In the latest Africa’s Investment Destination Index released in April, Nigeria was ranked 19 out of 54 African countries. In effect, if a foreign investor was to make a choice in which economy to do business, Nigeria would be their 19th choice. It is a steep fall for a country, which not so long ago was ranked as the third-fastest growing economy in the world.
For much of Africa, the ‘Africa rising’ slogan is wearing thin. A big problem is that many African economies are rentier states. In effect, when there is a boom in the sale of natural resources, the economy looks healthy. At best, this creates a superficial climate of prosperity; at worse it fosters complacency. The revenues from such booms are largely frittered away by the political class. Little effort is ever made to close the infrastructural gaps that could aid SMEs.
According to the index, some economies are steaming back to life. Zambia is a clear case in point, in fifth position. Egypt’s economy stands third; a clear sign that it has put the political turmoil of the last few years firmly behind it. This strengthens my belief in an Africa that is capable of rising above its challenges, an Africa that has the resources to courageously confront the future. At the same time, there is a sadness that some African countries are not focusing on their economies enough to become favorable destinations for foreign direct investments.
More African countries need to start paying attention to changing economic and investment realities. When we understand how money and investment works on a global level, we can better understand how to attract it. The digital takeover is the new conversation, and start-ups that have found brilliant and effective ways of simplifying daily life are the new magnets for venture capitalists.
Previously, governments shaped the economic focus in African countries. Now the private sector has more opportunity to drive growth, even against the backdrop of infrastructural and institutional gaps. Nigeria’s tech incubator, the Co-Creation Hub, which is solely private sector driven, appears more vibrant than the Botswana Innovation Hub (BIH), which is piloted by the government. The former attracted the attention of Facebook’s Mark Zuckerberg, culminating in his first visit to Nigeria.
At the Forbes Under-30 Summit in Israel, in April, where I was one of the selected speakers, venture capitalism and foreign direct investments in emerging economies was predictably top of the agenda. Since I featured on FORBES AFRICA’s 30 under 30 list in 2016, I was fortunate enough to attend the Forbes Under-30 Summit in Boston, USA, in October last year. It gave me the opportunity to interact with investors and entrepreneurs. These events create opportunities for young African entrepreneurs, like myself, to find ways to shape the future of our own businesses and economies, in collaboration with important global capitalist actors.
The discussions at the summit in Israel touched on new frontiers for investment. Interestingly, Africa hardly features in this conversation. There are investors with money to spend, but the continent is yet to position itself to welcome these opportunities.
This is where tech incubators can act as catalyst for economic growth. Zambia and Côte d’Ivoire are showing promising signs in attracting this sort of FDI, but Nigeria has the potential to attract much more if there is a policy to develop spaces for tech incubators to thrive. Tech incubators can generate ideas to solve economic, social and even governmental problems, while also attracting foreign capital.
In Nigeria, BudgIT uses charts and infographics to explain government revenues and remittances. Initially, investment group Omidyar Network injected $400,000 in BudgIT. Less than two years later, it won a $1.4-million grant from the Bill & Melinda Gates Foundation. BudgIT proves start-up ideas can plug governance gaps and attract foreign capital at the same time.
This is not to suggest that every tech company has to solve governmental problems. Tech incubators can be used for economic and social needs, while making a profit. Every round of funding an organization receives puts it in a position to scale up its activities. This is one way the private sector drives growth in an economy.
Tech incubators, and other spaces for technology-driven solutions, are urgently needed on the continent if we are to join the global business train. Currently, Africa is still stuck on the platform at the station. – Written by Obinwanne Okeke, a FORBES AFRICA 30 Under 30 alumnus
Cryptocurrency for Africans
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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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.
Offering The American Dream
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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