It is common knowledge that West Africa is blessed with abundant mineral resources. Aside from the macro-economic factors that affect the price of commodities, the micro-economic factors of each country in the region dictate the pace at which their mining sector progresses.
Australia, Canada and South Africa are generally perceived to be first-class mining destinations and are highly revered by countries that harbour aspirations of replicating their successes. They are not immune from the global factors associated with mining, but they have developed sustainable, and implementable, mining policies with supporting financial networks. It is this that should be followed, not the comparison of resources.
At present, a number of mines in West Africa are facing a number of challenges, such as a difficulty in accessing finance as well as the global slump in the sector. As a result, investment in mining projects has slowed down; though there are investments being made with China-based Chalco recently announcing plans to invest $500 million in a Guinean bauxite project. Crucially the aluminium will be produced in Guinea, a major coup for Guineans, especially as the issue of capital flight plagues the continent. In more developed mining countries, part of their success has been the ability of the government to develop and implement policies to protect resources. There is also a concerted effort to aid industrial development and, where possible, finance is made accessible to companies who wish to acquire foreign assets.
<a href="http://www.forbesafrica.com/homepage/2017/09/06/china-really-helping-africa/" target="_blank" rel="noopener">Is China Really Helping Africa?</a>
In many West African countries, would-be participants in the mining sector are restricted to small scale and artisanal mining due to an inability to obtain finance at competitive rates. In Nigeria, for example, two out of 25 banks have desks dedicated to solid minerals. Coupled with high interest rates for loans and a dearth of viable mining projects to finance, there is a catch-22 for banks to lend to participants in the sector.
However, with the development of the Solid Mineral Development Fund, there is fresh hope and, crucially, the political will to assist artisanal and small-scale miners with funding. Though there are on-going projects in Nigeria, the level of activity pales in comparison to Burkina Faso, which as recently as 10 years ago, did not have a notable mining sector to speak of. Despite its challenges, Nigeria remains an attractive proposition for foreign investors.
Some governments may not have the financial capacity to develop projects. They then need to ensure there is a stable political environment, with a clear understanding it acts as a crucial component in attracting investors.
South Africa, which is widely acknowledged as the premier mining destination in Africa, serves as a prime example to all. It has a wealth of experience to lend. However, the recent proposed revision of the mining code has triggered a wave of uncertainty among mining companies in the country. This is the second revision in recent memory and only goes to support the idea that investors require a degree of certainty, which they can marry with their long-term plans.
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Tanzania has also ruffled the feathers of multinationals operating in the country as recent policy changes have had an adverse effect on foreign investments. The political landscape of the continent often goes through periods of volatility. For the development of a nation to happen smoothly, government interference must be limited to policy development and implementation. International mining companies, along with the expertise and technical skills they provide, also increase the profile of the host nation they operate in. This, in turn, reflects well on the host nation’s ability to create an environment suitable for international best practices to be adhered to. The resultant effect is improved credibility and more investment.
Deterring investors through haphazard policy changes is tantamount to economic suicide. &#8211; Written by Richie Seun Johnson

Government Must Stay Away From Economic Suicide

The past three decades have seen a marked step change in Africa’s international relations. While geography historically favoured a European focus &#8211; especially in North Africa &#8211; the continent has shifted its gaze to the East.
China has catapulted from being a relatively small investor in the continent to becoming Africa’s largest economic partner. Africa-China trade is poised to grow 20% year on year making it seem like dragons are the new king of the African jungle.
Investment in Africa has however been structured around Chinese ownership, with roughly 90% of firms either majority controlled or owned outright by Chinese nationals. There are estimated to be over 10,000 Chinese firms in Africa that have created work for several million Africans. This economic stimulus continues to have significant economic impact in communities riddled with historic economic disparities.
Chinese firms have shown remarkable prowess in sectors such as manufacturing, resources, and infrastructure. One of the first famous examples is the Tanzania-Zambia Railway built between 1970 and 1975, for which China provided a zero-interest loan of RMB980 million ($150 million). Sectors including agriculture, banking, insurance, transport and logistics, housing, information communications technology and telecommunications are poised to see significant shifts to Chinese firms. Chinese firms have the benefit of tried-and-tested business models which bear great similarities to the African marketplace.
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To ensure the sustainability of the Africa-China partnership, three key concerns need to be addressed: Corruption, personal safety, and language and cultural barriers.
Corruption has thrived in Africa’s current climate of political and economic impunity. Corruption creates and increases poverty and exclusion. While corrupt individuals with deep political ties enjoy a lavish life, millions of Africans are deprived of their basic needs like food, health, education, housing, access to clean water and sanitation. Violence and crime across the continent derail efforts to encourage community building and foreign direct investment. Language and cultural barriers can lead to clashes that lead to misunderstanding and ignorance of local regulations.
If these problems are left unaddressed, the misunderstandings &#8211; and potentially serious long-term social issues &#8211; could weaken the overall sustainability of the Africa-China relationship.
Chinese aid to Africa has been criticized as being a form of economic colonization. Politically aid has been used to create strong bilateral ties between African countries and China. Proponents highlight the structural benefits brought about by aid; downplaying the benefits to China in the form of profit, resource extraction, and the acquisition of service contracts to Chinese companies. In a nutshell, whichever country offers the greatest economic gains based on China’s growth strategy becomes a target for aid. Currently this strategy is geared towards partnering with resource-rich countries, which often lack the political and economic structures required to efficiently and effectively manage such bilateral trade opportunities.
The key challenge is to ensure that there is an effective political and economic strategy to piggyback off Chinese intervention to ensure broad based economic empowerment.
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Part of this strategy should include elements like building a middle class in Africa, developing African entrepreneurs, allocating factors of production, industry 4.0, innovative distribution, and public-private partnerships.
The current economic polarization in Africa needs to be addressed by actively creating a middles class. Clan-based economic feudalism needs to be replaced by an educated and economically engaged middle class. Economic empowerment in turn will promote political development leading to healthier international trade relations.
Entrepreneurship, while still in its African infancy, has made significant strides both domestically and internationally. Agriculture, manufacturing, retail, and tourism can act as an employment sponge for basic labour intensive work. While not a cornerstone employment strategy, it will lead to rapid, broad-based job creation, often requiring very basic skill sets. Further vocational training can be provided in these sectors to prevent generational skills gaps.
Effective allocation of factors of production &#8211; specifically land ownership &#8211; will be critical. It&#8217;s a sensitive subject given Africa&#8217;s colonial past, however it&#8217;s one governments need to address to start an ambitious national agricultural plan. The rapid growth of Africa&#8217;s population presents significant opportunities for our poultry and grain sector.
Industry 4.0 will make global manufacturing much more competitive in the future. Traditional industrial economies, such as Germany and the United States, expect the fourth industrial revolution to create many competitive advantages, reversing the trend to relocate manufacturing processes to low-cost countries and create new high-tech opportunities at home. Africa is ideally positioned to leapfrog into Industry 4.0 by adopting best practices seen in developed countries. This will enable African-owned manufacturers to effectively compete with Chinese companies.
Africa is at the tip of an economic renaissance that will see opportunities being created that were considered impossible a few decades ago. But, this requires strong leadership in both politics and business. Citizens in turn will have to hold their political leaders accountable, specifically promoting broad-based economic empowerment, to ensure that the maximum number of people benefit from this growth. &#8211; Written by Johan Hanekom
<div id="attachment_33408" style="width: 154px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-33408" class="size-full wp-image-33408" src="https://www.forbesafrica.com/wp-content/uploads/2017/09/Johan-Hanekom.jpg" alt="" width="144" height="144" />Johan Hanekom</div>
Johan is a globally recognized expert on strategy, innovation, and growth with an emphasis on corporate entrepreneurship. A believer in social entrepreneurship, his paper while at Oxford focused on developing a nation of social entrepreneurs in Africa.

Is China Really Helping Africa?

My friend Adewale, fondly called ‘Dewale Alapere (meaning ‘Dewale the basket weaver), grew up on a farm in southwest Nigeria. He was raised by parents who could only afford to live in a mud house and sleep on bamboo beds. It was only when he left for the University of Ilorin that he had an opportunity to watch television.
He and his family were classified as poor while he was growing up, but ‘Dewale has a passion that circumstances could not deprive him of. While his siblings were eager to receive Christmas clothes and looked forward to the luxury of once-a-year rice and chicken, he would insist that his portion of the fund be diverted to purchase his schoolbooks. As a young boy, his main desire was to improve.
Today, ‘Dewale is a highly placed leader and excellent manager of resources in one of the top foreign banks in Nigeria. His dedication to personal improvement has impacted his community, family and the organizations he worked at. I have been told that ‘Dewale would often meet his business target latest by the third quarter.
The last time I visited him, and checked his personal library, it was impressed upon me that personal transformation is impossible without private responsibility and the desire to improve one’s knowledge. This is the reason why notable people, in any economy, are usually people of “notes and table”. They sit, study, strategize and execute. ‘My friend has moved beyond ‘Dewale Alapere, whose job was to weave baskets, to a PhD holder who works with a top performing Nigerian bank.
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The story of my friend can be compared to an average start-up in many parts of Africa. Seeing a start-up grow into a profitable business is often like seeing someone walk on water. Africans are incurable optimists, but are not quick to embrace mental development. We desire big breakthroughs while not being willing to cultivate our minds. In reality, the journey from rags to riches, grass to grace, is an internal one.
Similarly, the law of progress says “first within and then without”. All progress remains at a state of rest until a mental force is applied. Emphasis has to be on mental work; it is this that gives value to physical work.
In any organization where individuals do not improve mentally, its cutting-edge potential will be blunt. With this in mind, it is important for African entrepreneurs to invest in personal improvement.
A business’ slow growth and a country’s underdevelopment is the result of society’s neglect of the principle of progress. The principle of progress gives creative power and leverage for everybody, irrespective of location, race or gender.
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An entrepreneur needs to consciously work on a variety of things things, such as professional skills, soft skills, business image, personal image, market share, marketing strategy and business processes. It is good to set goals in these areas.
Irrespective of the level of success, it is important to have an attitude that celebrates the present while creating a better experience for tomorrow. When others see the best local brand, you should see the best international brand.
There can be no progress for an entrepreneur whose knowledge base is struggling to catch up with the present business sphere. It is smart to research, develop ideas, and work on projects.
Research shows that smart entrepreneurs are committed to daily improvement for many years. If you study for five more minutes each day, you’ll amass an additional 1825 study minutes in a year. Every tiny effort can catapult you towards success.
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Every human’s brain has the same potential. The most successful people have stretched their minds to achieve what others feel impossible. They are the billionaires we celebrate.
My personal belief is that if they can achieve it, then you and I can. We can all walk on water. &#8211; Written by Victor Mamora

Learn To Walk On Water If You Want To Grow Your Start-Up

African Gold Refinery, a Ugandan company, expects to process $1 billion worth of gold a year but is battling would-be smugglers turning to the precious metal to make easy money.
Gold is lucrative in this part of the world. Gold shipments by East Africa’s third largest economy surged to $204 million in the 2015/16 financial year, from $230,000 a year earlier, according to the Bank of Uganda.
“For the first time the country registered an increase in exports just on account of that one unit,” said Richard Kaijuka, Chairman of African Gold Refinery, in April in the capital Kampala. “It’s certainly a game-changer for the region. The outlook is looking good – without doubt.”
“The beauty about it is if this smuggling can stop, we are able to export. This unit alone can process $1 billion per annum,” Kaijuka said.
<div id="attachment_32840" style="width: 483px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-32840" class=" wp-image-32840" src="http://www.forbesafrica.com/wp-content/uploads/2017/07/DSC_0054-copy-300x199.jpg" alt="" width="473" height="314" />An Africa Gold Refinery employee prepares to melt gold (Photo by Joseph Burite)</div>
While a 2014 government geological survey revealed significant mineral deposits, including gold, iron ore and uranium, Uganda has no commercial gold mining operations in place. The country relies on artisanal laborers who sell raw minerals to unregulated middlemen. About 24 firms currently possess gold prospecting licenses, none of which has a mining lease, according to a ministry of energy and mining cadaster.
Since launching operations in 2014, African Gold Refinery has seen significant flow of gold from neighboring countries, according to Kaijuka.
“Dubai has over 14 refineries and they don’t produce anything. Ours is to create a ‘mini-Dubai’ in this region. We have even got gold from West Africa, from the Democratic Republic of Congo, from Tanzania,” he said.
The formal launch of the refinery in February heightened concerns conflict minerals would find their way to the market, fueling volatility in the Great Lakes Region.
“Our fear was that having a plant in Uganda with all these minerals and our porous borders, where people cross and conduct a lot of smuggling in and out of the country, and sometimes we don’t know how much we have in the country and how much is going out. How much is coming in because of this smuggling? Our fear was that maybe some of it would fuel conflicts,” says Peter Wandera, the Executive Director of Transparency International Uganda.
“Government should begin listening to the stakeholders. Let the government be more transparent because issues of extractives have a lot of secrets around them. It should be more open to external views,” he says.
“The refinery is to add value to our exports,” says Irene Muloni, Uganda’s Cabinet Minister for Energy and Minerals. “We have even removed royalties so that people can export through the legal channels.”
<div id="attachment_32843" style="width: 465px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-32843" class=" wp-image-32843" src="http://www.forbesafrica.com/wp-content/uploads/2017/07/DSC_0110-copy-300x199.jpg" alt="" width="455" height="302" />A receiving desk for gold (Photo by Joseph Burite)</div>
Muloni shied away from giving export targets for the current financial year.
Kaijuka, who is also the Vice Chairman of the not-for-profit, non-governmental Uganda Chamber of Mines and Petroleum (UCMP), says African Gold Refineries is based on responsible sourcing of its gold that it refines operating by the Organisation for Economic Co-operation and Development (OECD) guidelines.
“By going for responsible sourcing, it means we are eliminating those that are illegal. That’s the whole point,” he said. &#8211; Written by Joseph Burite

Smugglers Take Sheen From Uganda’s Bright Gold Refinery

At independence in 1966, Botswana ranked as one of the 10 poorest countries in the world. Just over half a century later, with the help of a significant diamond endowment, the richest on the planet, government has managed to elevate the country from a low-income country to one with a mid-income per capita GDP, as it invested the proceeds of its minerals rent into physical and human capital, and into institutions.
The success of this responsible management is to be seen everywhere, as the World Bank elaborates,  “at independence, Botswana had six kilometers of paved roads, three secondary schools, too few healthcare facilities to mention, and a mere 1.5% of the population had completed primary schooling. Today, it has more than 7,000 kilometers of paved roads, more than 300 secondary schools and 95% of Botswanans live within eight kilometers of a healthcare facility, and primary school education is free.”
At a time when its southern neighbor has cold shivers running through its markets, in anticipation of whether or not rating agencies will downgrade the South African sovereign rating to a non-investment grade credit, Botswana has a ranking far from a junk credit. Its upper Investment grade is the highest in Africa.
Government acknowledges, however, that among the challenges it faces, a high HIV/Aids infection rate (the second highest in the World) slows growth. It recognizes it has to diversify the economy, away from an overdependence on mining – especially diamonds – to areas that can carry GDP growth forward. For this reason, it has rolled out the National Development Plan (NDP-11) into tourism, construction, energy and transport. In short, government has assessed that doing the same is not good enough, and to use the worn cliché, diamonds will not be forever.
It has not forgotten where the roots of its humble existence began, and has not forsaken the mining sector’s contribution to the growth in its output, for beneath its soil, lies some 200 billion tons of coal – an estimated two thirds of Africa’s total – a happy co-existence with the volcanic diamond treasures its fiscus holds so dear, and which government manages proceeds from in its public-private partnership venture with Debswana. With so much focus on mineral wealth, it is easy to forget where other areas of promoting economic growth exist. A good example is Botswana’s biodiversity of resources, such as the Okavango Delta, as well as the Kalahari and Chobe, which boost eco-friendly tourism uplift socio-economic conditions of rural communities.
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While the need to diversify the economy grows urgent, there is a frank acknowledgment that government cannot do this on its own. This land-locked country faces challenges from climate change, and has a critical shortage of water and electricity, which threaten any sustainable moves to diversify the economy. Also, government will not hesitate to engage the help of the private sector.
As controversial as the decision may have been to close loss-making copper and nickel mines, the government has indicated a strong resolve to protect its hard-earned fiscal integrity, making any adjustment it deems necessary which would shield the taxpayer, despite mine closures shedding jobs.
Another indication of this responsibility was the decision taken by the Botswana Power Corporation to shed its loss-making Morupule B power station. The drive to privatize the  state-owned enterprises theoretically embraces the concept of Public-Private Partnerships, structures considered to be generally successful.
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Although 4.3% GDP growth in 2016 may not be high by historical standards, it remains a solid base against which key financial stability ratios can be monitored by credit rating agencies. A surplus of 16% of GDP on the current account of the balance of payments, and an almost negligible budget deficit of -0.7% of GDP, appear to have underpinned the decisions by the rating agencies to maintain the upper investment grade ratings by S&amp;P (A-) and Moody’s (A2) last April.
If there is a conundrum that policymakers have to solve, it is not that GDP growth must be diversified, and that a stronger export base will drive growth in output sufficiently to alleviate poverty and income inequality, but rather that the success of economic diversification will be reflected in economic intangibles, such as better levels of education, better healthcare, better institutions to manage the rents derived during times when economic cycles are more volatile and in better regulating private enterprise. &#8211; Written by Colen Garrow

An African Darling For Investors

Sometimes the worst plans can make you richer. In this special Investment Guide we highlight strategies that may seem foolish at first, until you dig into them. Buy gold? Trade options? Take a reverse mortgage? All can provide big returns in the right circumstances. To help lead the way is the man behind pretty much every bad idea on HBO&#8217;s cult sitcom Silicon Valley &#8211; actor and comedian T.J. Miller, whose Erlich Bachman somehow always pulls through.
Written by Janet Novack, FORBES STAFF
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<a href="http://www.forbes.com/sites/kellyphillipserb/2017/06/13/shrink-your-small-biz-salary-and-your-tax-bill/" target="_blank" rel="noopener noreferrer">Shrink Your Salary</a> / Newt Gingrich, John Edwards and (it appears) Donald Trump did it. Maybe you should too. / By Kelly Phillips Erb
Related:<a href="http://www.forbes.com/sites/kellyphillipserb/2017/06/13/6-smart-tax-moves-to-protect-your-small-business" target="_blank" rel="noopener noreferrer"> Keep The IRS At Bay</a>
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<a href="https://www.forbes.com/sites/schifrin/2017/06/13/rowing-upstream-for-alpha/#1cf080d44535" target="_blank" rel="noopener noreferrer">Rowing Upstream for Alpha</a> / As billions pour out of active management, stockpicking standout T. Rowe Price is hunkering down and quietly setting up a quant shop, just in case. / By Matt Schifrin
Related: <a href="https://www.forbes.com/sites/schifrin/2017/06/14/2-great-alternatives-to-t-rowe-prices-new-horizons-fund/#38bdba91e498" target="_blank" rel="noopener noreferrer">2 Great Alternatives To T. Rowe Price&#8217;s New Horizons Fund</a>
<a href="http://www.forbes.com/sites/nathanvardi/2017/06/13/the-new-face-of-active-investing/" target="_blank" rel="noopener noreferrer">Faceless Returns</a> / Jack Bogle and a chorus of indexing champions say active investing is futile. BlackRock thinks Andrew Ang and his computer-driven ETFs are the strategy’s last great hope. / By Nathan Vardi
Web Extra: <a href="https://www.forbes.com/sites/antoinegara/2017/06/07/the-irresistible-math-behind-private-equity-stocks/#1d749103612d" target="_blank" rel="noopener noreferrer">The Irresistible Math Behind Private Equity Stocks</a> / By Antoine Gara
&nbsp;

Forbes 2017 Investment Guide: Bad Ideas Gone Good

As soon as I graduated from university there was an invitation from the managing director of a top Nigerian engineering company to join the organization. There I learned the business of construction and after four years of strategic support work I left to start my own building engineering service firm with a partner. It looked easy!
In Nigeria, starting a new enterprise seems like a piece of a cake and it’s very convenient for people to suggest you should “start something on your own”.  Lagos, where I live, has an annual government revenue one of around $1 billion. With this kind of cash seemingly flowing through the streets, it is assumed it is easy to finance one’s start-up.
My partner and I started our business with our tiny fund – around $320 – and within a few months, had invested most of it on marketing. We didn’t have a car to drive around Lagos so we used taxis to get to meetings. We pushed on until we eventually landed a construction site deal. This process taught us how unsupportive financial institutions in our part of the world can be.
The average entrepreneur in Africa finds it difficult to get their idea to market because of ridiculous interest bearing loans. As we began to talk to our banker for financial support, it became clear that the banking sector was not going to be of much help. We did not have a property, in a choice part of the city, to guarantee the loan which in itself attracts over 20% interest.
With time running out, and needing to get our workers and equipment to site, we resorted to a desperate measure. Desperate people do desperate things. In this case it was a ship sinking decision for us. A private investor offered us a short-term loan with a monthly interest of 15%. We assumed all would work out; we had millions to get people and equipment to site, and substantial work could be done to impress our client. Within 30 days, we would be paid and refund our creditor. It was unrealistic.
In an environment where uncertainty is high, relative to other part of the world, such a straight-line strategy requires many back-up plans. Our company defaulted and the loan extended to a third month, with an accumulated interest of 45% on every million naira. We defaulted because our client delayed payment. He couldn’t pay us because his funds were not released. That circle of failure is the undoing of many businesses.
In a society where moneylenders and investors place an emphasis on the reputation of an entrepreneur, one needs to have a plan to protect this. The harshness of the African business environment triggers desperation and keep entrepreneurs focusing on short-term plans. This needs to change; the longer a business’s plans are considered, the better it will be. There are other strategies that work with raising fund. In south-western Nigeria, Yoruba parlance says that “it is from home that treasures are taken out”. The interpretation is that success begins at home.
Many business owners that I have had the opportunity to talk to use their relationship with family and friends to raise funds, equipment and other resources. The benefit of this is that family is more willing to forgive you and this type of loan usually comes without interest. However, this strategy is limited on a continent where around 70% live below the poverty line.
This provides a huge opportunity for capital ventures and angel investors. It provides opportunities to bridge the poverty gap and create wealth on a continent that is thought to be the next global investment destination. To truly realise this opportunity, the purse of an entrepreneur shouldn’t be bullied.

Desperate People Do Desperate Things

As Nigeria continues to grapple with its worst recession, two pressing concerns revolve around its struggle to diversify – the state of the local manufacturing industry and the level of government’s commitment towards industrialization.
Nigeria is sub-Saharan Africa’s largest economy which boggles my mind when I consider the abject decline in the real GDP, income, employment, manufacturing, and retail sales.
The Nigerian economy is chiefly governed by oil and natural gas. While the oil sector provides almost 30% of the GDP and accounts for 90% of the total export capacity, the manufacturing sector provides around just 4%.
The sector is undergoing industrial collapse. The Manufacturers Association of Nigeria (MAN) reported that 272 companies shut down in 2016, 50 of those were manufacturing companies. Other reports claim that more than 1,500 of the 2,500 registered manufacturing companies folded up while millions of employees have lost their jobs.
At the forefront of this decline is Nigeria’s reliance on oil and the failure to make hay while the sun was shining. This focus on oil derailed Nigeria’s progress to becoming an industrialized nation. The government’s recklessness is to blame for the industrial failure, such as power problems, infrastructural deficit, economic mismanagement, taxation discrepancies, policy uncertainty, weak investor confidence, restriction of foreign capital inflows, affixation to irrational importation, and, notably, the low income of consumers.
As commodity prices plummeted, the manufacturing sector has impressively emerged. Despite challenges, the huge demography and being the largest African market makes Nigeria ripe for investment. The United Nations had projected that Nigeria’s population will rise to 240 million by 2050. Also, Renaissance Capital and Frontier Advisory forecast that the country’s economy will grow to $1 trillion by 2025. These are signals of the potential of industrialization.
All that is needed to harness this potential is the willingness of the government to act. A robust manufacturing sector and a willful program for industrialization are equally crucial for the dream to be realized.
It is, therefore, unsurprising that the present government is jumping on the industrial horse to achieve economic reform that will replace the oil and gas with manufacturing and agriculture.
“My engagements with the organized and informal sectors has been mutually affirmative that we should work harder in partnership and disagree less, grow confidence with greater transparency by government, and accelerate actions rather than words, to build our capacities and secure development,” said Nigeria’s Minister of Industry, Trade and Investment, Okechukwu Enelamah, at the Nigeria &amp; Entrepreneurship Summit &amp; Honors in December.
Since then, however, not much has changed. Private businesses are still hindered by unfavorable laws. To this end, the National Assembly is working on legislative economic reform – with 30 bills, including the Petroleum Industrial Bill, Infrastructure Investment Protection and Regulation Bill, Railway Sector Reform Bill, and Tax and Revenue Law/Bill. If successful, such a revolution would be a shot in the arm for industrialization.
The hopes of entrepreneurs and local manufacturers are also bolstered by the Made in Nigeria campaign, which is receiving encouraging support from top to bottom. President Muhammadu Buhari has reassured Nigerians that his administration is working on enhancing the support of locally made goods as well as improving access to finance for small and medium-sized enterprises across the country.
Despite enduring hardship at the moment, Nigeria can be reassured that greater opportunities lie ahead.

Nigeria Needs Industrialization now

It was not narcissism that saw Papa Kwesi Nduom name his company after himself. It was that desire to put his reputation on the line when it came to business; that strong belief, born of a brass neck and a steel backbone, to be accountable for his work.
Today, Groupe Nduom sits atop of a business made up of tourism, investment advisory and management, financial services, technology, media, management consulting, cross border trade and sports.
It is a modus operandi born in Nduom 47 years ago, when the first opportunity knocked.
“There are certain stages in life that you get to know things. I had the privilege of getting a scholarship and spending one year in the United States in 1970. Prior to that, I wanted to be a medical doctor. I went to the United States and was introduced to other things. Through that I got to know that you could also be in business. In just that one year I took so many different classes outside medicine which broadened my view in life and all sorts of opportunities became possible,” he says.
His uncanny ability to spot opportunities led to the formation of a business empire, based in Ghana, with 60 companies in its portfolio. When we meet at the Coconut Grove Hotel, on a warm Saturday afternoon in Accra, Nduom has a spring in his step, a broad smile and an energetic “good afternoon” for everyone as he ushers us into his inner office in the sprawling resort.
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<h5 id="eow-description">The final episode of the first season of My Worst Day with Peace Hyde features Ghanaian serial entrepreneur Dr. Papa Kwesi Nduom &#8211; who shares his memories of the day he lost $2 million worth of business that threatened to end his consultancy business.</h5>
At 64, Nduom’s attention to detail is slightly intimidating; his demeanor is composed and authoritative. His gaze is attentive as he reminds us politely he is flying out later that evening to the United States to complete the acquisition of a new bank. Nduom’s intuitive timing has served him well over the years. That skill was born of the transition from medicine to business. 
“I ended up at the University of Wisconsin and that is where I did the Bachelor of Economics and PhD in service delivery systems. It is there that I actually went off course. I wanted to be a medical doctor and I took all the admission tests and everything and got to a point where I needed a lot of money to continue if I wanted to get into a high-quality medical school. But I found out that I could take some different courses and take a degree in economics and get to work quickly, so I took that path so I could finish and get to work and make some money.”
“I had to fend for myself. Some of the things I do to make a living today, like finding opportunities, comes from the fact that I had to do those things myself and scrape along to survive. I had to pay my own fees, pay for my rent and go to school at the same time,” says Nduom.
In those lean days, he packed canned beans in a factory; toiled for two weeks on a construction site, in the cold winter; and spent long hours as a parking lot attendant.
“I would do the third shift at work which was at midnight and when you come back there would just be enough time to take a shower and go to school. If they said a semester was 15 credits, I wanted to take 20 because I calculated how many credits I needed to take to get out of school early because it was money I had to pay.”
The search for new opportunities to make money taught Nduom two key business principles: the first was how to negotiate.
“One job I really liked was working second shift at a meat factory. It paid well per hour and you learned how to cut meat, and you were also able to take some of the off cuts home. So you had food. So the people I shared my apartment with at that time were two Somalis who loved meat, so I used the meat to trade for other necessities which I couldn’t afford myself.”
Second lesson: the power of perseverance.
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“Right after university, my first job was with Northwestern Mutual Life Insurance in Milwaukee. I went there and applied with my Ghanaian name and the lady looked at the name Papa Kwesi Nduom and started asking all sorts of other questions. I got to a point where I couldn’t answer all the questions so I failed the interview.”
“I went back to the university and I carried a different identification because my passport had two names in it. So I went and changed my clothes and came back as Joseph Hubster Yorke Junior, which was my other name. The lady didn’t notice that it was the same person. So now, with my new name, she asked me completely different questions, which I answered and she gave me the job and I became a life insurance underwriter,” says Nduom.
Then, Nduom worked at the Blue Cross Blue Shield of Wisconsin, a health insurance company, and then the Milwaukee Metropolitan Sewage District, a county government institution. Here a rare life-changing experience, in an unlikely place, unfolded through a chance meeting.
“You never know where and when opportunity will make itself available so you should always be ready. I was on the fourth floor of my work building but on the seventh floor was a nice men’s room, which was big and had marble floors, which was really nice. So I would go and use the men’s room on that floor instead of going to the one on the fourth floor,” says Nduom.
“One day I was washing my hands and a guy comes also washing his hands and we strike a conversation. He asked if I would be interested in a job opportunity. He happened to be a recruiter who worked in the building and was looking for people that Touche Ross might be interested in. So we spoke and he set up the interview for me with the partner at Touche Ross and that is how I got the job. It was just an accidental meeting in the men’s room.”
Touche Ross later became Deloitte Touche, one of the ‘Big Four’ accounting firms with revenues of $36.8 billion, according to research company, Gartner. Nduom worked his way up to become a partner in the firm where he would learn his most important business skill, the art of selling.
“Every year they had a book that had all the partners in the US and in that book every partner’s production was there. In it were also the points that you earn as a bonus, so you see the entire top performing partners. So you knew where you were and what your business was supposed to do. So it is important for you to deliver. So you learn how to sell, you learn how to provide service and you learn how to satisfy the need of your customer.”
Nduom became a partner at Deloitte in 1986; with that the pressure to deliver increased. Ronald Reagan was president, Wall Street was booming and business was opening up around the world. Deloitte was in the thick of it.
“When you become a partner in the firm, you are a shareholder in the firm and basically you work for your own account. What you earn is strictly based on the business you bring in. The minimum amount you had to bring in terms of consulting fees was $1 million a year.”
Nduom moved to Washington when the firm merged the Milwaukee and Chicago offices. That put him in contact with the international division at Deloitte; another opportunity Nduom quickly took advantage of.
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“One day, over Thanksgiving dinner I told my wife that I wanted to go to Ghana to see what it was like to work there because I had never worked in Ghana before. So I bought a ticket, came to Ghana and I wanted to spend about a month or so to look around,” he says.
It was this conviction to understand the Ghanaian market that lent Nduom his next big entrepreneurial break. Initially, he sought to offer his services for free to get a feel for the consulting market in Ghana. At the time, Deloitte had representation, with Haskins &amp; Sells, in Accra as well as an association with Akintola Williams in Nigeria. Nduom looked for another opportunity and his instinct paid off, yet again.
“One of the partners said Ashanti Goldfields was their client and it was time to go do an audit, so maybe I should go with them to do an information systems audit. I traveled with them to Obuasi and spent a week, did the analysis of their systems, wrote a report and spoke to the man in charge of the whole area. He said he liked what I was suggesting which was something they might like to do but I should go talk to the managing director of Ashanti Goldfields, which was Sam Jonah, but then he was based at Diamond House in Accra.”
This principle of perseverance, which Nduom had learned a lifetime ago, when he secured his first job as a life insurance underwriter, was to serve him well – just as well, as a frustrating time was ahead.
“So I tried to talk to Sam Jonah several times in Accra and it didn’t work. I went back to Obuasi and somehow somebody there accused me of messing up with their computer systems so they ordered me off the mine. So I left the mine but sat by the supervisor’s door all day and convinced them to let me in because I wanted to talk to him about what can be done to improve their systems. He let me in and I left with an agreement to come back and organize their information systems,” says Nduom.
The contract was for a complete systems overhaul of the gold mine, involving the change of computers, accounting systems as well as payroll. Nduom enlisted the help of Deloitte to deliver the projects. After this, Nduom delivered more projects, including overseeing the merger of Touche Ross and Deloitte Haskins &amp; Sells, forming Deloitte &amp; Touche.
“When they merged they didn’t have a management consulting section and that is what gave me the opportunity to set up Deloitte and Touche Consulting West Africa and brought some other people from the US and hired them to join the team,” says Nduom.
The team had nearly 100 people in Liberia, Nigeria, Ghana, Côte d’Ivoire and Zimbabwe. Ever the opportunist, Nduom spotted yet another gap in the market.
“While we were here, we realized that nobody was doing consulting work. So I took my own money because the firm said you are a partner in the US and not a partner in Ghana or Africa. They had no interest in setting up a branch of Deloitte USA in Ghana. Deloitte is set up as member firms. So they said we will give you two years after which you will get Africa out of your system and come back to the US.”
The two years taught him resilience. The new West African consulting business was inundated with work. Nduom secured major contracts with Texaco and Elf Oil in Nigeria, the African Development Bank and Malawi Oil. He was also responsible for setting up the computer software for Zimbabwe’s social security system.
“Eventually I became the coordinator for consulting for the African region for Deloitte and the time came for me to go back and I said there was enough work to do here so we set it up as a member firm of Deloitte. So when senior partners will get together every year to have their annual meeting, I would go as the senior partner for the West African consulting practise,” says Nduom.
Nduom became the chairman for the African region for Deloitte and held that position until the end of 2000. His says his success is down to focusing on long-term objectives, while staying flexible enough to solve day-to-day problems.
“We would look for a place to relax or do some work, we couldn’t find anything and so we set up Coconut Grove. We were looking for people to do some software work for us and we couldn’t find anyone, so we took a bus to Kwame Nkrumah University of Science and Technology and recruited some students, gave them computers, gave them software to tear apart and build again and then we started a software company. Out of that we set up a software company called TSS, then a hardware company called IBS, and out of that came corporate finance which became Gold Coast,” says Nduom.
The slogan of Groupe Nduom grew beyond expectation and owns a string of companies, from hospitality to entertainment. It has hotels, a football club and an artist management business. In media, it has newspapers, television, radio and advertising; it also owns primary and secondary schools and a university.
Nduom’s intuitive timing helped elbow out competition across his empire; a shrewd strategy that led to his worst day in business.
“I try to forget the date. It was 1995. It is the day I traveled from Ghana to Wharton to speak to graduate business school students about investments in Africa. I was one of the keynote speakers so I traveled from Ghana to Washington and my brother met me with faxes from Ghana, which said number one, I was on the Ghana Airways board at the time and I have been sacked from the board. I had consulting business with Ghana Telecom and it had been canceled. I was doing some consulting business with State Enterprise Commission and it said I was under investigation and in one day I lost over $2 million worth of consulting business,” says Nduom.
He believes this was an attempt by the government of the day to block his businesses for reasons he never found out. The event prompted a passion to be a part of the political system to prevent this injustice from happening to anyone else.
“I didn’t want anybody in Ghana to go through that experience where a government will just get up and, for whatever reason, decide that somebody should not be in business and that they should cancel their contract and just try to move him off the earth. There was a plan to do away with my businesses and everything I was doing in Ghana. They said they would smoke me out and get me to go back to where I came from. This was elevated to an extent that it became a row between the government of Ghana and the US,” says Nduom.
Nduom turned lemons into lemonade and expanded across Africa, leaving trading in Ghana until the impasse was resolved. It was, and 40 years on the business is riding high on its acquisition of Illinois Service Federal (ISF) Bank in Chicago, US. Nduom is older, wiser, with a clear eye for new horizons.
“Working here is like working in our own republic. We are governed by our own rules. You have to send a daily report, monthly report, quarterly report, a mid-year report and a yearly report. The idea is if something was to happen to you, anybody is supposed to look at your business and pick up where you left,” says Richmond Keelson, General Manager of Groupe Nduom Corporate Affairs.
What a journey – from packing canned beans in the United States to owning a bank there – a first for Ghana. The next couple of years will be spent trying to help the bank – the newest entrant into the group – find its feet in the business of its faraway owners.
Nduom is driven by the passion to have a business set up, thrive and succeed beyond Ghana.
That is the legacy Nduom is building; one opportunity at a time.

From Canned Beans To The African Dream Of Owning A Slice Of The States

It’s only six blocks from James Proud’s office, a brick-walled converted bakery in San Francisco’s Mission District, to Central Kitchen, a hip restaurant owned by fellow FORBES 30 Under 30 alum Thomas McNaughton, but that’s plenty of time for the 25-year-old to take on more or less all of Silicon Valley. People who complain about finding good talent just don’t know how to recruit. Traditional venture capital firms? Unnecessary. By the time we reach the host stand, he’s deriding the entire tech community for their “airy-fairy bullsh-t about changing the world.”
This absolutism feels all the more jarring given that his short, bulldog frame and pudgy baby face make him look like the high school computer-lab nerd he once was, a persona buttressed by his wardrobe (a sweatshirt and sweatpants almost all the time, a black T-shirt if he’s feeling dressy) and diet (no vegetables, no fish). The latest in the 21st-century cavalcade of cocky prodigies in the mold of Sean Parker, Mark Zuckerberg and Evan Spiegel, Proud was born thumbing his nose at other people. “No one can make me do what I don’t want to do,” he says. He’s been professionally bred this way, too.
James Proud was in the first class of Thiel Fellows, the upstarts – 122 and counting – who for the past seven years have taken $100,000 each from billionaire contrarian Peter Thiel on the condition they skip college. And he’s also the most successful. Over the past four years he’s raised roughly $40 million for his startup, Hello, mostly at a $250 million valuation. He’s recently been raising bridge financing, at an even higher valuation, including a direct $2 million ante from the godfather himself, Thiel. It’s his first personal investment in one of his fellows. “James stood out from the start as extremely tenacious and determined,” Thiel says.
And now he’s rich, too. Proud still owns about half of Hello, pushing him well into centimillionaire territory.
Proud’s chosen market is right up there with death and taxes in terms of universality: sleep, which has suddenly become a bit more sexy and a bit less sleepy than it has been for the past few millennia. “You’re starting to see a shift in conversation around sleep that happened in the ’80s around exercise and in the ’90s and 2000s with organic and healthy eating,” Proud says. Arianna Huffington has raised $7 million for Thrive Global, which offers a suite of products and services driven by the idea that more sleep translates to a better life, and Casper, the mattress-will-change-your-life startup, has raised $70 million.
Proud’s focus is on hardware, specifically an orb the size of a tennis ball that sits on your bedside table and uses a variety of hidden sensors to track your movements and the surrounding nighttime atmosphere. The $149 gadget, called Sense, grades your sleep on a scale from 0 to 100 – and tries to help you improve that score over time. Proud claims that the Sense holiday rollout at Target is the biggest the retailer has ever done for a new electronics product (Target says that’s incorrect).
Big orders won’t guarantee big success, at least not immediately. A source close to the company says the internal sales projection for 2017 is 250,000 Sense units, implying net revenues in the ballpark of $20 million. Tiny compared even to a flagging competitor like Fitbit, which likely finished 2016 with sales of more than $2.3 billion – and even at that size, it’s barely profitable. Meanwhile, a triad of monoliths – Amazon, Apple and Google – stand determined to put connected devices on every conceivable surface of your body and in every space in your home.
What does Proud think of his trillion-dollar competitors? Looking up from his lamb ribs and roast pork, he lifts both hands in a double-middle-finger salute.
It’s the kind of brashness that a Peter Thiel could love. That tack surely worked for Zuckerberg and Spiegel. But youthful hubris goes back to Icarus, and that tale didn’t end with an IPO. Given his complicated market, dotted with pitfalls and entrenched enemies, Proud will ultimately demonstrate whether unswerving self-confidence is a necessary entrepreneurial attribute or a potentially fatal flaw. At the FORBES Under 30 Summit in Boston last October, Proud was asked backstage whether he’d ever met Richard Branson, whom he would soon join on a panel. “The real question,” Proud responded, “is whether Branson has ever met me.”
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Proud grew up less than an hour away from Branson’s childhood home south of London. His father worked for the British civil service, and his mother was a secretary who later stocked grocery-store shelves at night. Proud preferred haunting the computer lab to making friends on the playground. His first Internet payday came at the age of 12, when he built a website for a scammer he had met through an online forum (he spent the money on a Sony Ericsson mobile phone and Creative Labs MP3 player). As a hired hand for Web projects, he began making hundreds of dollars per job. At one point his PayPal account was frozen because he was underage, so cash arrived in the mail, prompting questions from his parents.
At 17 Proud started GigLocator, a website that aggregated concert ticket information, and persuaded his parents to let him take a gap year to work on it. He fed himself by faking hole punches on loyalty cards from a British chicken chain, Nando’s, or else schmoozing venture capitalists and other European techies over lunch, always letting them pick up the check. “Already back then, James had this laser-sharp focus about what he was going to do for the next ten years,” says Spotify founder Daniel Ek, who met Proud playing Ping-Pong during that period. “It was incredibly rare to see that from someone who should have been more focused on girls and school.”
Proud would have been the first in his family to attend college, but when the day came to enroll, he refused to go, despite his parents’ pleas. Then, on a September day in 2010, Proud found his savior at 1AM while watching a live stream of the TechCrunch Disrupt conference. There Thiel announced his eponymous fellowship: a $100,000 grant to each of 20 teenagers who wanted to skip college to pursue another dream. Proud decided to apply on the spot.
When Thiel flew the finalists out to hobnob in San Francisco, Proud was surrounded by preppy American kids with acceptances to Harvard they wanted to turn down. He returned to London, sure he wouldn’t make the cut. “I wished I didn’t even come,” Proud says. “I was going to have to go back and hate my life because I’d seen that this would be so much better.” But in April 2011 Thiel’s organization called to give him the good news. They also told him to sit tight until July. Proud, of course, was in a hurry – and not listening to anyone who would stop him. He quickly emptied his savings to buy a plane ticket and then demanded the first Thiel check be sent early, lest he end up sleeping on the street. They caved.
The fellowship changed Proud’s life, turning him from an unknown programmer living with his parents to a member of an inaugural class of wunderkinds. While crashing on air mattresses and couches for most of the next year, he took advantage of every door the Thiel brand opened across Silicon Valley. For a time Proud worked out of PayPal cofounder Max Levchin’s incubator, and in June 2012 he offloaded GigLocator to the concert promoter Peter Shapiro, earning himself a cool six-figure payday. (“That’s one young, smart mother–ker,” says Shapiro.)
Soon after, Proud began raising money for a new stealth startup that would become Hello. “I said, ‘I’m in for whatever amount you’ll let me in for,’” says Shakil Khan, an early Spotify investor that Proud befriended in London. “He said, ‘I still haven’t finalized what it’s going to be.’ And I said, ‘That’s irrelevant.’”
The original idea for Hello was to build a better version of the activity-tracker wristband pioneered by Fitbit and Jawbone. Proud recruited a handful of young hardware engineers and spent 18 months developing a prototype, which included a magnetic strap similar to one that would later appear on the Apple Watch. But over time Proud quietly soured on its potential. He noticed that no one on his team wore any existing product on his or her wrist for more than a few weeks. Consumer surveys show similar results, with estimates that about a third of wearables owners give up on their devices within the first six months. Plus, competition was fierce. Google would announce Android Wear in March 2014, and the Apple Watch debuted in September. Proud was already late to a category in which he no longer believed. “So what do you do? Do you give the money back to investors and send everyone home?” he asked.
The epiphany came when Proud flew out to New York City to attend a birthday party in March 2014.
Distracted by his dilemma, he brainstormed about products that wouldn’t need to be worn at all times and suddenly arrived at sleep tracking. People enjoyed the feature on wristbands but hated wearing them overnight. He brought the team together when he returned and told them they would be scrapping a year and a half of work to start over. “I wore the wristband prototypes for a good two weeks after, holding on to the work we had done,” says Hello’s first industrial designer, Rob Shook.
Proud also had to sell his decision to an angry group of investors who had supported a $7 million Series A only months earlier. To placate them, he granted additional shares to everyone who participated in the round, including Khan, then-PayPal president David Marcus and Xiaomi vice president Hugo Barra. “Had the decision to pivot come three months later, I don’t think the company would have survived,” says Dan Rose, Facebook’s vice president of partnerships and Hello’s only board member other than Proud.
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Proud’s move away from wearable devices took Hello out of a crowded but expanding market – an estimated 67 million smart watches will be sold this year – and made it the pioneer of a completely new one. “If it can work, it can end up being a consumer device on par with the iPod,” Thiel says. A huge if. Searching for scientific backing Proud hired Matthew Walker, director of the Sleep &amp; Neuroimaging Laboratory at the University of California, Berkeley, as Hello’s chief scientist. Walker believes that lack of sleep is an “epidemic” in First World countries and that Sense can help fix that. After one year of use, 71% of Sense users slept longer on average than they had before, and 57% had more regular wake-up times, the company claims. Hello hopes to do even better as it tests more personalized sleep techniques.
Proud proved there was a market for sleep-centered products, at least among early adopters, with a successful Kickstarter campaign in July 2014. After racing to build a basic hardware prototype and marketable software façade, Hello launched its campaign with a slick video and a goal of $100,000. It blew past the finish line, scoring $1 million in the first four days and $2.4 million after one month, just a hair shy of VR phenomenon Oculus Rift’s crowdfunding haul. That summer proved an intoxicating high, but there was so much to do to make the marketing pitch a reality that four bottles of celebratory champagne sat in the office refrigerator unopened until this past Thanksgiving.
Hello promised delivery by November 2014 but delayed the first shipments until February as production challenges mounted. Sense is a two-part system that includes a bedside device – an amalgam of LEDs, circuits and sensors to detect light, sound, temperature and air quality, all stuffed into a small sphere – and an accompanying battery-powered, Bluetooth-enabled “Sleep Pill,” which clips to your pillow to track movement. The team had to design many of the manufacturing tools themselves. That following June Hello brought in a $30 million cash infusion at the $250 million valuation from the likes of Temasek Holdings, a government-owned investment fund in Singapore, but the rest of the year was lost to fixing bugs and rewriting core features. In 2016, as Amazon rolled out the Echo and Google revealed Google Home, both voice-enabled wireless speakers, Proud pushed the team to add voice controls to the latest Sense, which went on sale this past November.
“The big challenge is always: Can you lock in the market enough before people develop copycats that are cheaper and roughly equivalent?” Thiel says. “This is always something a little harder for hardware than software.”
Unfortunately, even the new version feels like an unfinished product searching for a market. After trying it for a week, I enjoyed Sense’s novelty as a smarter alarm clock with limited voice commands and the ability to turn off the alarm with a wave of your hand. But for my $149, the core functionality is too inconsistent. It’s supposed to detect when you fall asleep and wake up, and analyze your tossing and turning to see how many hours you’re in deep sleep. Yet the Sense interprets data gathered from the clip on my pillow rather than a band on my wrist, so it frequently fails to register when I get up from bed and often confuses my fiancée’s movement for my own. Even if it were accurate, neither the sleep results nor other measurements are groundbreaking. Everyone already knows that blackout curtains are good for beauty rest and a barking dog is bad.
Other warning signs abound. Proud boasts about the new Hello displays in nearly 700 Target stores across the country, but the only inventory in Oakland was one Sense tucked in a side cabinet next to some Apple TVs and Linksys wireless routers. A survey of Best Buys around New York found only one with the product in stock; other stores indicated you needed to order it. And when I brought a Sense home, I nearly abandoned the set-up process after an hour of trying and failing to plug in the charging cable. Hello says a new manufacturer had constructed the USB port a millimeter off target in a few units.
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While plenty of questions remain about Sense, Proud now treats his risky pivot as a thesis statement. He trashes devices that need to be worn (like the Apple Watch) or require direct interaction (like the home assistants from Amazon and Google). His goal is to cover the entire 24 hours of your day with a few “nonengagement” health-tracking devices like Sense. “It’s a tragedy that we  can’t build and release them all right now,” Proud asserts.
He’ll need to diversify his product line soon to avoid the fate of other hardware startups like fellow Kickstarter darling Pebble, which shut down in December, and drone maker 3D Robotics, which crashed after burning through $100 million in funding. Even public companies like Fitbit (trading down 86% from its peak) and GoPro (down 90%) have struggled. “On one hand, it’s easier than ever to build a hardware product,” says Jan Dawson, analyst at Jackdaw Research. “But in some ways it’s harder than ever to be competitive and build a sustainable business.”
In the meantime, Proud must mature as the leader of a 50-employee startup trying to go toe-to-toe with companies that outnumber and out-finance him. While friends extol Proud as wise beyond his years, former Hello staffers describe him as a smart but inveterate risk-taker who often unravels in tense situations. “You could see the pressure got to him, and sometimes I would think it’s because he’s young,” a former Hello engineer says. “He would suddenly rush in saying, ‘We need to do X because people are complaining about it.’” Instead of patiently adhering to a long-term plan, Proud is prone to rash decisions. “The ability to take risks and be aggressive is the foundation of James’ decision making, and it may eventually come back to bite him,” says one ex-Hello employee who worked closely with Proud for more than two years. “If that day never comes, he’s a genius. If it does, the warning signs were there.” Proud doesn’t deny he can be a capricious boss. In December 2014, on the morning an engineer was set to fly to China to install the final firmware for the Sense’s first manufacturing run, Proud decided to add one more feature. His CTO, Tim Bart, told him it was insane to change anything in the code at such a late hour, but Proud was suddenly convinced that Sense should light up and play a sound when it was plugged in for the first time – like a computer booting up.
After a bruising argument, Proud got his way. The engineer finished coding the change on the cross-Pacific flight, and through skill and luck avoided introducing new bugs into the final product.
Was that last minute intervention a Steve Jobs-like moment of product genius or the power trip of an enabled, immature founder? Proud’s analysis of his behavior in hindsight is simple and unapologetic: “Well, I was right.”

The Black Sheep

When he talks, people listen; when he moves money, markets react and when he invests, many follow.  He is Christo Wiese, Africa’s third richest man after Aliko Dangote and Nicky Oppenheimer &amp; family, according to FORBES’ list of Africa’s 50 richest, and the creator of Africa’s largest retail store. He is ever busy as he adds to his $6.5 billion fortune, but his last investment raised a few eyebrows.
As we meet, Wiese is dressed in black pants and a black sweater; you may mistake him for an ordinary bloke on the street in Cape Town, South Africa. But, there is nothing ordinary about this man when it comes to business. His creation, Shoprite, earns revenue of $9.9 billion a year, at a time when retail is struggling. Steinhoff, the parent company of Wiese’s retail company PEP, brings in $11.8 billion. Combined, they net almost $2 billion in annual profits, operate more than 9,000 stores in 30 countries and employ over 200,000 people. He made his fortune from smart investments that earned him billions. So, why is he looking to venture into Africa’s glittering, but struggling, diamond industry?
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The family businesses, Cream Magenta 140 Proprietary Ltd. and Metcap 14 Proprietary Ltd., bought close to 50 million shares (23.54% each) in diamond company Trans Hex. This adds up to a dominant stake of just over 47%.
This isn’t entirely new territory for the risk taker. Wiese was in diamond mining in the late 1990s through an investment in Ocean Diamond Mining Holdings (ODM). He sold ODM to Namibian-based diamond miner Namco.
“I used to be in the diamond industry 40 years ago and the opportunity arose to acquire a controlling stake in Trans Hex which is one of the junior diamond mining companies and one I think has potential,” says Wiese.
The cold fact is South Africa’s once thriving diamond industry is suffering atrophy. It has no more than 200 diamond beneficiators remaining from a historical peak of about 4,500 and a decline in investment, according to Mining Weekly.
“Rough-diamond prices are too high for manufacturers, who cannot profitably polish goods at such levels. Polished-diamond prices have declined, in turn, reducing demand for diamonds from South African mines, as well as throughout the world,” it says, quoting World Federation of Diamond Bourses president Ernie Blom.
Trans Hex has not been immune. Their 2016 results suffered heavily from a sharp decline in rough diamond prices.
“The diamond market was severely impacted by excess stocks in the polishing industry and a resultant decline in demand for rough diamond. Average prices received for rough thus decline by 23.5% year-on-year. As a result, the Lower Orange River operations, which are earning the end of their reserves, moved into loss overall,” says Bernard van Rooyen, Trans Hex Chairman in the company financials.
Piet Viljoen, Alternate Director at Trans Hex, says its share price has come under pressure but the business has tried to ride the storm.
“The problem creates value in a very lumpy way. It earns a lot of money one year and then makes big losses the next year… so its share price doesn’t seem to go anywhere ever, that’s why it creates the impression that the business is under pressure,” he says.
Viljoen says it helps to have shareholders like Wiese who have vision.
“The shareholder reference can act as a provider of capital when the business needs it, do acquisitions or to fund projects.”
Trans Hex Group incurred a disappointing loss of R100.8 million ($7.3 million) and Viljoen has called it “a difficult year” but Wiese is optimistic.
“It is going well, except the exchange rate is not in favor of diamond exports because the rand is stagnant. With the diamond industry, you are not running a shop where you always know what your sales are going to be,” says Wiese.
Wiese is known for taking risks and smart investments. More than 60% of his wealth is in Shoprite and Steinhoff, while another 30% or so comes from his shares of investment company, Brait. His stock in Tradehold, a real estate firm, accounts for much of the remaining 10%. He has made investments in the United Kingdom (UK) such as clothing retailer New Look and gym chain Virgin Active. He says there is no secret behind the success.
“In this company, we have always had a philosophy, in terms of which we run our group of companies. These are the five pillars as we call it; faith, positive thinking, enthusiasm, compassion and hard work. Hard work is probably important but you’ve got to be a positive person and able to put teams together and motivate them. I am not a person running the business, I play a different role. The good business leaders like Whitey Basson and Markus Jooste are people who can put teams together, motivate them and steer them in the right direction,” he says.
There have been several enormous setbacks like the currency upset in 1985 when the rand lost about 50% of its value in less than a year, Brexit, which badly affected the share price, and great disappointments in people. It is wealth that hasn’t come easy.
“Oh yes, plenty [of bad investments]. I can’t even remember the worst one but there are many adventurous investments that just didn’t work out. I am heavily invested in wine farming and that’s not a very big lucrative business but it gives other pleasures such as the beauty of it…”
“A man’s true wealth is the good he does in the world,” goes the proverb. According to Wiese, success is more than how much money you have, it is about whether you can look at yourself in the mirror and say maybe it’s very small but my contribution made life or the world a slightly better place. Following this mantra, he is helping the poor gain title deeds to their homes. He is a sponsor of the Free Market Foundation, which is working with First National Bank to give people land tenure, and gave more than 100 title deeds to residents of Ngwathe, a municipality in South Africa’s Free State province.
“The Free Market Foundation looked at South Africa and found that there are between seven and 11 million households where the occupants own the structure on the land by they do not own the land, so they launched an initiative cooperating with the local, provincial governments to give people title to their homes. My family decided to get involved in that to make financial contributions in order to help people to acquire the title deeds to their homes,” he says.
“It is an enormously important thing for people to have a sense of ownership. People that are used to owning things do not realize how much it adds to a person’s dignity if he can say ‘this is my home. It may be a modest little home, but it’s my home and I can leave it to my children and be assured they have a roof over their heads.’”
Wiese says positivity rules his life.
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“If you are positive about life, you ignore the unfair criticism. A lot of the criticism is totally justified but you don’t focus on either the nice things people say to you or about you too much or equally you don’t concern yourself too much about the bad things people say…”
“I don’t remember anything bad people say. I always say to entrepreneurs, ‘if you start rising above the average, you become a target’. People say, ‘but that guy is not cleverer than I am, why does he make a success and I’m so clever and I don’t make the same financial successes?’ You have to know you will have people tear you down; it’s part of the game,” says Wiese.
We leave him preparing to jet off to the UK for meetings. Some may not understand his decision to dive back into diamonds, but Wiese seems to see money where others don’t.  Maybe the smart investor should take a look at the diamond business.

The Billionaire Diving Into The Depths Of The Diamond Business

On a cool evening, Idrisu is gearing up for his daily workout. Today, he is doing a combination of squats, endurance exercises and boxing routines. He started this new regime a little over a month ago and so far the results have been life changing.
“I started at this gym because I needed to get fit very quickly and I was looking for a gym that could guarantee results at a moderate price,” says Idrisu.
The owner of the gym is entrepreneur Rehia Giwa-Osagie who is determined to get the nation fit again through boxing. Osagie is the founder of EliteBox, a speciality fitness and boxing gym designed to help clients like Idrisu, achieve remarkable health results. Today, Osagie, who doubles as a personal trainer, is working with Mark, who joined the gym last week.
“I have never been to a gym like this, the combination of fitness routines that Rehia designs is specific to your needs. I wanted to build muscles and see results quickly and in a week I can already see progress,” he says.
Mark and Idrisu are part of a new wave of fitness that is sweeping Nigeria. For Osagie, the journey began a decade ago due to injury.
“I used to play semi-professional football in England, then I injured my knee so that career was over. So, I changed sports about seven or eight years ago to boxing,” he says.
Born in London to a gynaecologist and a dentist, Osagie was destined for a career in medicine but he opted for crunching numbers instead. After completing his finance degree at Durham University in England, Osagie had a short stint as a salesman.
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“My first job out of university was selling makeup door to door. That is the best way to integrate yourself into society. I used to walk around the city of London and sell Victoria Jackson makeup for £30 to £40. I was in the job for just a month and I quit. After that I went into advertising for an event company where we sold advertising and organized conferences all over the world,” he says.
Osagie was transferred to the Nigerian branch of the business two years ago, which inspired the start of his entrepreneurial journey.
“When I moved to Lagos, I realized that it didn’t have the things that I wanted to do. The whole entrepreneurial journey started because I needed to find a way to do things outside of going clubbing and going to the restaurant.”
At the time, Osagie had to drive far to get to his local gym. He decided to move his workout sessions closer to the where he lived and avoid the same mistake he made years ago by not following his passion.
“I am 29 years old. I was playing football from a young age to about 22. My biggest regret was that I never really took the gamble to quit my job and just go for trials and play for a team. I used to get a decent amount of money per match but I never had the courage to quit everything and pack one bag and relocate to another country to make it playing football, no matter what happened,” he says.
Osagie took the plunge. He quit his job and, with his life savings, began looking for a location for his new gym. He had a clear vision of what he wanted; it had to be safe, moderately priced and accessible. With an initial investment of $40,000, EliteBox was born.
“The long-term vision is to franchise this concept and make sure it also grows organically. I haven’t created this just to be another gym. There are very specific things about this gym that you will not find anywhere else, so, for me to keep that ambience, it has to grow organically.”
So far the gym has 100 members and the media attention is bringing in more members. Combining boxing and fitness is a hit with Osagie’s clients, but he wants to do more with his business.
“We are also looking to have boxing events and charity events. We work with a lot of kids at the moment and people come from the mainland to train; we are creating something here that is more than just a gym. We see ourselves as bridging the gap in the industry so we have the upper echelon in terms of clients and the working class as well. So we have a mix and match with males and females,” says Osagie.
If the feedback from Idrisu and Mark are anything to go by, then Osagie has found his calling. As the fitness craze gains popularity among Nigerians, EliteBox is punching its way to the top.

Punching His Way To The Top

Kenya’s attraction of foreign direct investment (FDI) has no doubt been impressive in the past few years, buoyed by demand in consumer and real estate sectors.
East Africa’s largest economy for instance received an estimated $1.9 billion in FDI in 2015, a 65% climb from 2014, data by the African Development Bank (AfDB) shows, cementing its unique position among countries with no significant natural resources that are receiving significant FDI inflows targeted at their consumer-oriented sectors.
In its medium-term economic framework, Kenya actually aims to tap FDI proceeds to help boost its economic performance amid wobbly returns from agriculture that has for decades been its mainstay in terms of GDP contribution.
A new regulation sneaked through the East Africa nation’s Parliament requiring foreign companies to allocate 30% shareholdings in their operations in Kenya to local investors. This threatens to reverse gains in FDI attraction.
“It may be very expensive, if not impossible, for Kenyan individuals to purchase or invest at least 30 percent in a foreign company. The process of carrying out due diligence in a company in another jurisdiction to effect the share sale or allotment would not only be time consuming, but also expensive,” says a lobby of United States investors, the American Chamber of Commerce, in Kenya.
Investors who fail to comply with the fresh ownership rules will be slapped with a fine of KSh5 million ($50,000), so states clause 975(2b) of the Companies Act 2015 that was adopted last November.
“This requirement may do more harm than good to the Kenyan economy. To start with, this 30 percent rule flies in the face of Kenya’s goal of being a regional business hub. A major concern is the conflict between this rule and the fact that Kenya is a liberalized market economy which embraces the free-market ideology. This rule is a form of protectionism,” says Lois Musikali, a legal expert at the Nairobi-based Centre for Applied Research in Law and Policy (CARLP).
Several leading foreign firms, including Vodafone, Coca-Cola, Diageo, General Electric (GE), and Bharti Airtel, have operations in Kenya and authorities should strive to maintain a friendly and predictable business profile that would attract more investors.
“There are concerns that foreign companies will look elsewhere for an investment partner. It is also true that many Kenyans will find it almost impossible, in terms of cost, to acquire a 30 percent stake in a foreign company that wants to register in Kenya,” says Musikali, noting that the absence of guidelines for foreign companies on how or where to find these Kenyan citizens creates a loophole for rent seeking, whereby corrupt public officials could acquire stakes in foreign firms seeking registration in Kenya using taxpayers money thereby advancing crony capitalism.
These resentments are weighty and Kenya has no option but to expunge the regulations from its laws to prevent polarizing investment.
Kenya’s Attorney General Githu Muigai says the regulation will be repealed through the Finance Bill 2016 that is currently before Parliament.
“The clause was unilaterally inserted and does not reflect the investment policy of the Kenyan government. The rule will be repealed through the Finance Bill 2016 that is at the committee stage in Parliament,” he says.
Nonetheless it is baffling that the regulations were allowed to see the light of day because Kenya has previously unsuccessfully tried to introduce a local ownership rule in its telecoms industry after it emerged hat foreign firms were facing difficulties in securing local partners with the right expertise and financial muscle to support the business.
Under this rule foreign companies investing in the telecom sector were required to reserve at least 30% of their shareholding for local partners. This shareholding was reduced to 20% and eventually reviewed for discouraging foreign capital flows in the country.
Kenyan authorities must pull off this path or risk causing ripples among foreign investors given the realities of other outlier factors such as the prevailing global economic slowdown.
The International Monetary Fund (IMF) projects that Kenya’s FDI will fall by nearly a quarter this year, thanks to declining inflows into hydrocarbons exploration and an adverse global economy. According to the latest IMF update on the Kenyan economy, FDI could fall by 23.7% to $981 million.

No Choice But To Drop Contentious Rule

It has been half a year since 195 countries came together in Paris for the adoption of the first-ever universal and legally binding global climate deal. In short, the accord, which will enter into force in 2020, aims to limit global temperature increases to below two degrees Celsius. While some are skeptical, Adnan Amin, the Director General of the International Renewable Energy Agency (IRENA), is optimistic.
“Paris has made a huge step-change in people’s expectations regarding the reality of energy transformation,” says Amin.
Amin predicts that the agreement will be a turbo boost for the world’s renewable energy sector.
“The political ambition we achieved in Paris was only possible because renewable energy solutions have become mature enough to be implementable and viable,” says Amin.
The growing value of renewable investments prove this.
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“Between 2014 and 2015, global investment in new renewable energy capacity jumped from $270 billion to $330 billion. This was before the Paris Agreement. In addition, renewables installed capacity has jumped by 120 percent since 2000, and the costs of technology has fallen dramatically.”
When it comes to alternative energy, Africa is expected to be on the forefront of what Amin calls an energy revolution.
“Renewables deployment in developing and emerging economies has overtaken that in developed markets, including fast-growing economies like the United States,” he says.
“As the electricity demand in mature markets has more or less stabilized, it is soaring in the developing world. The energy demand in Africa for instance, is expected to double, or even triple by 2030,” says Amin.
Amin points to South Africa, Morocco and Kenya as countries to watch.
“The commitment South Africa is making to renewable power generation, and the fact that some projects are delivering solar and wind power that price-wise are more or less on par with coal-generated power, is remarkable.”
While solar PV uses solar panels to capture the sun and convert it into energy, Concentrated Solar Power (CSP) uses mirror structures, known as heliostats, or lenses to concentrate the sun’s rays onto a central point. This concentrated light is converted to heat, and then into electricity.
“South Africa has started to integrate storage components in CSP plants, which is reducing prices even further. CSP is not competitive with coal, South Africa’s main source of electricity, but it is getting there,” Amin says.
He notes that the country is also proving itself in terms of policy innovation.
“I have spent some time with officials there, going through their procurement process. All I can say is that these processes are some of the most rigorous, effective, and transparent I have seen.”
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Then there is Morocco, which recently inaugurated the first phase of the Ouarzazate CSP plant. Upon completion, it will have a 2GW power generation capacity.
“Morocco has gone from very little to no investment in renewables four years ago to $2 billion last year,” says Amin.
“The country has produced some of the most interesting wind and solar projects in the world. Their latest utility-scale wind investment is yielding power that costs $0.03 per Kwh. That is the lowest we have seen anywhere so far,” he says. “The government has bene very clear that this was achieved without incentives and subsidies. Morocco is a game changer in Africa, and is beating everyone else hands down.”
Kenya is doing well too.
“We will see geothermal development move very fast, with very cheap base-load electricity. Kenya is also investing in wind, with the wind farm in the Turkana District going online hopefully later this year,” says Amin, referring to the 250MW wind project, which is the largest in Africa.
Apart from individual countries tapping into renewable energy sources to improve national energy levels, what is more important is the formation of a so-called renewable energy corridor.
“Interconnections have been realized and are being built between markets in eastern and southern Africa,” he explains. “If we can achieve integrated markets with strong regulatory frameworks and transparent policy, we will start attracting financing and investment at a scale we have not seen before in Africa.”
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Going Green  To Light Up  The Continent

The sixth edition of the Credit Suisse Global Wealth Report 2015 offers a portrait of the world’s wealth. Besides affirming that global inequality has grown, the study had some interesting findings about the regions it covered, especially in Africa. Since 2000, the rate of growth of millionaires in Africa was faster than the global average, by a factor of four to 126,000 behind only India and China, which grew to 185,000 and 1.3 million millionaires respectively. The findings are supported by a similar report by Capgemini and RBC Wealth Management. In World Wealth Report 2015, Africans with at least $1 million of investable assets are reported to have climbed to 150,000 in 2014, up by 5.2%, while their combined wealth increased by 7% to $1.44 trillion.
Between 2000 and 2015, the Credit Suisse report noted that the wealth of those above the lower-middle-class threshold in Africa had grown by 140% compared to a global average of 113%. It states that adults with wealth beyond the middle class threshold accounted for a further $793 billion, bringing the total wealth of the middle class and beyond to $1.6 trillion, or 0.7% of global wealth. Such detailed and insightful revelations are rare. More importantly, they suggest that the continent’s recent gains are not a myth. Africa rising is real.
That said, the emerging wealth comes with the need for good advice. For that reason, I believe the time is now for private banking, wealth management and asset management in Africa. Although it is less understood than traditional methods of investing, wealth managers should prepare to deliver guidance to these freshly minted high-net-worth individuals (HNWIs). This is necessary. As the proverb says: Wisdom is a shelter as money is a shelter. Well, wisdom and knowledge will be needed. The opportunity is for wealth managers to serve as trusted investment advisors and as educators.
Just as important, these advisors will provide guidance on meaningful social impact activities, like giving back to society and creating entrepreneurial opportunities. This is vital in Africa where wealth inequality is so high. Credit Suisse reports that some Africans are among the top global wealth decile, and even among the top percentile. In fact, the region is more concentrated in the bottom end of the global wealth spectrum, with more than 40% of African adults belonging to the two lowest global wealth deciles. Seychelles, for instance, has a Gini index of 94.8 or near perfect inequality. Libya, South Africa, Botswana, Nigeria and Egypt are among the top 10 most unequal states in the region. In all, wealth managers have a critical role to play.
It is critical that policymakers fast track legislation allowing African funds to invest across the continent, as a means to provide investment channels for African wealth managers spread the risk. There is urgent need to deepen the roughly 30 recognized stock exchanges in the region for HNWIs to gain local financial markets exposure. In the past, Africa’s HNWIs dealt with bankers in New York, the Channel Islands, Geneva or London and invested abroad. This is likely to change soon. It is good to note that some international operators have already seen the opportunity. Specialist wealth managers, such as Pictet Asset Management and UBS, are notable examples. Locally, firms such as Stanlib and Ecobank are leading the way.
There is no doubt that significant wealth creation has occurred in Africa. This is a new dawn, wealth managers need to dump the pessimism and jump in.

Tag: Investment

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