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Investment Guide

Firing Up the future

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Anew mining act was introduced in Kenya, in May, which promises to usher a new era.

Among some of the new initiatives is the setting up of a National Mining Corporation, a Mineral Rights Board and a clear formula of how royalties are to be shared. Of the latter, the national government expects to keep 70% while the rest is distributed between the counties and the community in which the mining takes place.

The new law comes at a crucial time. Internationally, the country ranks poorly on mining matters. According to results of the Fraser Institute’s 2015 annual survey of mining and exploration companies, Kenya was ranked among the bottom 10. It is hoped that the new legislation will help catapult the country up the ranking. The government is eager to see the industry improve its contribution to the economy, from the current 0.9% to 10% by 2030. As at the end of June last year, overall value of mineral output stood at a mere $240 million.

In a bid to package its mining profile, the country is busy mapping out its mineral wealth through an aerial geological survey. This is an important step. For many years, investors have complained about the lack of extensive mineral data, which has resulted in less investment. The new survey is expected to unlock the massive potential in the industry, similar to its neighbors. In Uganda, an aerial survey in 2006 led to the discovery of 200 million tons of iron, five million ounces of gold and an updated estimate of the country’s vermiculite reserves to 55 million tons, up from just five million.

As Kenya embarks on this new direction, plenty of obstacles lie ahead. One key challenge is the obvious resistance to some of the clauses of the new law. Some industry figures have decried the requirement for license holders, whose planned capital expenditures exceeds the prescribed amount, to list at least 20% of their equity on the local exchange within three years after the start of production. Some have also taken issue with the government taking 10% of equity in large-scale mining operations and consider the forfeiture of unused exploration budgets to the state as a punitive provision.

It will be critical for the government to banish the notion of instability, particularly around security of tenure. Unilateral cancellations of exploration licenses will not augur well for the image of the sector. Moves such as last year’s cancellation of 65 mineral exploration licenses risk scaring away even the most committed investors. Current low prices also present a major hurdle. Poor commodity prices and an 11% decline in total mineral output last year, to 1.5 million tons, has led to some processing plants shutting down.

Be that as it may, the mining landscape is on the cusp of change. Under the Mining Strategy 2030, Kenya expects to earn up to $1.3 billion in royalties within 10 years. Gold mining alone is expected to fetch $3 billion in revenue. The mining department is also seeking to build an additional 10 to 20 mines in 15 years. The ministry expects to meet this target by expanding the small gemstone industry, developing a mining services industry and registering the tens of thousands of artisanal miners. Artisanal miners are estimated to account for over 60% of annual gemstone and gold production, according to the United Nations Development Program (UNDP).

Faster progress may come through the proposed national mining corporation which is set to act as an investment promotion vehicle, attracting foreign capital and bringing attention to the country’s vast mineral wealth. Kenya has an estimated three billion tons of titanium, 400 million tons of coal in Mui Basin in Kitui County, gold in western Kenya, gemstones in the coastal region and large deposits of fluorspar and limestone.

With all these initiatives, Kenya’s mining future is bright. The country’s humble start is set for a successful future.

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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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