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Investment Guide

Risks, Rewards And Eurobonds

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Life in Nigeria today is like living in a dilapidated caravan, or driving around in a fancy jalopy.

When this sort of accommodation or transportation is your daily reality, then your long-term ambitions become hobbled by the pragmatic quest to simply make it to the next day’s hustle, the next salary, the next windfall or gift from that well-to-do cousin, and perhaps, for businesses, waiting for that large order that may never come. Under these faltering conditions, a balanced diet, quality education, satisfactory healthcare, comfortable and safe transportation, and strategic focus become luxuries.

For most folks, simply existing has become a risk; and for businesses and corporate citizenship, a wasteful pleasure. Phrases like “the economic growth and recovery plan” begin to sound somewhat pretentious. Another government mirage perhaps. Sadly, the disdain for diligence is rife and few Nigerians seem convinced that patriotism has its rewards. The paradox of hoping for affluence has become a pandemic, with citizens, companies and communities prowling around for scarce resources and opportunities like a herd of famished goats. Even government’s uptake of loans – $1 billion from the African Development Bank (AfDB) and $1.3 billion from China’s Exim Bank for rail projects – has not restored confidence in the shaky polity. Another $1 billion World Bank facility is expected to flow into government’s coffers in 2017, says Nigeria’s Finance Minister, Kemi Adeosun.

“The economy is on the path to recovery and confidence in the macro-picture is key,” Adeosun told CNBC Africa anchor Wole Famurewa in February. “Government is focused on investing in the priority areas of power and infrastructure… even as we continue work on payroll clean-ups and efficiency at the state level…”

The dire economy will not stop government from taking its statutory pound of flesh from companies, as oil revenues now represent only 10% of GDP. So, tax reforms will take center stage. At 6%, Nigeria has one of the lowest tax to GDP ratios in the world, with Ghana at 15% and South Africa 24%, Adesoun cautions, warning that “we should be very careful about getting excited about recent crude oil price recovery.”

At the micro level, pervasive poverty, disdain for Abujanomics and the proliferation of dodgy pyramid/Ponzi schemes is the new social order. Camouflaging as financial literacy, network marketing or empowerment programs, they represent on one side, the quest for overnight wealth and absolute disregard for government’s agenda and promissory notes, and on the flip side, the emergence of a new breed of professional charlatans peddling crafty concepts in an increasingly sophisticated economy.  Somebody needs to commission a poll to measure Nigeria’s social desperation index.

In a risk-averse, reward-hungry society such as this, contemporary concepts and capabilities like coding, digital literacy, big data analytics, cybersecurity, the Internet of Things (IOT) and artificial intelligence (AI) are farfetched ideas. Non-profits like the Lagos-based Book Club, which has been promoting the altruistic pleasures of reading books and advocating for a return to the culture of heuristics, seem largely ignored, their activities lost in the babble of personal, communal and corporate survival.

The nation seems to have lost a large portion of its liberal ethos. The number of pepper soup joints and event centers has now surpassed the number of libraries and bookstores in the land. Clearly, the pursuit of leisure and lucre has overtaken the quest for the wealth of knowledge to be found on books – or e-books.

But it is difficult to grow a culture of reading and research when citizens go to bed every night with hunger in their bellies and hyperinflation on their minds. Consumer price inflation peaked at an 11-year high of 17.9% in September 2016 and had neared 19% by February. “2016 was defined by politics and policy spats… our currency and foreign exchange issues led to the economy catching cold. But as we entered 2017 the forex issue moved from being a cold into financial pneumonia stage,” Kayode Oguntayo, a Lagos-based entrepreneur told this writer.

Notwithstanding these issues, Nigeria’s $1 billion Eurobond was eight times oversubscribed during its early hours of trading on the London Stock Exchange last February. The 15-year bond offering 7.875% in trading is the first Nigerian offering since 2013 and the 2015 change of government. Nigerian legislators had last year rejected government’s plan to raise $30 billion through loans.

Could Nigeria be flirting with a new era of economic rejuvenation?

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.

(more…)

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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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