I have just arrived from a brief business trip to Ghana, one of Africa’s “doing well countries”. As to whose barometer the tag “doing well” is measured against is another subject all together. However, since arriving at my desk in London, my office has received several calls from many African countries with real estate projects in need of funding. At the same time Property Investor Africa is fast gaining ground in the eyes of investors (from the rest of the world) looking to invest in real estate and infrastructural projects in Africa. While there the dominant news was about America’s initiatives in Africa and of course Ebola.
America’s Smoking Pipe
Last week, President Obama’s administration made the last minute gesture of inviting no less than 50 African Heads of States, Presidents and Prime Ministers to what it billed as The US-Africa Leaders’ Summit. In his 6th year as president, President Obama finally delivers a summit that is to launch Africa’s credentials for funding innovation, entrepreneurship and the many infrastructural projects in need of financing. Do not get me wrong: I am a huge admirer of President Obama, however, I may perhaps be one of the most sceptical entrepreneurs you will find who actually thinks all this “brouhaha” about this summit may come to nought. After all, how many times haven’t African leaders attended summits such as the World Economic Forum, G8, G20, G-whatever and yet the same old issues persist to date? At these meetings and pledges have been made by many a nation, corporations and what have you. Yet, in 2014, the issues in Africa that necessitated attendance at these meetings all these years ago, still persist. Like bees to a honey comb, African leaders only need to see Africa added to USA, IMF, World Economic Forum or Europe and they come rushing to attend. Mark my words: the next big thing that will happen will be a China-Africa Economic Forum or something with a stupid label like that and African leaders will be there in their numbers.
You see, my problem is not that I think these summits do not amount to anything; my problem is rather that the leaders who attend these summits do not often times, have the commitment and balls it takes to implement what the summits deliver in terms of policy initiatives and investment drives to transform their economies and alleviate poverty. A pat on the back of President Obama for following up on his promise to give African governments and businesses a life-line. However, until there is a serious monitoring mechanism to ensure that the countries present do deliver the policy initiatives at the summit, I am afraid that all this is a lot of smoke from an American pipe.
Do Angels Exist in Africa?
In April 2011, I wrote an article headed: “Do angels exist in Africa?” which was published at vc4Africa.com. The article can be read here: http://vc4africa.biz/blog/2011/04/06/do-angel-investors-exist-in-africa/
Three years after the publication, the issues highlighted are still as relevant today as they were three years ago, because when it comes to Africa, it is “business as usual”. Africa is like a pocket with holes – it has all the natural resources any continent can ask for. It has all the man-power and skills set available, yet it is still very, very, poor and in my mind disjointed. The reason is because Africa still looks to the west and now Asia for its economic recovery instead of to itself. Almost all projects now look for funding from these countries. It is good to look to mature markets to fund multi-million dollar projects. But I still believe that it is about time Africans found a way of financing businesses and project initiatives by themselves.
At the US-Africa Leadership Summit, according to Dane Erickson, Lecturer at the University of Colorado Denver and previously a foreign policy advisor on Africa to the Barack Obama 2008 Presidential Campaign, “…$33 billion of public and private commitments aimed at enhancing commercial ties with the continent was pledged”. This is where I get mad. Pledges and commitments are not cash. As a Chartered Accountant, I know that pledges, cheques and promissory notes are not the same as cash. Give me a pledge of $1million in 12 months or cash of $10,000 now, and I will choose the $10,000. Why? Because a lot can happen in 12 months. With America, you only need one incidence of terrorism anywhere in the world and this summit and its ideals will be consigned to history. The question needs to be asked: Why does Africa still rely on the US and not on itself?
US and European businesses have benefitted enormously from Angel Investors and high net-worth individuals. Africa’s high net worth individuals or business angels are nowhere to be seen. Apart from showing off their wealth, they can only be found in holiday resorts, Dubai, London, Paris, or world forums such as the one I am talking about. Forget about high-net worth individuals. Africa’s new business angels must come from the diaspora. It is about time that we found the solutions to harness the might and power of the diaspora to fund capital initiatives.
I believe that the $33billion of US pledges and commitment are no match to the cash out-pouring of the African diaspora, if the right machinery is put in place to harness it. That is where US help is needed – helping Africa to harness its potential, not pledges and commitment. In 2012, African remittances from the diaspora was over $60billion cash (not pledges) – twice what America pledged last week! This is what African leaders do not see when they flock to these summits, coming back home with empty promises, pledges and commitments in their hands. It is about time Africa looked within to discover how it can transform its economies rather than depending on pledges and commitments.
President Obama’s US-African Leadership Summit held last week is to be commended. In recent years however, like bees to a honey comb, African leaders have attended summit after summit only to come home with empty pledges and promises. It is time for African leaders to harness the power of the diaspora and help grow angel networks that will help fuel innovation and enterprise as well as fund dire projects on the continent. Until Africa looks within itself for capacity and energy to transform its economies, I am afraid, that there will be more of such summits to come but it will be business as usual.
Quote of the day:
“Africa is like a pocket with holes – it has all the natural resources any continent can ask for. It has all the man-power and skills set available, yet it is still very, very, poor and in my mind disjointed. The reason is because Africa still looks to the west and now Asia for its economic recovery, instead of to itself.”