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Investing In Memories, Not Material

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Cézanne Britain is the founder and CEO of Britain Renecke, a 100% black, female-owned commercial law firm in South Africa. Her tips for a debt-free life and why she counts memories, not money.

What is your investment philosophy?

I tend to have a conservative investment philosophy that is long-term orientated rather than short-term focussed. While I believe in doing research, I am also guided by my gut feel when making investment decisions.

What advice you would give anyone who wants to invest?

I take a very conservative and long-term view on investments. From a very young age, my focus has been to save as much as you possibly can of your salary and to try and be debt-free as soon as you can. And if you can steer away from short-term credit like credit cards and short-term loans from the get go in your career, that’s probably a good thing. You are going to need to build up your credit but make sure that, for example, if you spend money on your credit card, settle the full amount at the end of the month. Don’t let it draw interest.

What is the most interesting investment decision you ever made?

When my husband and I got married, we didn’t buy wedding rings. We didn’t buy bedroom suites. We spent our money on travel. After the first financial year of business, I wanted to give my husband something to show him and thank him for all his support and I bought him a wedding band and that was two and a half years ago. And it was quality but it didn’t cost a fortune.

READ MORE: Fashion, Fame and Finances With SA Designer, David Tlale

What was your first big investment?

Buying my first apartment. I have generally invested in immovable property and shares and my education. Of the three, I paid for my own education and worked five jobs a year. Because I didn’t want to have debt when I started this [company] when I was 18 years old. It meant five jobs a year but it meant I graduated without a loan. There were lots of bruises along the way. But I was debt-free. The second thing I had on my list was to buy property. I then bought a bachelors apartment when I finished my articles…I was going on 23.

What lessons have you carried with you since your childhood?

I was fortunate to have parents who taught me the value of discipline, responsibility and hard work from a young age. I think most important of all, have a dream and vision and a fierceness, fearlessness and resilience to succeed.

What is the most expensive item you have?

I don’t tend to collect material things. I tend to spend money on traveling and making memories. Four years ago, I took my mom to Mauritius for the first time. I wanted her to experience what I experience. We spend our money on giving people experiences and giving ourselves experiences because memories last a lifetime. When I talk about long-term investment, I also talk about memories lasting a lifetime. You can’t get those back.

The most expensive trip you have ever taken?

A trip around the world seven years ago.

How do you describe your leadership style?

I learned a long time ago we have to use our power responsibly. I don’t have one type of leadership style, but rather a combination of autocratic, transformational, coaching and visionary leadership.

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With “Room2Run,” AfDB Launches Securitisation Market For Multilateral Development Bank Sector

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➢ WITH “ROOM2RUN,” AfDB LAUNCHES SECURITIZATION MARKET FOR MULTILATERAL
DEVELOPMENT BANK SECTOR
➢ TRANSACTION IS IN DIRECT RESPONSE TO G20 ACTION PLAN FOR MDB BALANCE SHEET OPTIMIZATION
➢ AfDB COMMITS TO REINVEST FREED UP CAPITAL INTO NEW AFRICAN INFRASTRUCTURE
LENDING, MAKING ROOM2RUN ONE OF THE LARGEST IMPACT INVESTMENTS EVER
➢ TRANSACTION IS SUPPORTED BY NEW EUROPEAN UNION GUARANTEE TOOL (EUROPEAN FUND FOR SUSTAINABLE DEVELOPMENT)

OTTAWA, Canada, 18 September 2018 — The African Development Bank (AfDB), the European Commission, Mariner Investment Group, LLC (Mariner), Africa50, and Mizuho International plc today announce the pricing of Room2Run, a US $1 billion synthetic securitization corresponding to a portfolio of seasoned pan-African credit risk. Room2Run is the first-ever portfolio synthetic securitization between a Multi-Lateral Development Bank (MDB) and private sector investors, pioneering the use of securitization and credit risk transfer technology to a new and previously unexplored segment of the financial markets.

Structured as a synthetic securitization by Mizuho International, Room2Run transfers the mezzanine credit risk on a portfolio of approximately 50 loans from among the African Development Bank’s nonsovereign lending book, including power, transportation, financial sector, and manufacturing assets. The portfolio spans the African continent, with exposure to borrowers in North Africa, West Africa, Central Africa, East Africa, and Southern Africa. Mariner, the global alternative asset manager and a majority owned subsidiary of ORIX USA, is the lead investor in the transaction through its International Infrastructure Finance Company II fund (“IIFC II”). Africa50, the pan-African infrastructure investment platform, is investing alongside Mariner in the private sector tranche. Additional credit protection is being provided by the European Commission’s European Fund for Sustainable Development in the form of a senior mezzanine guarantee.

“Room2Run gives us fresh resources to invest in the projects Africans need most,” said Akinwumi Adesina, President of the African Development Bank Group. “Africa has the most promise, the greatest natural resources, and the world’s youngest population. But we also have the world’s most persistent infrastructure deficits. The African Development Bank has the strategy to address these infrastructure finance gaps—and Room2Run gives us the capacity to make it happen.”

Structured as an impact investment, Room2Run is designed to enable the African Development Bank to increase lending in support of its mission to spur sustainable economic development and social progress. In connection with Room2Run, AfDB has committed to redeploy the freed-up capital into renewable energy projects in Sub-Saharan Africa, including projects in low income and fragile countries.

“On the Impact scale, Room2Run is off the charts,” said Dr. Andrew Hohns, Lead Portfolio Manager and head of the Mariner Infrastructure Investment Management team. “Room2Run answers the call of the G20 for private sector participants to step in and facilitate development finance, providing a template for attracting significant private sector capital into urgently needed projects in developing economies.”

Raza Hasnani, Head of Infrastructure Investment at Africa50 commented, “Room2Run provides an innovative and commercially viable solution to the African Development Bank’s risk management and lending objectives, while paving the way for commercial investors to support and benefit from the growth of infrastructure on the continent. Africa50 is very pleased to participate in this landmark transaction, which is in line with our mandate to drive increased investment in infrastructure in Africa, and to create pathways for long-term institutional capital to flow into this space.”

Room2Run enjoys the support and participation of the European Commission with an investment from the European Fund for Sustainable Development, in the form of a senior mezzanine guarantee. “Only a few days after announcing our renewed Alliance with Africa for sustainable investments and jobs, I am very happy to announce that we are, together with the African Development Bank, launching Room2Run,” commented Neven Mimica, the European Commissioner for International Cooperation and Development. “This initiative is a perfect example of what we are doing to support investments in African low income and fragile countries through the External Investment Plan. Through Room2Run we provide
an additional protection to investments in the field of renewable energy. Through our Guarantee, investments under Room2Run will translate into extending supply to many people currently without electricity whilst creating much-needed new jobs.”

Room2Run also directly responds to calls by the G20 that MDBs use their existing resources to full capacity, as articulated in the 2015 G20 MDB Action Plan to Optimize Balance Sheets, as well as calls for greater MDB efforts to crowd-in private investment. The G20 has called on MDBs to share risk in their non-sovereign operations with private investors, including through structured finance, mezzanine financing, credit guarantee programs, and hedging structures.

The Government of Canada has been a global leader in advocating for MDBs to use their existing resources more efficiently and to mobilize private capital for global development. The goal of the G20 MDB Action Plan to Optimize Balance Sheets is to catalyze significant new development financing from the MDBs throughout the real economy in key development regions. “Attracting more private capital into global development efforts is critical to building economies that work for more and more people around the world,” said Bill Morneau, Canada’s Minister of Finance, “that’s why Canada and our G20 partners have been calling on multilateral development banks to use their existing resources as efficiently as possible, and to look for new ways to attract more private capital. We are pleased to see the African Development Bank come forward with a transaction that directly responds to both of these objectives. Room2Run is an innovative solution to a long-standing challenge.”

Juan Carlos Martorell, Co-Head of Structured Solutions at Mizuho International, adds, “Compared to other synthetic securitizations, a major achievement of Room2Run has been to ensure that ratings agencies, and in particular S&P, reflect the merits of the risk transfer into their rating assessments for multilateral development banks. AfDB’s leadership through this transaction has now set the stage for broader adoption of the instrument throughout the MDB community.”

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Investment Marketplace Coming To Africa

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From November 7-9, Africa Inc. will convene in South Africa’s Gauteng Province, the continent’s seventh largest economy, for the inaugural Africa Investment Forum (AIF).

An initiative of the African Development Bank (AfDB), it was announced in May in Johannesburg by AfDB President Akinwumi Adesina with Gauteng premier David Makhura.

“It will be the continent’s first-ever investment market place,” said Adesina, formerly Nigeria’s minister of agriculture.

“South Africa is open for business again, and as Gauteng, we are ready to host the forum on behalf of not only South Africa, but for Africa,” said Makhura, calling the forum “the Davos of Africa”.

A platform to close the investment gap, Adesina called it a game-changing initiative.

READ MORE: The Investment Hotspot

“It cannot be business as usual, it must be business unusual,” he said.

With Africa’s population set to be two billion by 2050, its development needs will require an estimated $600-$700 billion per annum. So accelerated development will be the forum’s focus.

“The forum will be 100% transactional. There will be no political speeches. The only thing allowed will be transactions, transactions and transactions,” said Adesina. In attendance in November will also be African heads of state who will be present as the CEOs of their countries.

In a sit-down interview with FORBES AFRICA, the AfDB president shared more about new investments, and the bread baskets and Silicon Valleys of Africa:

How will AIF take Afro-optimism and the African growth story further?
African economies have been growing relatively well in a very difficult global environment. Despite the global economic downturn, in 2016, they grew at roughly 2.2%; in 2017, they grew at 3.6%. In 2018, they are projected to grow at 4.1%. And that’s still above the global average.

So Africa’s head is above the water. But it’s more than about keeping your head above the water that matters, it is about how fast you can swim. I think Africa needs to swim fast and needs a lot of oxygen to do that. And that means a lot of firepower in terms of capital to close the infrastructure gap. To be able to drive millions of people out of poverty, Africa should be growing at double digits.

To be able to do that we have to deal with the problem of lack of electricity, make sure there is a lot more investment to allow trade to happen. Africa could contribute a lot more be it is rail, ports, national highways or aviation. It has to change lives on the ground and quiet honestly when people ask if I am an Afro-optimist, I am a very proud African. Africa is a beautiful place and has tremendous potential so we shouldn’t always just talk about the potential because nobody eats potential. We have to unlock that potential. So that is what the Africa Investment Forum is all about. Be it oil, gas, minerals or agricultural commodities, Africa is awash with rich resources.

The question is how to turn them into real dividends with significant amounts of revenue that allows a better quality of life for the people. For that, you need to deal with the infrastructure deficit. We used to say it is about $15 billion. But that has changed. The AfDB recently released the African Economic Outlook report and the deficit is anywhere between $67 billion to $107 billion every year, so which means we must do a faster job pulling capital together because the rest of the world is not waiting.

How long will it take to close that gap?
I think within the next decade. But it’s going to take a lot of work…

What about the youth dividend; what are the future industries?
Africa is at the very top in fintech and mobile money… but as we look at new types of industries, we have to look at them in the context of the fourth industrial revolution… I get excited when I see the youth in Africa well-educated, they are all on social media, know how to use apps, which means they already have a leg up. So the key is how to re-tool them to operate in that kind of a new economy. The AfDB is doing that in three ways already. First is we signed up a joint program with Google and Microsoft to help develop young talented Africans in computer technology. We as a bank are already investing in technology parks in Cape Verde, Angola, Kenya, Senegal, Rwanda. These are technology parks where you can have the ICT industries emerge; almost like trying to create the Silicon Valleys of Africa.

When it comes to the new economy, you have to start early. We have a program trying to create 250 coding centers in Africa where you get people with computational knowledge to do coding services that can help in this new world we are moving towards. We are also investing in universities for science and technology across Africa to create this new scientific human capital…We need to give African youth the skills they need for the jobs of the future, not for the jobs of yesterday.

What then are the new wealth generators?
If you look at where the money is going in Africa, it’s not actually going into oil, gas and natural resources. Most of the foreign direct investment (FDI) is going into the service industry, at least 64%, and also the financial services sector; maybe about 27% goes into the manufacturing sector. So these are the big sectors where you see a lot of FDI. But there are two sectors very important for me.
One is ICT, because this is going to be the driver of the economy. It’s very important for countries to invest heavily in the ICT industry to give their countries the platforms they need in the knowledge economy.

The second is the food and agriculture industry. Africa has a lot of oil and gas, but nobody drinks oil, nobody smokes the gas. Food is the future. The size of the food and agriculture industry in Africa is going to be $1 trillion by 2030 in Africa. This is where the wealth is supposed to come from. Unfortunately, in Africa, we always walk past gold. Just imagine you are seeing gold, and you see it as dirt and don’t recognize it. That’s the power agriculture has… The food business is the biggest business. Agriculture is not a development sector, it’s not a social sector, it’s a wealth-creating sector. Agriculture is a business and Africa needs to fully unlock that potential. If you look at the amount of arable land left to feed nine billion people in the world by 2050, it is not in Europe, Latin America, Asia, or the US, it’s in Africa – 65% is right here. What Africa does with agriculture will determine the future of food for the world.

How will Africa’s billionaires and capitalists help achieve these goals?
If you look at the high-networth-individuals in Africa, the majority of them make their money on this continent, and that’s already a strong signal. Aliko Dangote makes his money in Africa.
So we are going to get them involved on the Africa Investment Forum because it is trying to send a message to the world that we have African businesses that are viable businesses making money and doing well on the continent; so putting capital to help them expand can help them become global multi-national companies…

And investing in African entrepreneurs?
The issue for entrepreneurs is finding them, nurturing them and then putting the financial backing behind them to thrive. Africa has a lot of young people. Every day, I wake up I read about a young person doing so well. So the best investment that Africa can make is to put its capital at risk on behalf of its young people. Because when you see a young person walk into a financial institution, all you see is risk, risk, risk. We have to change that and try and see creativity, innovation and entrepreneurship. So that way we can put your money at risk to make them more creative, more innovative and unleash their entrepreneurship capacity. That is why at AfDB, we have a program helping to invest in the early-stage businesses of young people. Mark Zuckerberg and Bill Gates didn’t just get there, somebody had to believe in them.

We have a program set up with the European Union called Boost Africa to invest in young people. The other thing we are doing is helping unleash entrepreneurship in the food and agriculture industry. The bank has a program targeted at getting young graduates, medical doctors, engineers… who are all going to agriculture as a business. Last year, AfDB invested over $860 million in that program for about eight countries. Going forward, we expect to invest $1.5 billion dollars every year in that program for the next 10 years.
I really think unless we change the mindset, the labor composition of the agricultural sector and create a new dynamic group of entrepreneurs in the food industry, we only will have old people left. Every university in Africa has to make entrepreneurship compulsory.

– By Karen Mwendera and Methil Renuka

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Me & My Money: Dion Shango

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Dion Shango PwC

The IMF says the global economy is likely to expand 3.7% in 2018. What is your personal investment philosophy?
A 3.7% growth rate for the world economy is quite thought-provoking when considering that some emerging markets, such as South Africa, are not expected to grow by much more than 2% in 2018. The foundation of my personal investment philosophy is the elimination of debt, starting with the most expensive debt.

Is it mainly cash, stocks or mutual funds where there is growth? Any other preferred financial instruments?
The organization that I work for restricts me from directly investing in shares, due to independence requirements, and so I generally do not invest in shares. The asset I find attractive is property, followed by unit trusts. Interest rates are currently low, and have been so for some time as a result of the pressure that the global economy has been under, and so I do not consider cash to be an attractive asset class.

What about real estate, art, jewelry, wines, watches…? Do you see them as worthwhile investments too?
I strongly believe that real estate should form part of any wealth creation and preservation strategy. I have never invested in art, jewelry or wines (as an asset), and so cannot speak with any authority on these type of investments. Over time, and with the exception of the odd property bubble, real estate has proven itself to be able to generate inflation beating returns for relatively low risk. However, one should always be cautious of property bubbles and unrealistic expectations.

How do you balance your portfolio between liquid and fixed assets to build wealth?
We are fortunate enough to live in a country that still makes it possible to hold a good balance of both, and where fixed investments can be liquidated with relative ease. This is not always guaranteed in other parts of the world. When one is still young, I believe a portfolio should always be weighted towards fixed assets, with the liquidity being prioritized as and when one gets nearer to retirement.

Is investment about getting rich or increasing savings? What are your own long-term goals?
The first goal of investment should be to secure financial independence and the ability to sustain one’s lifestyle long after retirement. This does not necessarily translate into being wealthy. After all, wealth is a relative term. With people living longer and longer, the ultimate long-term goal is to have enough to live on after retirement without having to make significant changes to one’s lifestyle.

What returns do you target from your investments and how do you monitor it?
As a minimum, one should target for one’s investments to outstrip inflation and to cover any investment and financing costs associated with that investment. I enlist the services of a broker to monitor performance.

What do think the seven habits of successful investors must be?

Perhaps not seven in total, but a good mentor once told me the following:
1. Try and pay off your debt in the shortest possible time.
2. Do not be greedy.
3. Do not follow the herd.
4. Invest for the long-term, and do not be fazed by short-term volatility.
5. Life is not only about money.

Was there any one time when you thought your plans didn’t work, especially in a volatile market?
All asset classes come with some exposure and risk. Very few people in the world can claim not to have been impacted in some way or another by the 2008 global financial crisis.

With longevity increasing and global billionaires investing in prolonging life, how best can one be retirement-ready?
Retirement-readiness is a big problem in society today, and it is an accepted fact that people generally do not save enough for retirement. There is unfortunately no silver bullet to this. The simple fact is that one gets retirement-ready through exercising discipline in saving, and to start saving for retirement at the youngest possible age. Of course, one is always in control of one’s lifestyle.

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