It never matters how old you are before considering investment in any project. While the youth from other parts of the world has caught the investment bug, it seems the African youth population both at home and in the Diaspora still lag behind on seizing opportunities arising in its investment environment. If you wonder where to begin, then perhaps it is time to educate yourselves.
Investment platforms such as Homestrings have sprung up to offer lucrative investment prospects in Africa’s financial markets with clear exit strategies. Widely regarded as the most innovative Diaspora Investment platform, Homestrings has facilitated over $100 million of transactions and generated $35 million in capital over the past 18 months alone from the Diaspora into key investable projects across Africa.
Homestrings works in association with DMA (Developing Markets Associates), which organises sovereign investment summits of the most productive investor showcases in the world. Countries such as Senegal, Djibouti, Gabon, Kenya, Niger, Liberia and Malawi have been able to generate some $3.6 billion in capital in the past couple of months, thanks to DMA.
In early March, Homestrings put up an Investing in Nigeria event in London with a myriad of organisations present from the country’s agriculture, built environment, extractives sector and projects of special interests present. Most notable were Kohath, which is entrenched in the agriculture and built environment sector. The Davandy Group was present to talk about its project of building a world-class private university in Calabar, Cross River State to cater to the skills’ needs of its diversifying business environment.
The follow-up on July 4th is the Investing in East Africa Symposium which will outline investment opportunities in East Africa. Areas to invest in include government bonds (Rwanda, Ghana, Nigeria, Ethiopia, Senegal, Kenya) with mature dates clearly outlined, public trading oil companies such as AFREN PLC, investment funds, banks such as Stanbic IBTC Bank PLC, Nigeria, the African Development Bank and agricultural leasing firms. The opportunities are clear outlines and there is help on hand to explain what each investment entails, from seasoned specialists in the field.
Africans in the Diaspora now more than ever, are being encouraged to invest back home. This also goes to those back in Africa. This is a notion that eludes most, who do not trust the systems in place to handle their monies well. This is why there is a flurry of activity from governments trying to prove that changes are happening, to allow for good investment environments. Often, it is Foreign Direct Investments (FDIs) that garner a lot of attention. Now, the focus is moving to Africans investing in Africa.
Just to put things into perspective; remittances to Africa last year surpassed aid from the West to the continent. In 2010 alone, Africans in the diaspora sent home over $51.8 billion home compared to the Official Development Assistance (ODA) offered by OECD countries in that year, according to studies undertaken by Hong Kong-based Ghanaian academic, Adams Bodomo on cash flow analysis. Bodomo says that 75 percent of transfers are done informally, meaning there are no records to actually quantify the full amount.
North African countries lead the pack in remittances, with West Africa being the biggest remittance contributor to the tune of over $10.400 million according to IFAD (International Fund for Agricultural Development). The figure below is explicit.
I caught up with Homestrings Founder, Eric Guichard at the Invest in Nigeria event in London in March. We asked him what he had to tell investors who could be agitated due to the effects on the financial markets, following the Central Bank of Nigeria governor’s suspension; and how such occurrences in the future could affect their investments.
For those worried about the safety of their investments and the volatility of the African investment environment, Mr Guichard said:
“Presidential politics is as volatile anywhere in the world whether it is Nigeria, the US or France. Whenever you get into situations the markets are going to react. Last year as we saw, was the Republicans in the US who were keeping the government hostage because of some disputes with the President of the United States. And that sent the market into a tailspin.
So I don’t think this is very specific to Nigeria, this is something that happens. Most investors who are sophisticated and understand that these things are cyclical will make adjustments. We are interested in long-term investments and the investors that we are attracting to the platform are interested in long-term returns.”
Africans and Africa have started smelling the coffee as there is promising news. Most FDIs into Africa is coming from developing countries within the continent, according to a survey carried by Ernst & Young last year. The companies behind these changes are Ecobank Transnational Inc., Oando, a multinational energy company based in Nigeria and MTN.
However, it is still clear that a bulk of Africa’s FDI’s come from outside with China in the lead with FDIs to the tune of $14.7 billion in 2012 alone.
There is a wide scope to start investing now in lucrative areas, and the youth and Diaspora especially are encouraged to start investing now, as there is never a better time.