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NU african conference

Tuesday 17 February, 2009

I attended the Friday afternoon session of this eventAfrica In Motion: Global Health, Markets and Human Rights which focused on Sino-African Relations & Entrepreneurship/African Capital Markets.  This conference addressed many other issues going on in Africa, but I wasn’t able to attend because I had a client meeting & did an indoor triathlon.

1st to Sino-African relations, China supported Africa’s liberation in 1955 & was on the front lines with them, so their relationship is not new.  What’s new is China’s ascendence as a world power.  What differs is China’s approach to Africa.  The Chinese place no preconditions on the aid they provide to Africans, in contrast to the Americans, for which the Chinese get mutual respect for non-interference.

Q&A

  • China will not fundamentally change the displacement of refugees in Africa.
  • China hasn’t earned profits per se, however has gained influence, which should be as valuable.

Moving to entrepreneurship/capital markets, filmmaker Carol Pineau made  Kenya Stories which started to tell the tales of 6 business plan contestants in Kenya.  It ended up following them through elections protests, riots, etc.  Most ended up being real success stories.   There are inspirational stories of overcoming corruption, lack of infrastructure, (computers have to be replaced on a regular basis because surge protection is insufficient).

Rob Fogler has the only US-based Africa investment fund that is financed entirely by private money.   He focused on 4 areas

  • microfinance-definition depends on who’s defining it.  It’s not a toy, although it has been co-oped by some non-profit organizations.  Transaction costs are going up.  There are regulatory issues, but some are being solved by technologies, wireless, etc.
  • mortgages-title, surveys, & foreclosure are issues, but they’re available to SME’s.  $250 trillion could be unlocked with them.  The problem is lack of access to long term currency reserves.  A 2ndary market is needed.  Currency risk must be diversified away.
  • stock exchanges-only 10 US companies are listed in all of Africa, so they’re still to small & illiquid.  Mutual funds, pension funds, 401K investments need to develop.
  • private equity/venture capital-$125M was invested in 2005 (1/2 of that in Nigeria).  Now funds are raising $200M.  Opportunities will not come from foreign investment, rather from within.

Kolawole Oyefeso of Kotco Energy Ltd. spoke too, but I couldn’t understand him very well.

Q/A

  • Rob will invest in anything but tourism
  • You need to build personal relationships to find people you can trust.  There are no quick bucks.
  • Companies which establish viability with appropriate controls get investment.
  • Previous aid models haven’t worked.  Entrepreneurship does.
  • Raising long-term capital is tough.  Governments must develop tax bases to avoid the need to borrow.
  • Americans are already late to Africa & need to get past the mental “Africa obstacle.”  The Russians, Indians, Middle Easterners, & Chinese are already there.  Africa is not that different from Latin America.  Barclays is issuing debt in local markets.
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