments to tackle integration issues is beginning to happen.

“Kenya is fully open for business,” says Amolo. “Our investment promotion frameworks continue to foment long lasting networks and commercial alliances between the business communities in East and West Africa… Deepening and broadening integration is essential for Africa’s inclusive development.”

The momentum between the gateway economies across Africa needs to be sustained.

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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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