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half a billion reasons to be optimistic

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In recent years, African countries have steadily emerged as strong consumer markets at a time when emerging economies are struggling with sluggish local demand. Fast-growing economies have greatly improved household incomes over the years as reflected by the rising household consumption expenditure.

Already international consumer businesses have taken notice of this and are planning to invest. A recent Deloitte EMEA survey: Consumer businesses priority markets for 2014-2015 ranked Africa third, behind the European Union and China, as an important market for investment this year by European consumer businesses. The survey confirmed a growing trend since the close of 2013, retail and consumer sectors are among the top three investment sectors by foreign direct investments.

No doubt, more households with discretionary spending means Africa’s consumer market is poised for even greater growth. Data from the World Bank shows that between 2000 and 2012, Africa’s household final consumption expenditure grew at an average annual rate of 10.7%, rising from $360 billion and reaching nearly $1.3 trillion. Consumer demand is now projected to add around $ 1.1 trillion to Africa’s Gross Domestic Product (GDP) by 2019, with Ethiopia, Uganda and Mozambique expected to be the fastest expanding markets. Clearly, rising prosperity is slowly becoming an important component in Africa’s future growth.

It is widely believed that much of the increasing demand is attributed to the growing middle class. Owing to their ever expanding varied tastes and preferences, this group has served as an important force behind the current consumer boom. Over the three decades ending in 2010, the middle class has grown by 3.1%, compared with the overall population growth of 2.6% effectively accounting for 34% of Africa’s population or 355 million people by the end of that year. It is forecast that by 2030, about half a billion Africans will join this class and a further half a billion by the year 2060.

Another important factor contributing to the African consumption story is the rapid urbanization. Migrations to bigger cities have created large clustered urban centers which are supporting growth in domestic demand. According to the United Nations (UN), Africa’s urban population as a percentage of the total population stood at 40% last year, up from 27% in 1980. The same research projects that urban population will grow to 47% by 2030.

Closely tied to urbanization is the young population. Younger Africans who form a large share of the rising middle class, are estimated to number at more than 200 million, or just over 20% of Africans. This dynamic demographic is expected to grow to 321 million by 2030 which translates into a 57% growth from 2010. Potentially, young African consumers are expected to account for even stronger demand for consumer goods in the future. Already demand from the 15-year-old to 24-year-old age group is driving growth of the modern retail and sales of branded goods. Interestingly, a recent Deloitte survey of this group revealed that the majority of younger consumers use mobile phones to access internet. Investors need an effective channel to engage with this group, especially across large markets.

In view of all this, it is highly probable that as wealth, which historically has been concentrated within the elite, begins to trickle down to the masses, the region will become a magnet for international capital. Evidently, for companies seeking to invest, it is clear that Africa is not suffering from a lack of demand, but perhaps from a lack of supply. With growth projected by the World Economic Outlook at around 7.7% annually to 2019 (this is twice the rate projected for advanced economies in the same period), potential investors can rest assured of a sustainable growing consumption trend.

Presently, the region is the second fastest growing economic region behind Asia. Certainly, it is undeniable that Africa is indeed an attractive consumer market that is worth tak

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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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