No. 261 – 40% of People Earning Below $40K Lost Jobs

Federal Reserve Chair Jerome Powell Remarks on Current Economic Issues – The Federal Reserve chair spoke at an event hosted by the Peterson Institute for International Affairs. Before I get into Jerome Powell’s remarks, it’s worth dwelling a bit on the Peterson Institute. The place is named after Pete G. Petersen, an investor who became a billionaire after The Blackstone Group, the private equity firm he founded with Steve Schwarzman, went public. While a massive windfall, that was not his first taste of professional success. He had been CEO of Lehman, Secretary of Commerce, CEO of other companies, and more long before launching Blackstone. Before he passed away, I remember watching interviews he did and the man was all about fiscal responsibility. Apparently, he was known for that over the course of his career. I wonder what he’d have to say about the money being spent to deal with this pandemic.

Pandemic — the impact COVID-19 is having is hard to wrap my mind around. In his prepared remarks, Jerome Powell said that about 40% of people earning below $40,000 have lost their jobs in the past two months. Sit with that. According to the Brookings Institution, whose building sits across the street from the Peterson Institute, reported that median income for Black households had risen to $41,511 as of 2018. Tomorrow, the Federal Reserve is releasing the rest of the survey results from which they got this data. If they have job losses broken about by race, I venture a guess it will be heartbreaking.

Later in his remarks, Chairman Powell describes how the Federal Reserve has essentially thrown everything tool it has available to address the pandemic. Yet, the Federal Reserve may need to do more. Digest that while processing that a whole lot of vulnerable people still lost their jobs. Like I said, it’s hard to wrap my mind around the impact of this pandemic. When we’re finally able to after this pandemic has passed, we’ve got real work to do to ensure vulnerable folks aren’t this vulnerable anymore.

The African Legal Support Facility holds 11th Governing Council meeting – It’s good to see the African Development Bank continues its effort to support countries in negotiating large, complex transactions. Countries really need the agreements they enter to be rock solid considering the economic situation we’re in and how hard it is to come by money these days.

This Is How Hard It Is to Invest in Black Neighborhoods – This is an excellent excerpt from Andre Perry’s book “Know Your Price: Valuing Black Lives and Property in America’s Black Cities.” It’s worth every word to understand how it’s going to take more than buying the block to change the trajectory of black wealth creation in this country. In my view, unless more black folks are in position to reshape how we determine what is valuable and what’s not, we’re only pushing incremental measures that won’t really work.

Loon signs deal to expand commercial internet service to Mozambique – While this is a welcome move, I hope local players push to figure out ways to build out their own internet networks.

China Seen Joining Debt Relief Effort for Poorest Nations – Right now, no one really knows how much countries owe China. If the country follows through on joining other lenders in pausing payments, there could be a good bit more clarity on the scale at which China has lent around the world. Getting clarity on those numbers and term could be scary.

No. 166: 3AMReads: Mozambique and Ivory Persist and Attract Capital | African Development Bank Makes Case for Investing in Africa

Bloomberg: Traders Snap Up Assets of Nation Where Default Is New Normal

I’m not really sure what to make of this article. I wrote a several weeks ago about how I was nervous about hedge funds investing in countries like Mozambique. While the independent audit of the country’s finances seems to have given investors increased confidence in the country, are we certain Mozambique is rounding the corner in being able to make it’s debt payments? I’d hate to see this turn into a situation where investors just have more assets to play with in order to get their money.

Reuters: Ivory Coast says long dated Eurobond raised $1.25 bln, 625 mln euros

Despite the tensions with its military, Ivory Coast continues to attract capital. Good stuff.

African Development Bank: Adesina – Its time to reboot and boost US-Africa Commerce and Investments

The Corporate Council on Africa is hosting is US-Africa Business Summit this week. Is Commerce Secretary Wilbur Ross speaking at the Summit a signal that we’re a few inches closer to seeing the US start to roll out bits of an Africa policy?

 

No. 108: 3 Thursday AM Reads – VW Scandal | New African Development Bank Chief of Staff | Zero to One

  1. You’ve probably seen the news of Martin Winterkorn’s resignation from his CEO post at the Volkswagen Group. Rough year for this guy. Earlier in the year, VW Group supervisory board chair Ferdinand Piech publicly stated that there was distance between him and Winterkorn. I wonder if anything related to this discovery of VW vehicles emitting pollutants up to 40 times the legal amount contributed to that distance. Look for Andrew Ross Sorkin to analyze Winterkorn’s apology (or lack thereof), and Harvard Business School to put out some case studies on leadership, the impact of government regulation on commerce, family-controlled businesses, and trust.

  2. New African Development Bank President Akinwumi Adesina announced yesterday that Dr. Sipho Moyo would be his Chief of Staff. My Howard University alum friends will like this, considering that she did quite a bit of graduate work there. Add Dr. Moyo to the list of women I’ll be pointing my daughter to. (As an aside, the little one has been killing it at school. She turns three in a couple weeks and is the youngest in her class that has students who will turn six during the school year. The feedback has been shock that she is so young, yet so vocal. That’s my girl!)

  3. I just finished up Zero to One by Peter Thiel. It’s provides helpful insight into how one of the most successful Silicon Valley entrepreneurs/investors thinks. In unpacking his perspective on the ingredients to building a company as meaningful as Facebook, PayPal, Palantir, and Netscape, he traces the evolution of the technology industry before and after the dot com bubble and addresses how our society tracks individuals to not put together the building blocks necessary to do big things. At a more granular level, he gives his perspective on building technology, marketing, creating a team of people who know each other really well, and the list goes on. I will probably give this one another read. Some of the thinking in the technology world is pretty fascinating. Some of it is a bit scary. The concept of singularity, for example, is something I need to chew on. Basically, it is that concept of humans transcending our limitations exponentially thanks to technology. Here’s Singularity evangelist Ray Kurzweil discussing the idea. Nassim Nicholas Taleb, author of Antifragile – the book I mentioned in my last post, says not nice things about Kurzweil in the book. Essentially, Taleb is all about stripping away things that he thinks make us die sooner – technology, GMOs, etc. Kurzweil is all about building tools that he thinks will make us immortal – technology, GMOs, etc.

No. 75: Why Akinwumi Adesina Won the African Development Bank Presidency

Bobby Pittman, head of Kupanda Capital, did a nice interview with the Center for Global Development where he serves as a board member alongside the likes of Ngozi Okonjo-Iweala and Lawrence Summers. He highlights the reasons Dr. Adesina won the AfDB presidency, and some things on which he will have to focus. Three points that stood out are:

  1. The AfDB picked a lot of low-hanging fruit in developing the private sector on the continent. Now that the private sector has advanced significantly, a lot of thought has to go into how to most effectively catalyze the private sector. Dr. Adesina has the track record and skill set to take the development of the private sector to the next level. 
  2. The AfDB’s focus on areas like the private sector, infrastructure, and regional development, in comparison with other development banks has contributed to its success. Maintaining that focus will continue to position the AfDB for success. 
  3. There are a lot of voices that could be part of the AfDB’s conversation, but are not currently. Work has to be done to incorporate their viewpoints into the AfDB’s work. 

I am excited about Dr. Adesina taking the reins at the AfDB and look forward to seeing the bank continue to do good work on the continent. 

No. 38: Sovereign Wealth, IPOs, Cool Jobs, and Cities

Cherae and I had a great time on New Rules Africa this week, covering:

  1. Zimbabwe established sovereign wealth fund
  2. Rocket Internet filed for IPO in Germany
  3. African Development Bank opened Young Professionals Program

Read the summary below to get up to speed on what we covered, and check out the show.

Zimbabwe Establishes Sovereign Wealth Fund

Last Tuesday, Zimbabwe’s Senate passed a bill that lays the groundwork for the country to establish a sovereign wealth fund – a tool used by countries around the world to maintain long term wealth and resist economic shocks. The African countries using the tool include Angola, Botswana, Senegal, Nigeria, Libya, Algeria, and Ghana. Countries like Uganda and Kenya are considering establishing their own funds with their new found oil resources. Let’s keep an eye on Zimbabwe’s fund as it is unclear what the structure of the fund will be and who will manage it. Countries like Nigeria and Senegal announced the managers of the funds pretty close to the establishment of the fund, and had a detailed governance structure.

Rocket Internet Files for IPO in Germany

Rocket Internet, the emerging market, uber-startup launcher is filing for an IPO on Germany’s stock exchange that would raise around $1.8B. For the past six years, Rocket Internet has launched emerging market copycats of some of the top internet brands in the US and Europe – Amazon, Paypal, and Zappos to name a few. In Africa, these include Jumia, Zando, HelloFood, and EasyTaxi among others. Rocket has absorbed a lot of criticism for just copying other business models, but is unapologetic about its business model and has raised more than $2B in venture capital since its founding in 2008. Jumia, Rocket’s flagship brand in Africa recently went under a management shift and has been relatively quiet after raising several millions in venture capital and building a 90,000 square foot warehouse in Lagos. Keep an eye out on the IPO and future Africa activity from the company.

African Development Bank Announces Young Professionals Program

The African Development Bank is recruiting young professionals, particularly women, to apply for its two or three-year rotational young professionals program. The bank will select 15-20 candidates who will be based in the bank’s headquarters in Cote d’Ivoire. The bank has been a critical part of the continent’s development, ensuring the contract negotiation skills of African countries, committing dollars to the combatting of threats like Ebola, setting up an infrastructure fund, among many other things. Apply. The folks that work there are talented and its a nice alternative to working at a place like the World Bank or IMF, if you are looking to work at an international development agency.

Preparing Cities for the Future

The Corporate Council on Africa is holding its annual infrastructure conference in the lead up to the World Bank/IMF Annual Meetings, and the focus is on building resilient cities on the continent as rapid urbanization continues to take place.

As cities continue their rise, Africa’s cities will increasingly have to figure out where these people will live, how to provide them with services, make sure they are able to move around, and the list goes on. Investors are paying more and more attention to the threat/opportunity in these cities. If these cities develop well, they could be hubs of consumerism, new ideas, innovation, you name it. If these cities do not develop well, we could see the failure of institutions, increased political unrest, and the list goes on here as well.

What else? What are some other interesting things that happened in business in Africa this past week?