Bill Ackman panicked about the coronavirus early on.



The billionaire investor had a nightmare about COVID-19 in late January, which might as well have been the plot of the pandemic thriller&nbsp;Contagion. When he woke up, he started prepping.



He began arranging for his firm’s fifty employees to abandon their midtown Manhattan offices. He put on doomsday hedges. And then he pulled an enormous amount of cash from an ATM. By the time the Dow Jones Industrial Average was plunging seemingly a thousand points a day, Ackman’s $5.6 billion firm was making money amid the chaos.



So when he woke on Wednesday morning, Ackman didn’t have a pleasant message for America. He took to Twitter to recommend <a href="https://www.forbes.com/sites/antoinegara/2020/03/18/hedge-fund-billionaire-bill-ackman-calls-for-30-day-shutdown-of-country-closing-of-borders-to-curb-covid-19-spread/#4d6686425571">a shutdown of the country</a>.



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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Mr. President, the only answer is to shut down the country for the next 30 days and close the borders. Tell all Americans that you are putting us on an extended Spring Break at home with family. Keep only essential services open. The government pays wages until we reopen.&mdash; Bill Ackman (@BillAckman) <a href="https://twitter.com/BillAckman/status/1240244507246919681?ref_src=twsrc%5Etfw">March 18, 2020</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Then he called into&nbsp;CNBC&nbsp;around noontime to elaborate. And it was bad.



“Hell is coming,” said Ackman, in a frenzied 28-minute interview. “Shut it down now,” he said of the economy, “There is a tsunami coming.”



Ackman recommended President Trump effectively close the country for 30 days and shut the borders to stop the spread of the coronavirus. Yes, it would mean an economic disaster, so Ackman recommended that Trump call a national ‘Spring Break’ and have the government pay wages, halt foreclosures, and help with other monthly bills like rent to tide people over.



This way Americans will stay at home and the virus will stop spreading.



If not, Ackman warned in an emotional interview that verged on panic, the country will experience a prolonged pandemic, which will put many industries ranging from hotels, to restaurants, to real estate out of business.



“What’s scaring the American people and corporate America now is the gradual roll-out,” said Ackman, of containment and distancing measures. “Capitalism does not work in an 18-month shutdown, capitalism can work in a 30-day shutdown.”



The hedge fund manager, turned amateur health expert, said the contagiousness of the virus may mean millions will die without drastic measures. He choked up when talking about the risks of the disease to his elderly father, and revealed that some of his employees may have the virus.



“The only shared sacrifice that is going on right now is the healthcare community, the nurses, the doctors, the people taking care of patients,” said Ackman. “The president is not saying storm the beaches of Normandy,” he said, hypothetically, of his 30-day shutdown proposal. “He’s saying go home, spend a month with your family.”



When Ackman turned to his portfolio and the rest of Wall Street, his warnings were dire.



“Hilton is the canary in the coal mine,” said Ackman of the hotelier, which is one of his larger holdings. Without quicker action, “it’s going to zero along with every other hotel company,” he predicted. Though, he did say his Pershing Square was buying shares of Hilton as markets plunged on Wednesday morning.



“I have enormous respect for KKR and Blackstone,” Ackman added of the two illustrious private equity firms, before predicting their leveraged deals would be toast if there isn’t a quick solution within the next 18-months. “[E]very one of their companies goes bankrupt,” he said.



After the interview,&nbsp;Forbes&nbsp;has learned Ackman called Blackstone and said he’s buying the firm’s shares.



His ideas were boundless: He recommended Elon Musk convert Tesla’s car-making factories into ventilator-making factories.



As he spoke, the market plunged, tick-by-tick.



The Dow Jones Industrial Average was down over 1,000 points when he went on air. It hit a circuit breaker as he spouted dark doom and gloom, then closed for 15 minutes. When it reopened, it was down 2,000-plus.



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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Ackman just halted the market.&mdash; Nathan Michaud (@InvestorsLive) <a href="https://twitter.com/InvestorsLive/status/1240321527024844804?ref_src=twsrc%5Etfw">March 18, 2020</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Some on Twitter took Ackman’s dire warnings as necessary.



His “shut it down now” idea, increasingly, is becoming the pandemic playbook for cities either implementing or considering “shelter-in-place” laws. And, in recent days and weeks, health experts have responded positively to market-tanking warnings by public officials about the virus.



Many commended President Trump for talking about the gravity of the pandemic earlier in March, even though it was the catalyst for a sudden market drop. Before Ackman went on air, Dr. Deborah Birx, the head of the White House Coronavirus Task Force, said many people, particularly young people, are not taking the pandemic seriously enough. Her message to millennials? You can die from this.



However, others saw a panicked billionaire investor talking down the market and inciting fear.



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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Please get Ackman off CNBC before people start jumping off bridges. <a href="https://twitter.com/CNBC?ref_src=twsrc%5Etfw">@CNBC</a>&mdash; Mike Novogratz (@novogratz) <a href="https://twitter.com/novogratz/status/1240321462621351936?ref_src=twsrc%5Etfw">March 18, 2020</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Ackman then went back on Twitter to clarify his intentions. “These are the bargains of a lifetime if we manage this crisis correctly,” he said.



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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Some investors have been confused by remarks. To clarify, I am confident the president will do the right thing in temporarily shutting down the country and closing the borders. If that happens, we can win the war against the virus and the markets and the economy will soar.&mdash; Bill Ackman (@BillAckman) <a href="https://twitter.com/BillAckman/status/1240351178933895169?ref_src=twsrc%5Etfw">March 18, 2020</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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 You can watch Ackman’s CNBC interview in full here. (Pershing Square declined to comment further.)



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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Watch the full interview with Bill Ackman on the coronavirus threat to economy — &#39;Shut it down now&#39; <a href="https://t.co/nSDK8lwKec">https://t.co/nSDK8lwKec</a>&mdash; CNBC (@CNBC) <a href="https://twitter.com/CNBC/status/1240339659709915138?ref_src=twsrc%5Etfw">March 18, 2020</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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&#8211; <a href="https://www.forbes.com/sites/antoinegara/">Antoine Gara</a>, Forbes Staff, <a href="https://www.forbes.com/banking-insurance">Banking &amp; Insurance</a>

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The Billionaire Interview That Tanked The Stock Market

Women are still a minority among the most successful venture capital investors, but their presence is growing. Twelve female investors made it onto this year’s Midas List, a record for the annual ranking and an increase from nine women a year ago. The cohort includes three female newcomers, one of whom,&nbsp;Kathy Xu, is the highest-ranked woman on the list. &nbsp;



The Midas List ranks venture capital investors based on the number and dollar size of exits and highly-valued private companies over the past five years, with a premium on bolder early-stage deals. Produced in partnership with TrueBridge Capital Partners, the ranking counts only exits (public offerings or acquisitions) that are over $200 million or private investment rounds valuing companies at $400 million or more.&nbsp;



Newcomer Kathy Xu, founder and partner at Shanghai-based firm Capital Today, joins the list at the very lofty No. 6 spot, thanks largely to her prescient bet on JD.com, China’s No. 2 online retailer, plus investments in Chinese gaming company NetEase and discount e-commerce site Meituan-Dianping. Capital Today was just a year old when Xu bet on JD.com as its only Series A investor. 



After the e-commerce site went public in 2015, she had a career-making win. Her $18 million check returned $2.9 billion to Capital Today and its investors. Xu began her career as a bank clerk in China, then worked at Hong Kong investment firm Peregrine and Baring Private Equity Asia before founding Capital Today in 2005.



READ MORE | <a rel="noreferrer noopener" aria-label=" (opens in a new tab)" href="https://www.forbes.com/pictures/5c9c18d5a7ea43206f13833a/women-investors-of-the-20/" target="_blank">Gallery: Women Investors Of The 2019 Midas List12 imagesView gallery</a>



Xu dethroned Mary Meeker, who was the highest-ranked female on the Midas List for the past three years. Meeker lands at No. 8 this year. After eight years at Kleiner Perkins Caufield &amp; Byers, Meeker left the firm in late 2018 to start a new fund with former members of Kleiner Perkins’ digital growth team. Her new fund, Bond Capital, launched in January 2019 and focuses on high-growth Internet companies. 



Her Kleiner Perkins portfolio had five exits since our last Midas List: Turkish commerce site Trendyol (acquired by Alibaba in June 2018), DocuSign (IPO in April 2018), Spotify (direct listing in April 2018) and Ring (acquired by Amazon in March 2018). 



Meeker is known in the tech world for her annual Internet Trends Report and was a managing director at Morgan Stanley covering public technology companies before she shifted into venture capital in 2010.&nbsp;



<h3 class="wp-block-heading">Addressing The Root Causes That Force Migrants To Flee</h3>



Beth Seidenberg, No. 59 on the list, also recently started her own venture investing firm. After 14 years at Kleiner Perkins, Seidenberg, a physician by training, founded Los Angeles-based Westlake Village BioPartners, which plans to focus on early-stage firms and to incubate life sciences companies. 



The firm launched its first fund with $320 million of committed capital in September 2018. &nbsp;During her tenure at Kleiner Perkins, the ex-chief medical officer at Amgen incubated eight companies and made big deals including Flexus Biosciences, which was acquired by pharma giant Bristol-Myers Squibb in 2015 for $1.25 billion. Another notable exit: cancer drug maker Tesaro, which was acquired by GlaxoSmithKline for $5.1 billion in 2018.



READ MORE | <a href="https://www.forbesafrica.com/woman/2019/03/13/watch-the-making-of-the-new-wealth-creators-cover/" target="_blank" rel="noreferrer noopener" aria-label="WATCH | The Making Of The New Wealth Creators Cover (opens in a new tab)">WATCH | The Making Of The New Wealth Creators Cover</a>



Other Newcomers



Two other newcomer female VCs debuted on our list. Nisa Leung, managing partner at Qiming Venture Partners, ranked at No. 54, leads the Chinese firm’s health care investments. 



Notable deals include the acquisition of cell analysis instrument company ACEA Biosciences by Agilent for $250 million in November 2018, and the September 2017 initial public offering of drug developer Zai Lab. Before joining Qiming, Leung cofounded Biomedic Holdings, which invested in medical devices, pharmaceuticals and health care services. 



Outside of her venture role, Leung is a visiting lecturer at Harvard Law School and a member of the government of Hong Kong&#8217;s Committee on Innovation and Technology Development and Re-Industrialization.



Another newcomer: Anna Fang, partner and CEO of ZhenFund, an early-stage China-based firm that has backed more than 600 startups. Fang, who oversees the fund’s investments, portfolio management and operations, secured the No. 89 rank thanks in part to her investments in lifestyle and shopping site Xiaohongshu, also known as Red, which said it had more than 200 million users as of January 2019. Fang, who is based in Beijing, started her career as an investment banker at J.P. Morgan in New York covering consumer and retail companies.



READ MORE | <a href="https://www.forbesafrica.com/woman/2019/03/11/the-businesses-of-the-future-20-new-wealth-creators-on-the-african-continent/" target="_blank" rel="noreferrer noopener" aria-label="Businesses Of The Future: 20 New Wealth Creators On The African Continent (opens in a new tab)">Businesses Of The Future: 20 New Wealth Creators On The African Continent</a>



Repeat Appearances



In addition to Meeker and Seidenberg, six other women who were on last year’s Midas List are back again, including Jenny Lee, founder and partner at GGV Capital (No. 19); Ann Miura-Ko, cofounder and partner at Floodgate Fund (No. 57); Theresia Gouw, cofounder and partner at Aspect Ventures (No.65); Rebecca Lynn, partner at Canvas (No. 80); Aileen Lee, founder and partner at Cowboy Ventures (No. 82); Sonali DeRycker, partner at Accel Partners in London (No.83); and Kirsten Green, founder and managing partner at Forerunner Ventures (No. 95).



Two of these women jumped up quite a bit in the ranks since last year. Jenny Lee of GGV Capital rocketed up to No. 19 from No. 74 a year ago thanks to five initial public offerings in the past year: credit card service startup 51credit in July 2018, language platform LingoChamp in September 2018, scooter startup Niu in October 2018 and smartphone maker Xiaomi in July 2018, a personal investment. 



Lee, who has been a Midas lister since 2012, also led GGV’s fundraising efforts last year, culminating in $1.88 billion of new funds in October 2018. Twenty of her investments are valued at more than $400 million and seven have reached unicorn or “megaunicorn” (multi-billion dollar) valuations. &nbsp;



READ MORE | <a href="https://www.forbesafrica.com/entrepreneurs/2019/03/31/this-billionaires-terrible-purchase-just-made-14-billion-in-profits-and-now-hes-ready-for-more/" target="_blank" rel="noreferrer noopener" aria-label="This Billionaire’s ‘Terrible Purchase’ Just Made $14 Billion In Profits, And Now He’s Ready For More (opens in a new tab)">This Billionaire’s ‘Terrible Purchase’ Just Made $14 Billion In Profits, And Now He’s Ready For More</a>



Gouw, cofounder and managing partner of Aspect Ventures, moved up to No. 65 from No. 89 a year ago following two notable acquisitions of companies she’d backed: Slack picked up smart email assistant Astro in September 2018, and Airbnb said it would acquire Hotel Tonight in March 2019 for $465 million. Gouw tells&nbsp;Forbes&nbsp;this year that she continues to focus on investments in artificial intelligence and machine learning “despite all the hype.” &nbsp;&nbsp;



An Imbalanced Industry



It’s common knowledge that the venture capital industry and the startup and investment ecosystem skew heavily male. Globally, only about 17% of investment-level positions at venture firms are held by women,&nbsp;according to PitchBook data&nbsp;this year. 



What’s more, the overall surge in venture capital funding in recent years hasn’t benefited female founders at the same rate as male founders,&nbsp;according to PitchBook. The total amount of capital going to female U.S. founders is increasing— barely. 



Companies founded solely by women claimed 2.3% of total capital invested in venture-backed startups in the U.S. in the last year, according to PitchBook in February, up from 2.2% a year earlier. Not much, but an uptick of 0.1% is better than a move in the opposite direction.



-Kathleen Chaykowski; Forbes Staff

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Meet The Top Women Investors Of The Midas List In 2019

Initial coin offerings (ICOs) see companies create their own digital tokens and sell them to the public.
They are like initial public offerings (IPOs), but investors take no equity in the business, and rather invest in the potential value of the token.
They are proving attractive to firms and investors alike, with over 230 companies raising almost $4 billion in such a way in 2017.
“Initial coin offerings allow companies an easy way to raise capital while bypassing many of the regulations and requirements associated with initial public offerings. ICOs also allow companies to tap into the hype around cryptocurrencies and crowd-sourcing,” says George Etheredge, Research Analyst in the Digital Transformation Practice at Frost &amp; Sullivan Africa.
But are ICOs relevant in the African context? It’s early days, but a number of startups have recently given them a whirl. Nigerian remittances platform SureRemit netted $7 million, while South African company and property investment portal ProsperiProp secured $200,000. 
ProsperiProp founder Llew Morkel says ICOs offer entrepreneurs an opportunity to dip into a global source of capital without having to go through formal channels like banks or venture capitalists.
<a href="http://www.forbesafrica.com/focus/2018/02/12/everybodys-interests-regulate-cryptocurrencies/" target="_blank" rel="noopener">READ MORE: Why it’s in everybody’s interests to regulate cryptocurrencies</a>
“Investor institutions require the entrepreneur to commit to a period of exclusivity while the funder conducts their due diligence. In the event where the application is rejected, the entrepreneur has to start over, often costing valuable time to market. This cycle is discouraging,” he says.
The lack of regulation in this space makes it easier to fund starved African businesses. But it’s also the main drawback of ICOs.
“It’s far easier for groups to set up ‘fake’ ICOs. The general hype around the crypto space may cause investors to be insufficiently diligent,” says Etheredge. 
This is likely to mean the space becomes the focus of more regulation as time passes. 
“One factor here will be those parties that currently make money from the way things are done at the moment will have powerful incentives to lobby for regulation. This is a pattern in most disruptive industries, just look at Uber,” says Etheredge. 
Getting the legal ducks in a row was one of the challenges for ProsperiProp.
“It’s important for an ICO to move inside the guidelines of each country&#8217;s legal framework. The country&#8217;s framework not only protects the ICO investor but also the entrepreneur,” says Morkel.
<a href="http://www.forbesafrica.com/lists/2018/02/08/forbes-first-list-cryptocurrencys-richest-people-meet-secretive-freaks-geeks-visionaries/" target="_blank" rel="noopener">READ MORE: Forbes’ First List Of Cryptocurrency’s Richest People: Meet The Secretive Freaks, Geeks And Visionaries</a>
With all the noise around ICOs, and awareness of potential scams, marketing is key. Wala CEO Tricia Martinez says trust, transparency and community are key elements.
“We quickly recognized that in order to gain trust you must be transparent. And the only way to build a community is by being transparent. Once we gained the trust of the individual and were transparent our community began to grow,” she says.
Africa’s foray into the world of ICOs have been tentative thus far, but those that have made the jump expect more to follow. SureRemit co-founder Adeoye Ojo says they are about more than just capital.
“There needs to be a real utility for the underlying token being distributed. Many businesses are rushing to tokenise without a proper plan to sustain the new economy they are creating. This isn’t unique to Africa,” he says.
Martinez agrees.
“ICOs shouldn&#8217;t be used as a funding mechanism. Only if there is a real use case to build a token economy should an entrepreneur look at this as a potential channel,” she said.
Yet the potential for token sales to provide access to funding cannot be ignored.
“The good thing is that barring countries that have some strict financial regulations about ICOs, almost anybody can participate. This allows projects, including African ones, to have exposure to a diverse audience who can both back and be first users of the product,” says Ojo.
<div id="attachment_36252" style="width: 310px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-36252" class="size-medium wp-image-36252" src="https://www.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-300x200.jpg" alt="" width="300" height="200" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-1024x683.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262.jpg 2048w" sizes="auto, (max-width: 300px) 100vw, 300px" />Eugene Mutai, bitcoin &#8216;miner&#8217; and software developer, uses the LBRY web site at his home in Nairobi, Kenya. Photographer: Luis Tato/Bloomberg via Getty Images</div>
This diversity, however, also means the usage of ICOs by African companies will depend on how these strategies perform globally.
“They are attractive in an African context as they can, for now, get past regulatory and bureaucratic red tape. However, Africa is some distance behind wealthier areas with respect to crypto adoption,” says Etheredge.
Yet all the signs are that crypto, in Africa and globally, is on the rise. Much of the future of ICOs in Africa may hang on the level of success experienced by first movers like SureRemit, Wala and ProsperiProp. For now, it’s a question of riding the wave and seeing where it goes.
&#8211; By Tom Jackson

Bitcoin surrounded by various world coins

Are ICOs Relevant In Africa?

The High Court case, in Pretoria on March 27, saw the full gamut of human emotions: anger; frustration and folly, followed by joy.
The latter emotion came from the long-suffering 27 independent power producers who won the case against an interdict to pave the way for the signing of the Power Purchase Agreements (PPAs) with the Department of Energy – the 20-year agreements that give them a chance to claw back $3.8 billion in investment.
The deal will add 2,300MW of green power to the estimated 40,000MW in installed capacity. Despite this, green power will make up 5% of South Africa’s power.
Outside the court, the thwarted National Union of Metalworkers of South Africa (Numsa) members and pressure group Transform SA weighed in with the anger and frustration coupled with a threat to block the streets in protest. As the union licked its wounds, the court poured on salt by ordering it to pay costs as it stuck the application from the roll.
“We got it from Eskom that if they introduce these renewables, they’ve done calculations on power station by power station on how many jobs will be lost. When we did this study last year it was found that 30,000 to 40,000 jobs are likely to be lost and there seems to be no interest about that,” says Numsa Secretary Irvin Jim.
“We are prepared to block the streets to achieve this.”
This claim despite the fact that Eskom will have to close down a number of its ageing and crumbling coal-fired power stations.
<a href="http://www.forbesafrica.com/technology/2017/10/30/road-green-future/" target="_blank" rel="noopener">READ MORE: On The Road To A Green Future</a>
“The South African population is being taken for a ride. Our fiscus is being looted because these companies, IPPs are only producing 5% power and taking 30% of Eskom’s profits,” says Transform SA’s Adil Chabeleng outside the court.
The mighty National Union of Mineworkers (NUM) – the biggest union in Africa with more than 300,000 members – agrees with Numsa that the unions don’t want private money generating the people’s electricity. They also feel that capitalists have benefited from public money ploughed into kick-starting green energy with preferential tariffs.
“We view this capitalist IPPs deal as a backdoor privatization of Eskom. The plan is to privatize 42% of Eskom by 2030 masquerading as the implementation of clean energy,” the NUM said in an angry statement.
“We are going to mobilize all our members and society to revolt against this planned madness called IPPs.”
Days after this fire and fury, Energy Minister Jeff Radebe shocked many by putting pen-to-paper for the PPAs to end the years of waiting.
The big problem now is to revive the dormant green power industry in South Africa.
“We have to resuscitate the industry to generate this power. Supply chains have to be rebuilt and manufacturing restarted. The whole supply chain has lain dormant for nearly three years,” says Brenda Martin, a board member of the South African Renewable Energy Council that represents most of the 27 IPPS.
Martin also refutes one of the claims of the unions that green power will see billions leaving South Africa and into the pockets of foreign investors. Numsa&#8217;s legal counsel Advocate Nazeer Cassim had argued in court that the signing of the IPPs could be viewed as a form of economic looting.
“Only 25% of this deal is owned by foreign investors and the rules of the game is that most of the money must stay in the country.”
Whatever the fall-out over the signing of the PPAs, just weeks before, this unsteady progress was a pipe dream after many months of dithering and a court case.
Picture this: multi-millionaire, suited and booted, investors leave air-conditioned airport lounges to fly thousands of miles to Africa to accept a government invitation to finally sign up for a return on their investment; only to arrive to, amid confusion, a court case, disappointment and a union that they’d never heard of, threatening to block the streets in protest against the deal. Confused? Most of them were.
“Excuse me,” a fresh-off-the-plane Italian investor, who looked like a clown lost in a circus, at the Department of Energy, asked one of the many young journalists at the press briefing, in Pretoria, on March 13.
“What is happening?”
The confused man from Milan was one of a number of foreign investors, from Spain to the United States, who flew in to sign PPA contracts. Investors expect it will take them a decade to claw back their money.
There was chaos before the investors landed that morning. Overnight, the militant Numsa – a union that appears to have forgotten that the Berlin wall came down – claimed it had won a late-night court interdict against the signing.
When it came to the signing later that day, in Pretoria, Energy Minister Radebe told investors that the courts had in fact not issued an interdict, as Numsa had claimed; it rather postponed the next hearing until March 27. You can understand the confusion of the man from Milan.
“It’s a banana republic,” chirped one of the South African investors in the wake of a day to forget in the course of renewable energy.
<a href="http://www.forbesafrica.com/woman/2014/02/01/shedding-light-renewable-energy/" target="_blank" rel="noopener">READ MORE: Shedding Light On Renewable Energy</a>
More inexplicable for investors was how these IPP contracts raised the ire of the unions almost overnight; there was hardly a peep from them in the years of government foot-dragging over signing them that has left many of the green power producers; at least 14 of the 27, according to industry, sources – on the brink of bankruptcy.
The coal-fired power stations of South Africa, built in the 1970s, are ramshackle and inefficient. Last year, the government said it was going to shut down the 3,000MW Kriel, 1,000MW Komati, 2,000MW Hendrina and the 1,600MW Camden power stations, all in Mpumalanga, anyway.
In any case, renewable energy generates a mere 5% of South Africa’s total power so the chances of green energy elbowing out coal, which produces nearly 80%, are unlikely in the extreme. It is more likely that South Africa’s coal-fired power stations will perish under the weight of repair bills and the cost of compliance with environmental regulations on account of the vast amount of acrid black smoke they belch into the African sky every year.
Other energy experts put down the government lethargy over signing the PPAs to ill-advised complacency. Low growth leading to low demand for electricity, plus a 500% increase in cost since 2007, has seen a cessation of power cuts in South Africa, for the time being.
Under the current energy scenario, South Africa will have more than 60GW of capacity by 2022, against a flagging demand of below 30GW, Ted Blom, a partner at Mining &amp; Energy Advisory, said. 
All in all, South Africa, which once dreamed of building the continent’s leading green power industry, creating thousands of jobs, has done quite a lot to destroy that dream. As well as the near three-year delay over signing the IPP contracts – the government has been penny-pinching, that is, trying to negotiate down tariffs with the argument that the country doesn’t really need energy right now.
What it means is that South African renewable energy producers are now looking across the continent for projects in favour of trusting the backed-up process in their own country. One of the unintended consequences of this whole controversy is likely to be that a score of African nations – who once lagged behind in renewable energy – could find themselves at the cutting edge of the industry thanks to South African technology and knowhow fostered by South African tax money and exported thanks to foot-dragging over contracts in Pretoria. Now, for hard-pressed South African taxpayers, that is an issue worth blocking the streets over.

Solar panels and windmills

Save Jobs Or Save Energy? The Dilemma Of Going Green

How is it that West Africa only accounts for 5% of foreign direct investment (FDI) into the African continent? The World Bank wondered this in July this year.
This is a region that includes the continent’s largest economy, Nigeria, with gross domestic product (GDP) of $406 billion in 2016, about 29% of sub-Saharan African output of $1.4 trillion. By comparison, South Africa, the continent’s most advanced economy has a size of $294 billion. Furthermore, the largest and most dynamic francophone African country, Ivory Coast, with a $36 billion economy, is also West African. So why the scant foreign investor interest?
Jack Ma, one of Asia’s richest men, led a group of people with similarly deep pockets to East Africa in July. His first stop was Kenya, an economy barely one-fifth of Nigeria’s size. Ma also visited Rwanda, a tiny landlocked neighbor to Kenya.
If corruption, terrorism and the occasional rebellion in Nigeria and Ivory Coast is disturbing, why is Ghana overlooked? With an economy almost as large as Kenya, Ghana has a better democratic record and has proved to be one of the most stable African countries. And just as Nigeria struggles to deal with the Boko Haram terrorist group in its northeast, so does Kenya with Al-Shabaab. Additionally, political violence is more of a problem in Kenya than it is in Nigeria.
So why did Ma and his 38 billionaire friends find relatively smaller African countries more attractive to the larger coastal countries in the West with such cosmopolitan cities like Lagos and Abidjan? The reasons are not farfetched.
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The World Bank asserts cumbersome administrative procedures and corruption at the ports hinder the speedy clearance of goods, for example. These apply to most African countries, though. It attributes access to finance as well. This is not significant though, as foreign investors bring their own capital. But if a country’s exchange rate policy is controlled and not transparent, this can be stymied.
East African countries have been more reliable in this regard, allowing their currencies to trade without much interference and not hindering the free flow of capital in and out of their jurisdictions, even during periods of crisis. Historically, this has not been the case in West Africa, especially Nigeria, which until recently not only rationed hard currency but blocked the repatriation of capital, causing great losses to foreign investors. Also, myriad bottlenecks around doing business in most West African countries are worse than they are in East Africa. Little wonder the World Bank ranks Rwanda and Kenya 56th and 92nd out of 190 countries respectively in its latest ease of doing business index. Ghana and Nigeria are ranked 108th and 169th respectively.
Even though corruption underpins the relatively more difficult business conditions in West African countries, it is not likely the reason they are less attractive investment destinations. Kenya is perceived by some to be more corrupt than Nigeria, for instance. In fact, Transparency International ranks Kenya as more corrupt than Nigeria in its corruption perception index.
The reason could be that East African countries are more economically integrated. In contrast, West African countries, under the Economic Community of West African States (ECOWAS), have been more successful at political integration than economic cohesion.
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A more innovative streak is also a factor, especially with information technology; albeit West African countries, like Ghana, Senegal and Nigeria, are increasingly demonstrating technological progress as well. Facebook’s chief executive, Mark Zuckerberg, visited Nigeria in August 2016, for instance.
So what can West African governments do to attract more FDI? They must make doing business easier. The World Bank is helping via a European Union funded four-year ‘Improved Business and Investment Climate in West Africa Project’. It is hoped the ECOWAS Investment Climate Scorecard will bring quicker progress with integration.
With patronage-based politics continuing to be crucial to the stability of most West African countries, however, there is not much political will towards economic integration. Move too quickly and they might have bigger problems than just being difficult to do business in. &#8211; Written by Rafiq Raji

Why Is West Africa Less Attractive To Investors?

It is a tragedy that business opportunities are missed because entrepreneurs overanalyse risk factors. This is the very reason businesses grow at a slow pace, while others are phased out.
I’m not encouraging ignorance; I’m just disappointed by entrepreneurs blinded by small details rather than being decisive.
The same applies to investors who, thinking they knew too much, did not invest in Uber when their founders approached them.
In an ever-changing world, you can’t make decisions that are only informed by the past. Rather than dismissing what you don’t yet understand, consult those who do to help you make an informed decision.
A gigantic problem faced by most of us entrepreneurs at some point in our businesses is analysis paralysis. Basically, it is over-analysing, or overthinking, an opportunity. It often results in a decision not being taken, and can lead to your business underperforming.
Analysis paralysis is worse than red tape. With analysis paralysis, things don’t move slowly, rather not at all. Decision makers are paralysed by their inability to make a decision, afraid of what could or could not come to pass. Ultimately, not deciding is the same as deciding against.
As an entrepreneur, you have probably dealt with corporate clients and stakeholders. This disease is within their structures, whether it is the personnel dealing with your proposition not being entrepreneurial in their approach, or the committee under-evaluating your proposal.
<ol>
<li>Harv Eker, the author of Secrets of the Millionaire Mind, says it better: “One step in the right direction is worth 100 years of thinking about it.”</li>
</ol>
One of the reasons Nokia went down the way it did, after a decade of leading the mobile sector, was due to analysis paralysis creeping as the company was getting complacent. Around 2006, Nokia was more concerned with staying where it was, instead of pursuing new opportunities.
It’s not as if Nokia wasn’t working on new stuff, they just lacked a sense of urgency. Developing cutting-edge new products was put on the backburner. Former employees observed that Nokia’s operating system team split into two and started to battle for the attention of top executives, resulting in internal politics. In 2008, Paul Jacobs, CEO of Qualcomm, also voiced concern that Nokia devoted too much time to strategy.
From one decade to another, we have seen how the mighty have fallen. Now we are aware of the danger of analysis paralysis.
Entrepreneurs can learn a thing or two from a married couple. A husband comes back from few meetings, excited about a business opportunity. He tells his wife that the family’s finance could improve, but, because the wife was not in the meeting, she will do the responsible thing of interrogating the validity of the offer.
Often, with many businesses, these opportunities are not discussed and considered in the same manner. This should be compared to the processes at successful start-ups. Here the co-founders will debate the merits of each deal.
There is a danger of approving every offer that is made; it will likely end up in bankruptcy. I’m an advocate of being cautiously optimistic.
In a competitive business environment, analysis paralysis is the worst thing that can be allowed to emerge; it is a culture that needs to be kicked out of the system.
No matter how big a company becomes, it need to maintain an entrepreneurial approach. Don’t become a big truck that turns around after driving two blocks down the road.

Optimism  Is Better Than  Paralysis

As political unrest rattles one of the world’s biggest minerals producers, foreign investors in the Democratic Republic Congo (DRC) are in a quandary – to stay or pull out?
Peter Leon is a Johannesburg-based mining specialist who helps clients with mine development agreements and resources regulatory issues in Africa.
“It is now clear that President (Joseph) Kabila is stalling in terms of the next presidential and parliamentary elections, now only scheduled for April 2018. Given the concern this has created locally, foreign investors in the DRC obviously have to see how this develops. It is unclear what will happen next and what pressure the EU and the US will bring to bear on the Kabila administration given that the election will be 14 months late. There is growing dissatisfaction, in particular in Kinshasa, as to what is happening, as seen in the recent opposition protests. Uncertainty is never good for investment in any country,” says Leon, a lawyer at Herbert Smith Freehills.
“A lot of South African businesses are involved in various activities in the DRC. A lot of minerals in DRC are exported through South African ports so logistics are a key business for South African companies. The current situation is obviously challenging, but it doesn’t surprise me companies are still there and continue to do business as long as they are able to do so. Obviously if the situation becomes untenable, they will review their position. The fact remains that the DRC is still a good place to do business,” he says.
Thierry Naweji, the chairman of the DRC Chamber of Commerce in South Africa, maintains there’s no threat to business.
“Every country has its own dynamics… we are going through challenges in the DRC based on election organization. I have to advise people to remain in the DRC because it going to be difficult to go back. Do your investment very wisely. This challenge is going to be behind us,” says Naweji.
“There was a budget allocation of $250 million per year for elections, put aside since 2011, so that they can reach a budget of $1 billion after five years. We had a war in the east region of the country. Here we are, looking for a political solution how to get out of the situation,” he says.
According to Naweji, the head of electoral commission, Corneile Nangaa, has said there will be no election in November due to a lack of money. The election is more likely to be held in December 2018, he says.
“The general feeling is not that good for the business at all. They are concerned because we haven’t seen a clear direction yet, whether we are going to have elections in November or not,” says Naweji.
Naweji admits business stability has been shaken; the markets reacted negatively to violence last year. As a result, many investors have not allocated budgets for their operations in the DRC next year, he says.
“Many South African companies on our list don’t know what will happen next year in DRC, so they can’t put in money into DRC. Mining is the biggest concern; we had Glencore suspending mining concessions late last year.”
Naweji is hopeful this too shall pass.
Nqubeko Sibiya, the spokesman for KPMG in South Africa, says companies are not suspending operations, they are monitoring security issues, especially for expatriates. He said feedback from their senior partner in the DRC, Jean-Yves Parant, confirmed smooth operations.
Siobhan McCarthy, of PPC Cement, says the companying is building a million-ton–per-year plant in Kinshasa.
“The plant remains on track to be commissioned by the end of 2016, with cement ready for sale early in 2017,” she says.
Simon Malone is a DRC veteran and retired founder of Metorex, a mining consortium founded in 1975 in South Africa. In 2004, Metorex entered into a joint venture to develop the Ruashi copper mine site in the DRC, and made substantial investments.
“It will be sad day for business if something happens, because the DRC has the world’s best copper deposits but doing business there is so difficult that proposed tax hikes for mining companies will stifle new investments,” he says.
Malone says besides exorbitant taxes, he is confident of the work ethic and the good faith of trade unions.
For now, it’s over to the legislatures to set a date for the elections.

The Angry  Wait

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FORBES AFRICA has told many spellbinding business stories in its five years. The story of its own difficult birth is one of the most riveting.
The idea of the pan-African business magazine was born in the heart of a financial crisis which wiped out many investors and left businesses lucky to survive. The media suffered the most.
In the depths of the downturn in 2007, soon after launching CNBC Africa, a business and finance TV channel, the two founders, Rakesh Wahi and Zafar Siddiqi, wanted a magazine. It was the worst time to launch.
“The whole publishing market was collapsing around us. To launch a new title at that time; people externally would have said you are foolish. Some of our other shareholders did not want to invest in the publishing business owing to the economic downturn,” says Wahi.
The pair refused to throw in the towel.
“I had a strong feeling this was going to work. When I told Zafar about it, he only asked if how I felt about it and I told him that the brand would be an instant success and after his thumbs up, we ran with it.”
Towards the end of 2009, a meeting in New York sparked the interest in joining the worldwide FORBES family. The magazine has a string of franchises around the world, from FORBES MEXICO to FORBES INDONESIA.
Wahi followed his gut, in the face of scepticism.
“Every time we spoke about FORBES, people’s eyes would light up,” he says.
It was the right time, he believed. The pair waited for the market to turn around slightly and made their move.
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“We didn’t like that very few African business leaders had made it into the international version of FORBES… people didn’t understand that there is so much entrepreneurship going on in the continent,” says Wahi.
It wasn’t easy. Building a pan-African magazine was expensive and complicated; but the gap in business and finance reporting in the continent was there to be filled.
It took about two years to complete the legal agreements of the franchise. The most difficult challenge was hiring the right people to steer the magazine to the top. Wahi’s 13 years in the Indian army, where he had become one of the youngest to receive the Vishisht Seva Medal (a military decoration in India) in 1986, helped.
“The army teaches you about looking after people. The core of it is that you have to do things together and you have to inspire people.”
He brought these principles with him to the world of entrepreneurship.
“When we were looking at finding an editor for the magazine, I searched around trying to see who would be the right fit… I was impressed by the experience people brought to the table but something was always missing… Chris Bishop’s name came up because he had done a great piece of work for me a couple of years before that, and impressed, so we took him on… He said he would even do this job for free,” recalls Wahi.
Magazines were in trouble everywhere. In the United States, according to MediaFinder, 152 closed in 2011 and 82 in 2012. In South Africa, Heat, Seventeen, FHM, Sports Illustrated and Shape are a few magazines that shut down because of declining advertising, circulation and competition from online.
Despite this, on September 28, 2011, on a night of glitz and glamour in Johannesburg, billionaire Patrice Motsepe unveiled the historic first cover of FORBES AFRICA.
It turned out that Wahi’s decision to hire Bishop was the right one. In just five years, the team has turned FORBES AFRICA into the leading business magazine in Africa against the odds.
The magazine came out ahead of its competitors in the IPSOS Affluent Survey Africa in 2014 and 2016. The independent research study, released on August 4, shows FORBES AFRICA reached 163,000, or 4.7%, of the 3.4 million qualifying adults, aged between 25 and 64, across seven markets.
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“What we have managed to achieve in just five short years is truly remarkable. Our success is attributed to the hard work and dedication of our teams from across the continent,” says Sid Wahi, Executive Director at ABN Publishing (FORBES AFRICA).
The IPSOS 2016 figures show a 7% increase from the 2014 survey.
“As the founding editor of this magazine it gives me immense pride to see our circulation figures increasing; all this at a time when magazine circulation around the world is falling. I think this is a tribute to the hard work and determination of our young band of highly talented journalists,” says Bishop.
FORBES AFRICA’s work has been recognized by various accolades awarded to the journalists and the editor. The hard work is also appreciated by readers. In Zimbabwe, entrepreneur, Blessed Mushamiri, says he drives around the city looking for a copy each month.
“Sometimes I have to drive to five different uptown shops to bump into one but I don’t stop looking. If I can’t find one, I ask people in South Africa to send me some copies. When I read FORBES AFRICA it engages me in an affair of pure pleasure, an exciting brush with business in Africa that shows me, as a young entrepreneur, that I can participate in something rare and thrilling. It is a must-read for every businessperson,” says Mushamiri.
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In West Africa, Emeka Akano, CEO and Co-Founder of Jara Mobile Ltd, says reading about entrepreneurs from different backgrounds who make it to the FORBES lists has inspired and motivated him.
“Features in the prestigious FORBES AFRICA magazine have gone a long way in giving me much more exposure to a credible audience, increased my personal profile beyond measure, opened doors for new business opportunities and business connections,” says Akano.
No matter the praises, Wahi says there is still more work to be done. He wants to grow the magazine to an even bigger success story, as with many of his other businesses.
Wahi is a smart entrepreneur and risk taker. An audacious one, five years ago, put this magazine in your hands.

Behold The Business Bible Of Africa

Africa’s biggest platinum industry faces one of the most bruising years in its history. Unions and management have drawn battle lines for pay talks and a cloud of question marks hangs over the mining laws – dual uncertainty that could deter foreign investors from putting money in a country that produces 70% of the world’s platinum.
In July, pay talks for a new one-year deal began. Unions for 130,000 workers in South African platinum mines, sat down with the big three: AngloPlats, Implats and Lonmin. They are likely to prove tricky and drag on for weeks. The majority union, the Association of Mineworkers and Construction Union (Amcu), wants a 15% pay rise; the second largest, the National Union of Mineworkers (NUM), wants 20% across the board. Both unions are eyeing the recovering platinum price nosing above $1,000 an ounce for the first time in years. In August 2011, it was over $1,900.
<div id="attachment_5133" style="width: 210px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-5133" class="size-medium wp-image-5133" src="/wp-content/uploads/2017/05/Peter-Leon-017-200x300.jpg" alt="" width="200" height="300" />Peter Leon</div>
Demand for platinum, thanks to jewellery and automotive manufacturers, rose 10% in the first quarter of this year, according to the World Platinum Investment Council, while supply dropped 11%. It promises profit for South African mines if they can keep costs down; wages make up almost half of costs.
Amcu has 61% of the membership at AngloPlats, 62% at Implats and 82% at Lonmin. It holds the aces and will play a mean game for a minimum wage of R12,500 (around $860) a month. This wage has been the rallying call from Amcu ever since the bitter Marikana strike of August 2012. At the announcement of its demands in July, FORBES AFRICA questioned R12,500, saying it should be more like R20,000, taking into account four years of inflation.
“If we say R20,000 for the lowest paid, the employers are going to run away so we will go for R12,500 and work up from there,” says, the president of Amcu and part-time preacher, who appeared bullish and ready for action.
“We are applying for a pay rise here, not a strike. If the employers apply for a strike we will give it to them.”
The platinum employers are likely to be a tough nut to crack; inflation, at around 6%, is on their side. They are also struggling against years of falling commodity prices and productivity. On the Johannesburg Stock Exchange, AngloPlats shares lost two thirds of their value last year and Lonmin, kept afloat by a shareholders’ bailout in 2015, lost 99%.
Aside from the industrial problems, South Africa faces many more months of uncertainty over the country’s mining laws. Amendments to the Minerals and Petroleum Resources Development Act – which governs mining – have spent four years going back and forth through Parliament; questions have been raised over the constitutionality of the amendments. Investors take a dim view of plans to make resources – like iron and coal for the steel industry – designated minerals under the law. That would mean miners accepting government prices and maybe having to ask permission to export. This could lead to a trade law complaint at the World Trade Organization (WTO). China suffered a WTO ruling against it recently in a similar case concerning rare earth.
Then there are concerns about the discretion the law hands to the minister, giving him the power to cancel mining licences and prosecute.
“It is open to discretion, with unclear rules, which makes it very difficult to invest with that level of uncertainty and that is the long and short of it,” says Peter Leon, a mining lawyer with Herbert Smith Freehills, at a briefing in Johannesburg in June.
“We are going to a third rewrite without solving the problems of the first two.”
The bill is on its way back through the legislature and a number of bodies, including the Congress of Traditional Leaders of South Africa. Leon and his colleagues say the chiefs came up with one of the best ideas yet – an independent body to allocate the state-owned mineral rights.
With Parliament adjourned for the August 3 municipal elections, mining experts fear it could be well into next year before South Africa’s mining code is fixed. Investors seek stability and regulatory certainty; with every passing month there is a risk more of them will turn away.

Platinum Blues

If you have travelled across Africa, you will attest that there is a war between optimism and pessimism. If you look closely, there is a high level of pessimism on the continent. Africans are people who believe in fate; often subject to our situations, than our situations subject to us.
There needs to be a balance between optimism and pessimism, but not so that you only get realism. If this world only had realists, humanity would not have advanced. Realists base their judgments mainly on what has already been proven.
Optimists tend to have too much energy, particularly in the early stages of conceiving an idea, and overlook what could go south. The key here is to realize when your vision does not cost you anything; if so, you are day dreaming.
I will admit, this world was and is built mostly by optimists, the ones who saw something when everyone else saw nothing. This is important because if you can see the invisible, you can do the impossible.
Nevertheless, realists, despite sometimes being negative,  have anchored our society and are often our voice of reason.
As an entrepreneur, you will realize that potential investors are your voice of reason, particularly banks. When you, as an entrepreneur, approach investors excitedly about your business idea, they have a way of making you get in touch with reality by viewing your presentation with x-ray goggles.
I want to touch on the pessimistic bias among some African entrepreneurs, and how we can both confront it and conquer it. It is also important to mention that we have a large number of optimistic entrepreneurs on the continent, especially since Africa is the latest economic frontier for major growth, following on from China and India.
Some might ask whether this pessimistic behavior is part of the nature versus nurture debate. You might notice that a few African entrepreneurs settle for mediocracy, while our Asian, American and European counterparts strive to be the best.
Could it be that you cannot dream to rise above what you are exposed to? Entrepreneurs around the world may have more role models than we do, but we are as capable as any of them.
My concern is that the pessimism is blocking us; we need to stop it once and for all. Let’s follow the example set by some of the shining African stars in business, such as Folorunsho Alakija, Aliko Dangote, Elon Musk, and Mohammed Dewji, among others.
As we embrace optimism, we need to also be careful of blind optimism. You cannot only consider the upside without having counter measures to still succeed if your original plans do not work.
Therefore, a major dosage of optimism, mixed with a dash of realism, is necessary for any African entrepreneur. There is no place for pessimism.
There is a saying I am fond of: while the optimist was arguing that the glass was half full and the pessimist was saying it was half empty, the entrepreneur sold the glass.
So, what needs to be done? We must make sure we use the right metrics to measure our business. This will make it easier to achieve the desired results, not leaving anything to luck or fate. We need to be persistent and implement the right strategies until things start to happen.
Most importantly, African entrepreneurs need to understand that victories don’t come by accident.

mohammed-dewji

See The African Glass As Half Full

As international investors became more familiar with the continent, international listings and debt offerings by African companies increased as the need for capital to power investments intensified. Record low interest rates globally created an issuer-friendly debt market over the past five years, while foreign equity markets also made it easy for African companies to list. By 2013, over 100 sub-Saharan focused entities were represented on the London Stock Exchange (LSE), with a total market capitalization of $70 billion which accounted for roughly 5% of Africa’s total market capitalization.
This year, the much anticipated listing of Dangote Cement on the LSE is expected to be the latest African-based issuer. As a result of this trend, many emerging market equity players have come to prefer gaining exposure to African companies via developed world exchanges as opposed to investing via the issuer’s local bourse.
Nonetheless, due to the increase in interest rates in the United States (US) and subsequent weakening of local currencies relative to the US dollar and other major funding currencies, this trend is likely to dissipate this year as repayment of foreign currency denominated bonds has become more expensive. Moreover, the implosion of developed equity markets means investor appetite for international listings may not be sufficient. For this reason, since raising capital is a continuous process, this could the perfect opportunity for Africa’s capital markets to rise up and lure more African companies from the grip of international bourses. London has remained a leading destination for African companies listing abroad for over 60 years, according to LSE. Needless to say, work is clearly cut out for the more than 23 African stock exchanges to improve their platforms to succeed in this.
Perhaps the place to start is solving the challenges of illiquidity, high trading costs and small-sized markets. In my view, the last two require the integration of regional stock exchanges, such as what has been done successfully by the BRVM in West Africa and what the East African Community (EAC) is seeking to do. In this regard, the Johannesburg Stock Exchange (JSE) could consider relaunching the Africa Board, implementing the lessons learned from the initial failed attempt in 2009. Considering the economic size of many African nations, it’ll be very expensive to operate such an exchange.
On illiquidity, there will be need for more investor education and more listings for change to occur. Surely, something is not right when the second biggest equity market in sub-Saharan Africa, Nigeria’s stock market, has a daily turnover of less than $30 million. The Nairobi Securities Exchange has 61 listings, but just 10 of those constitute roughly 90% of its annual markets liquidity. Further progress would also require African countries to harmonize their trading laws and accounting standards, set up convertible currencies and establish free trade among members.
Despite this, African capital markets have been growing and gaining recognition over the years. At the end of 2015, total market capitalisation stood at $1 trillion, up from $113 billion in 1992. African equities are now included in emerging frontier indices and Africa-focused benchmarks indices, such as the Russell Frontier Index (RFI), MSCI Emerging Markets Africa (excluding South Africa) Index, S&amp;P Africa Frontier, S&amp;P Pan Africa, and FTSE ASEA Pan Africa Index. According to PwC’s recent 2015 Africa Capital Markets Watch, over the past five years alone, there were more than 100 initial public offers (IPOs) and 336 further offers (FOs), raising a total of $41.3 billion. Furthermore, African equity markets have seen a surge in Africa-focused equity funds, such as JPMorgan’s Africa Equity Fund and the Old Mutual African Frontiers Fund, which invest directly in equity and equity-related securities of companies domiciled or listed on an African exchange.
Given Africa’s economic prospects and volatility in global capital markets, now is the time for Africa to establish its exchanges in order to offer its home-grown enterprises the services that they need, while also tapping into the growing portfolio allocations toward the continent. For Africa to emerge as an important player in the world of capital markets, a well-established capital market is necessary to provide a better alternative to its well-known rivals.
They say a journey of thousand miles start with a step – thankfully Africa has already made several steps and is closer to its destination.

On The Right Path

Banks and investors are reluctant to risk money in untested projects. Start-ups are left penniless and broken across Africa. Nairobi-based entrepreneur Erik Hersman struggled for capital from banks unwilling to take a risk. Crowdfunding was the answer.
“We had to make sure that we made this innovation come alive and crowdfunding made it easier. Although the process of marketing the idea while being funded is hard, it is worth it,” he says.
Through online crowdfunding platforms, people pledge small amounts of money to projects for 90 days, for a reward.
Hersman turned to crowdfunding and met people that gave his new business a lifeline.
“It wasn’t just about raising money for the project but we also wanted to test out if anyone else wanted this product. Sometimes something sounds great in our heads but no one else would be interested,” he says.
Using Kickstarter, one of the many crowdfunding sites in Africa, he raised over $160,000 for BRCK – a device that helps people go online where electricity is scarce. It can hop between Ethernet, Wi-Fi and 3G and 4G.
“We looked at the market and we were asking ourselves, why are we trying to connect to the internet using devices that are made in Europe and the US when we have a different infrastructure in Kenya; so we started designing and developing a new way to connect to the internet.”
BRCK began shipping units in July 2014. Thousands had been sold to 54 countries by February 2015. The company employs 40 people.
Hersman is grateful for crowdfunding and says entrepreneurs should use it.
“It is not currently well used and understood in the continent but I wish more people could make use of it,” he says.
Entrepreneur Patrick Schofield, co-founder of Thundafund, a crowdfunding site based in Cape Town, says many businesses fail in their first year and good ideas rarely see the light of day.
“Crowdfunding is the most powerful mechanism we have in Africa. If you have a really good idea and people like it, they will support it. People can put $100 for a good idea, for example, but they are sceptical to put down $5,000 for something that hasn’t been tested,” says Schofield.
“Through the process of the campaign, we test if the idea is viable and if there is a market for it. The entrepreneurs say how much they need to execute their plan. If the target is not reached, the donated funds are returned to the funders.”
Thundafund claims it has funded 170 projects worth R6,123,843 ($550,000).
“There are a lot of ideas around how you can thank or reward backers. This is a very important part of crowdfunding because it will determine how well your campaign will do. For example, you can offer the product you want funding to create as reward, early access to the product or service for example when looking for funding for an album, you will offer signed CDs, VIP access to shows; you can make your backers part of the project and much more,” says Schofield.
Crowdfunding platforms like Malaik, AngelList, EarlyShares, and Seedrs offer equity.
Malaik spokesperson, Vias Lustig, says equity crowdfunding is great, but has drawbacks if not well managed.
“An early-stage company that has raised financing from a hundred different investors through an equity crowdfunding platform will have more trouble getting follow-on investment from venture capitalists,” says Lustig.
Malaik, based in West Africa, acts as a nominee. All the crowdfunded money is channelled through a special purpose vehicle (company formed for investing in equity) that appears on the entrepreneur’s books as a sole investor.
“Smaller investors that participate in equity-crowdfunding are also less likely to contribute and help the entrepreneurs with their business plan, since they have smaller incentives. Malaik also thought about curbing this when developing its model by adopting a lead investor format, this way the lead investor takes at least 25% of the equity round, thus ensuring the company has a larger, more invested individual that can possibly act as an advisor,” says Lustig.
Lustig claims equity crowdfunding could take advantage of the $140 billion to $160 billion gap in finance for African SMEs, because they enable many investors to commit small amounts of capital that would usually be out of the question.
The founder of London-based The Crowdfunding Centre, Barry James, says crowdfunding has not had a massive impact in Africa because of a lack of awareness.
“The UK lagged far behind the US four or five years ago until we started to tackle this. Even now, only a small percentage of people in either country are getting the help and funding they could from crowdfunding, so it has a long way to go,” he says.
“If you’re writing a book, the best advice is to write about what you know. The same is true with crowdfunding and entrepreneurship. That said, campaigns in the tech category tend to raise the most money, while games and comics have the highest rate of success – around 50 percent.”
In South Africa, Schofield says consumer products, arts and entertainment projects are the most supported.
The future could be brighter for struggling entrepreneurs, if you have a dream that draws a crowd.

If you want to get Ahead Draw A Crowd – But Be Careful

It’s a question that had to be answered sooner or later, the silent question in most entrepreneurs’ minds. It’s a topic I have  discussed privately, but now it’s something I think should be explored publicly.
If you look at the tech capitals of the world – Silicon Valley, Seoul and Tel Aviv – you won’t find any globally renowned black technology entrepreneurs.
It concerns me that a black entrepreneur has not come up with a major breakthrough in technology and gained a personal net worth of over a billion dollars as a result. Bear in mind, I did not say millions as there are many around today who are worth that.
Money is not the defining criteria though. To get to the bottom of this question we need to look at innovation, an idea that took the world by storm like WhatsApp.
Being African is also not in question, the continent has entrepreneurs such as Mark Shuttleworth and Elon Musk who have delivered powerful tech innovations and have billions in their pocket to prove it.
In order to answer the question, we need to confront three issues, cronyism, racism and nepotism. Firstly, they exist; we can’t run away from them.
Nepotism is a global issue. Everyone supports who they know, even people of color. This means that the success of a previous generation cascades to the generation that follows. This continues any race’s probability of success.
Many believe that racism is preventing black Africans from rising to the top. This belief is wrong. Asians and Jews at one point suffered tremendous discrimination, but they succeeded despite that challenge. Today, those two ethnicities are leading the business world.
Another challenge faced by many tech companies started by black entrepreneurs is the moment they come up with an idea, they are immediately thinking of ways to monetize it. You have to make money because you have bills to pay and there is the pressure of friends and family members wanting to see the fruit of what you have been working on.
At the main goal of the most successful tech companies, like Google, Quora and LinkedIn, their main goal was to get  as many people to use their technology as possible. Once that was achieved, they started to figure out how to make money from them. WhatsApp and Quora are still trying to figure this out, but they have millions of users to work with.
Investors in the United States encourage that. You need to attract interest first, monetization will be figured out afterwards and together. The message is that they will give you money if you can show your users have an active interest. Unfortunately, this is not the case in all countries around the world.
I believe Africans are brilliant. We, however, need an ecosystem that can be supportive for all ethnicities on the continent, not just black people. Nairobi and Cape Town are beacons in Africa for the vibrant tech ecosystem they have enabled in their cities. These ecosystems were largely built by the entrepreneurs themselves.
There are two black entrepreneurs who started major technology companies that should be mentioned, David Steward from the United States and Mike Adenuga from Nigeria. Steward runs World Wide Technology, the largest black-owned company in America, with revenue of $7.4 billion in 2015. World Wide Technology is tech service based.
Adenuga, with a personal worth of $3.8 billion, runs telecommunication company Globacom, with over 30 million subscribers. It is not a global brand and it doesn’t have to be.
My point is Africans are created equally and have conquered almost every industry. Competing with the rest of the world should be a challenge, not a competition. Let’s collaborate, with each other and counterparts of all backgrounds, to advance this world technologically.

Where Is The Black Mark Zuckerberg?

Private equity firms are becoming increasingly important in investing in thriving businesses and contributing to the development of African consumer markets. Numerous industry analysts are predicting that 2016 will see significant growth in this industry throughout sub-Saharan Africa as investors seek alternative asset classes to generate robust returns.
The private equity industry in South Africa has seen steady growth over the past decade and has attracted the cream of the crop of the banking sector, including investment bankers, merger and acquisition executives, management consultants and asset managers to name a few. Over the years, the number of these individuals who’ve elected to join private equity firms has increased. The audacious among them have opted to set up their own private equity funds to have autonomy over their investment strategies. The growing demand to recruit these executives, coupled with the increase in new private equity start-ups, indicates growth prospects for the industry at large. It also helps that the industry offers attractive remuneration packages and prestige that will elevate their career profile.
The Southern African Venture Capital and Private Equity Association (SAVCA) contends that although “&#8230;private equity is still under-represented in sub-Saharan Africa, the asset class presents an opportunity for investors to invest in a region that is experiencing strong economic growth and which is generating robust returns.” Some surveys have gone as far as predicting that around 80% of investors expect African private equity to outperform the African listed equity market in the next decade. This is a bold prediction, but one which cannot be dismissed.
Recent stats of the South African private equity industry are compelling. SAVCA reported in their latest RisCura-SAVCA South African Private Equity Performance Report that, “by mid-year 2015, the South African private equity industry delivered a ten-year internal rate of return (IRR) of 21.7%, up from 20.5% in March 2015. This performance compares with the 17.1% return from the FTSE/JSE All Share Total Return Index (ALSI) over the equivalent ten-year period.”
The reality of the matter is that the fast-growing African region presents countless opportunities for businesses and investors alike. When economies experience tangible growth they enable other industries and sectors to expand via the multiplier effect. For instance, Africa presently requires extensive investments in infrastructural development, energy, entrepreneurial support, skills development, research and development, and numerous others to drive economic growth.
Take a look at the need to improve transport infrastructure throughout Africa for instance. The construction of road networks, together with the upgrading of ports and airport facilities, will be done by engineering and construction firms. Some of these firms will be based in Africa and will require private equity partners that can provide the necessary financial and human capital support. Through this support, firms will have the backing and potential to grow exponentially.
The South African private equity market amounts to R170 billion ($10 billion) in assets under management, and although this may not typically appear large when contrasted with other asset classes, it is significant in the context of a niche asset class. SAVCA believes that the industry is maturing and this is demonstrated by the emergence of specialist private equity funds which are dedicated to focused industries or sectors depending on the scale of the fund. In addition, South African-managed funds have broadened their focus by exploring investments outside the country, indicating that the South African private equity market has developed over the years.
In the past, the private equity industry was largely concentrated in the developed markets in the United States and Europe. However, a number of emerging markets, such as South Africa, have seen significant growth over the past decade and, if future projections are anything to go by, the trend seems likely to continue.
Africa is teeming with opportunities for businesses to expand and private equity firms are the formidable partners that can bring this to fruition. Watch the space.

Watch this space

In Nigeria, citizens, businesses and investors are struggling to come to terms with the absence of a cabinet to run Africa’s largest economy. When President Muhammadu Buhari took office, from Goodluck Jonathan on May 29, few would have imagined that there wouldn’t be a cabinet in place, or awaiting parliamentary approval, by the end of June.
Buhari himself hasn’t said much, leaving the explaining to his aides. At the beginning of July, Spokesman Femi Adesina said that “at the fullness of time, the ministers will be appointed.”
There has been speculation that there won’t be a cabinet in place until September. If that is true, it will mean that the new ministers will spend the last quarter of the year coming up to speed with their new assignments, and real work will not start until 2016.
The only presidential staff appointments made by the second week of July were three spokespersons (two for the president; one for the vice president), a State Chief of Protocol, and his principal security aides – one of which was replaced weeks later, for undisclosed reasons.
On July 13, six weeks after the inauguration, the President replaced all the military chiefs and the National Security Adviser (NSA). The key positions of presidential Chief of Staff and a Secretary to the Federal Government, who serves as Secretary to the Cabinet, as well as a liaison between the presidency and the sprawling government bureaucracy, however, remain unfilled.
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<h3>Team Austerity</h3>
Amid the uncertainty about the president’s team, there are, however, things one can bet on. One is that it will be a smaller cabinet than his predecessor’s, which had 42 ministers. But, the degree to which it will be smaller is constrained by a constitutional provision that says there must be at least one minister from each of Nigeria’s 36 states.
The Transition Committee that Buhari set up in May, to liaise with the outgoing government and prepare a smooth handover for the new government, recommended a reduction in the number of ministries from 28 to 19. Going by that proposal, only nine of the existing ministries will not be merged or scrapped: Defence, Federal Capital Territory, Education, Trade and Investment, Finance, National Planning, Labour, Justice, and Foreign Affairs.
Ambitious as the plan might seem, it’s not unfamiliar territory for Buhari. As Head of State 30 years ago, he presided over a wide-ranging regime of cuts: laying off thousands of civil servants and freezing wages, abolishing hundreds of local government areas, and rolling out an austerity budget that slashed government spending by 15%.
Considering that the economy he is inheriting is in straits just as dire as then, chances of another austerity-inflected outing are high. Indeed there’s a cost-saving element to a delay in the appointment of a cabinet and advisers, who will have to be paid generously in housing and travel allowances, and armored convoys.
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<h3>Speculation, Inc.</h3>
In the weeks following Buhari’s unprecedented electoral victory, the rumour mills were agog with news of expected appointments. Documents regularly circulated on social media, purporting to list the persons who had been nominated for appointments. All of them turned out to be false. Early into the new administration, it was reported that Chief Ogbonnaya Onu had been named Secretary to the Government of the Federation, Nigeria’s designation for Cabinet Secretary. Weeks later, the speculations shifted to the still-vacant position of Chief of Staff. News filtered out that retired Colonel Hammed Ali, Buhari’s long-time personal Chief of Staff, had been appointed. Again, it turned out to be false.
The two men have been close to the president since he joined partisan politics in the early 2000s and are still very likely to bag important roles in his government. Other long-time associates tipped for important positions include Tam David-West, who served under Buhari as the petroleum minister when he was military head of state in 1984-85, and Abdulrahman Dambazau, a former army chief and head of security for the presidential campaign. Dambazau, widely expected to be named National Security Adviser, may now be in the running for Defence Minister.
Former state governors, Kayode Fayemi (Ekiti), Babatunde Fashola (Lagos) and Rotimi Amaechi (Rivers) are also expected to be named to cabinet or presidential staff positions. The trio played prominent roles in the Buhari presidential campaign – Amaechi as campaign director-general, Fayemi policy director, while Fashola oversaw fundraising.
Party leaders, like former Governor of Lagos State, Bola Ahmed Tinubu, and former Vice President Atiku Abubakar, are also expected to nominate candidates for presidential consideration, but there is no doubt where the final decisions lie.
<h3>Policy Direction</h3>
Apart from the 800-page report of the Transition Committee, the new government can also count on another 73-page one; the outcome of a two-day summit that the ruling party’s policy directorate, under Fayemi, convened in May; bringing together technocrats, politicians and public officials.
With the support of the United Nations Development Programme (UNDP) and management consulting firm, Bain &amp; Company Nigeria, the summit produced detailed recommendations on several sectors of the government: oil and gas, education, healthcare, security, agriculture and foreign affairs, among others. The reports outlined specific plans for the incoming ministers to implement in the short term, medium term  and long term. As things stand, it’ll be more than 100 days from May 29 before a cabinet is in place, and the incoming ministers will have some recalibrating to do.
For business executives and investors, the reassessing will be an unending obligation. As soon as the cabinet is named, the next round of tea-leaf reading – this time for policy direction – begins.

Tag: Investors

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