No. 118: 3 Thursday AM Reads – Kweku Adoboli Tells His Story | S2G Ventures Closes $125M Food and Agriculture Fund | Ace Harris Releases Solid African Vibes

  1. I was embarrassed when Kweku Adoboli’s name went across the screen for losing $2.3B while trading ETFs at UBS. A Ghanaian brother had done something really bad. What impact would this have on the perception of Ghanaians? Here’s a fascinating piece on him now that he’s out of jail, but still not in the clear. He still faces deportation back to Ghana since he isn’t a British citizen.

  2. S2G Ventures closed a $125m fund that will be used to invest in food and agriculture companies that operate at any point. From the looks of the announcement and their website, the firm is focused on investing in US-based startups. Examples of their investments include $8m into a startup that is developing mushrooms that can remove gluten from wheat, and other unwanted components from crops. I hope they are not solely US-focused, so they can take a look at Hello Tractor.

  3. I listened to Ace Harris’ new album four times yesterday. ATLLiberia mashes up afrobeat, more traditional African rhythms, and EDM – it’s solid.  Tuma’s Song and Light Your Night set your sights on making a difference in this world. African Star rocks that “proud to be African” vibe. Ife took my mind to my favorite characteristic of South African music – that driving bass drum that gives all the layers space to move. The guitar riff on that track took my mind to when Sango Malamu first visited my dad’s church and I fell in love with African music. Whinin’ It and Drop will make you sweat, as will Yansh, though it’s my least favorite track on the album. I look forward to hearing his next project. While we’re on the music front, check out the visuals for Baloji’s Unite’ and Litre – a strong message against the power wielded by the telecoms and breweries in DRC.

    Photo Credit: Adama Jalloh

No. 112: 3 Thursday AM Reads – Paga Raises $13m | Organic GMOs | Reid Hoffman is Networked

  1. Tayo Oviosu and the Paga team are pushing their dominance in Nigeria’s mobile payment space to the next level with the $13 million Series B round of financing they announced earlier this week. A couple things I need to look into: Now that the Central Bank of Nigeria is implementing its cashless policy, how is it going? Also, what is Paga thinking about Bitcoin?

  2. A couple weeks ago, Cherae Robinson and I were laughing about how  her schooling me on GMOs led to me joining the Afripolitans in Equatorial Guinea a few years ago. Here’s a compelling piece on the prospects for organic GMOs. I wrote about my concerns with GMOs several years ago. My thinking on GMOs continues to evolve and I found this piece helpful in surfacing more questions.

  3. Those who know me will understand why I got lightheaded reading this profile on Reid Hoffman. Towards the end of the piece, his conversation with James Manyika, someone I’ve followed for a number of years, chrystalizes the types of conversations that drive me. Hoffman’s practice of pulling out a list of things to discuss during his conversations with friends is something I’ll probably copy (those hits to the head while playing football seem to be showing their effect on my memory more these days…).

No. 103: The African Development Bank Welcomes its New President Today

The African Development Bank (AfDB) will be receiving the swagger Dr. Akinwumi Adesina brought to Nigeria’s agriculture sector, as he begins his term as president today. He takes the helm in times that are significantly different from when his predecessor, Dr. Donald Kaberuka got his start, and present their own set of challenges and opportunities, some of which I will cover here.

The Bank is Operating in a Different World

For six of the ten years President Kaberuka served as AfDB president, the US Federal Reserve was implementing its policy of quantitative easing. During QE, we saw investors’ risk appetite and willingness to place money in developing markets increase, creating an environment for several African countries to dip into the debt markets to finance infrastructure development and address deficits.

Now that QE is over, there is concern we could see a reversal depending on how aggressively the Fed hikes interest rates and to what extent emerging market growth slows. The Institute for International Finance projects that 2015 private capital inflows to Sub-Saharan Africa should still increase, though slightly.

If this proves accurate over the next several months, it would have been a cause for relief for countries like Ghana that have dipped into the debt markets, but are experiencing significant fiscal struggles and have been trying to figure out how to maintain investor confidence.

The Bank is Different 

The AfDB is a much different bank than it was 10 years ago. The AfDB was issuing about $400M in lines of credit when President Kaberuka began his first term. Now, it issues more than $3 billion. Over the course of his tenure, the AfDB has approved $28 billion in infrastructure projects, $10 billion more than the bank had approved between the bank’s creation in 1964 and 2004. 

Further, the AfDB worked on incorporating the private sector into its business model, increasing the number of public private partnerships it involved itself with, and a large reason for the growth in the bank’s lending portfolio.

These two developments, along with a concerted focus on integrating African countries at a regional level serve as significant opportunity areas for driving the continent’s growth further.

Back in 2009, the World Bank came out with data that about $93 billion annually over ten years was needed to bring Africa’s infrastructure up to a competitive level. It would be interesting to see what progress has been made against this figure. If the $93 billion need holds true, there will be plenty of room for the AfDB to engage new project development around energy, transportation, and agriculture, which will require private sector participation and often planning at a regional level. 

Developing Country Development Banks Are On The Rise

The World Bank missed an opportunity to reshape the global power structure between developing and developed countries with the election of Jim Kim to be its president in 2012, rather than candidates from developing countries like Nigeria or Mexico. The following year, Brazil, Russia, India, China, and South Africa formed the BRICS bank, now known as the New Development Bank. 

China is also setting up the Asian Infrastructure Investment Bank (AIIB), whose primary focus is Asian countries, but could expand to African countries. The more the merrier according to President Kaberuka, per his recent remarks at the Brookings Institution, suggesting that the AIIB would do well to invest in Africa. We will have to see how China’s continued economic right sizing impacts ventures like the AIIB. 

What Dr. Adesina Will Be Working On

Dr. Adesina has stated several times that he will be building on the already strong work President Kaberuka had done over the past ten years.  A lot of his focus areas echo those sentiments. For example, he has talked about developing regional centers of excellence to help support natural resource development capacity, and complement the Africa Legal Support Facility’s efforts to help African countries negotiate better deals in the extractives industry. 

Building on the scale the AfDB has reached in its infrastructure investments, Dr. Adesina campaigned on building “integrated smart infrastructure,” to ensure the bank can measure its impact. This will complement the work of the Africa50 fund, another legacy of President Kaberuka. The $3 billion fund is focused on accelerating infrastructure investments across the continent to close Africa’s aforementioned $930 billion infrastructure gap with the rest of the world. 

This focus area should also feed into other parts of his vision for the AfDB’s work, including the development of resilient cities and building the continent’s agriculture value chains.

Potential Risks on the Horizon

The continent’s two largest economies – South Africa and Nigeria – have faced challenges with energy and fiscal matters. The Nigerian government continues to deal with falling oil oil prices, among other challenges, all while President Muhammad Buhari has just begun to announce his cabinet after several months in office. South Africa is continuing to deal with the fallout of rolling blackouts, though it too should continue to see a rise in capital inflows. 

As the AfDB pushes for regional integration, the ripple effects of challenges in individual African economies will grow. The Greek debt situation has not been pretty to watch and something like that happening to an African country would be really frustrating. 

Further, it is difficult to see how the country can break from a cycle of loan repayments. The cautionary rAfrican countries will approach each step in integrating their economies with caution.

The importance of African countries communicating their growth strategies is paramount, especially now that the QE program is over. This is especially true for fragile countries as the AfDB pushes for more inclusive growth on the continent. 

Keep Your Eye on the Bow Tie

Dr. Adesina delivered impressive results in Nigeria’s agriculture sector by closing loopholes for corruption in the country’s seed market, setting up a $100 million private equity fund, and boosting rice production, as a few examples. I look forward to seeing where he takes the AfDB. 

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. 31: Here’s My Issue with the IMF/World Bank Africa Rising Seminar

When I first saw, the agenda for the Africa Rising seminar at this year’s IMF/World Bank Spring Meetings, I posted a tweet:

Probably not the wisest thing to not provide any context. So, here goes.

My issue with the seminar is the makeup of the panels. I believe there could be a greater representation of African academics and practitioners. Currently, 30 percent of the panelists are African nationals. Considering that the topic is Africa, this strikes me as odd.

Consider the following promotion of the Africa Rising Conference slated to take place in Mozambique next month.

The Government of Mozambique and the IMF will convene a high-level conference in 2014 to take stock of Africa’s strong economic performance, its increased resilience to shocks, and the key ongoing economic policy challenges. The Africa Rising conference will be held May 29-30, 2014, in Maputo. The event is intended to follow up on the 2009 Tanzania Conference, which helped galvanize international support for Africa after the 2008 financial crisis. The conference will bring together policymakers from Africa and beyond, the private sector, civil society, academics, and private foundations with the goal of sustaining the current growth and sharing its benefits among African populations.    

I find the statement in bold odd considering the relative struggles much of the rest of the international community faced after the financial crisis. Furthermore, the statement defaults to Africa somehow being dependent on externally driven development. I think the structure of this week’s Africa Rising seminar could potentially do the same.

Afara Global exists to see a world in which African and Western countries engage economically at an eye-to-eye level. To do that, you need the right people at the table. While the majority of the panelists are quite impressive, I think the right people are not all present – at least not in this seminar.

A few candidates come to mind for future reference:

Amadou Hott runs Senegal’s newly established sovereign wealth fund and chairs the development of the country’s new airport.

Rolake Akinkugbe is Head of Energy, Oil and Gas Research at Ecobank.

Alexander Chikwanda serves as Zambia’s minister of finance. As Africa’s biggest producer of copper, the country has had to deal with global copper prices while driving inclusive growth at home.

Yaw Nyarko is Professor of Economics at New York University and is Director of the university’s Africa House and focuses his research on technology and economic development, and has done work on human capital.

Dambisa Moyo is CEO of the Mildstorm Group and has a global view on economics and development from an African perspective.

Rentia van Tonder is Head of Renewable Energy, Power and Infrastructure at Standard Bank.

Akinwumi Adesina is Nigeria’s Minister of Agriculture and has earned a lot of attention for his efforts to grow Nigeria’s agriculture sector. He could speak to inclusive growth and structural transformation and economic diversification.

Who are some people you think would make for good panelists?

No. 12: Partnerships Needed: Atlantan and African Entrepreneurs Ripe to Connect

While receiving an award for Excellence in Commercial Diplomacy at Howard University’s Africa Business Conference, Florizelle Liser, Assistant US Trade Representative for Africa expressed her desire to see entrepreneurs in the African-American community and in African countries seek out partnerships with each other. The city of Atlanta, Georgia has a mix of key ingredients to make this happen:

1. According to 2010 U.S. Census data, Atlanta has the second largest number of black-owned businesses in the United States. One cannot help but notice the entrepreneurial spirit within the black community, with individuals operating in industries ranging from dry-cleaning to management consulting.

2. Through Atlanta’s Hartsfield-Jackson Airport, Delta launches direct flights to Accra, Johannesburg, Monrovia, Abuja, Lagos, and Cairo. One can fly to Accra in a time not much longer than it takes to fly to Los Angeles.

3. Mayor Kasim Reed has a vision for Atlanta to be the Western Hemisphere’s logistics hub – an aspiration that will contribute to the growing impact of the African Growth and Opportunities Act on trade between the US and African countries.

4. Georgia Tech University develops numerous engineers whose skills could contribute to Africa closing its $93 billion gap in infrastructure development.

5. Though not in Atlanta, the University of Georgia develops a talented pool of students in the agricultural industry who could contribute to Africa reaching $880 billion in agricultural output by 2040.

Dr. Adetunji Adegbesan, a strategy professor at Lagos Business School, shared an incredible story that crystalizes the potential of entrepreneurship on the African continent. An MTN executive monitoring data usage on the company’s Nigeria network noticed that a significant amount of data was passing through the network, but someone was not paying for that usage. After alerting the company’s network engineers, MTN blocked the source of that usage. A few weeks later, the same executive noticed more data passing through that was not accounted for financially. He again approached network engineers who blocked the source. Yet again, data was passing through after a few weeks and the executive approached engineers in Europe who established an elaborate block that was sure to keep the data from passing through. Data was passing through the block a few months later.

Who was breaking through MTN’s network? The company tracked the source of the data and located a small college city where a group of graduates helped families set up their computers. As part of the package they offered, these entrepreneurs “installed” the internet on these computers. They figured out a way to log the computers into MTN’s internal network while keeping the computers’ identities masked. The end result – MTN hired these innovators.

Entrepreneurship is essential to economic growth on the African continent and in the US. One can be sure that the vibrancy found in that small college city in Nigeria is not isolated, and US entrepreneurs would do well to engage this movement. Atlanta-based entrepreneurs should take the lead in engaging fellow entrepreneurs in African countries.

No. 11: Africa’s Agricultural Potential – What’s the Cost?

At what cost will Africa realize the economic potential of its agricultural industry? According to McKinsey & Company, about 60 percent of the world’s uncultivated arable land is on the African continent. A few months ago, NPR did a piece on how Brazil has leveraged science to establish the country as a breadbasket. While listening to the piece, I thought about the model Brazil presents for African countries. Initially excited, I then thought about the potential costs of producing genetically manufactured (GM) foods.

Embrapa, Brazil’s government-run agricultural research institute, has done significant research to find ways for various types of crops to grow in the country since the 1970s. This research has led to enormous economic output. According to the Economist, Brazil drove the value of its crops from $23 billion in 1996 to $108 billion in 2006. Furthermore, the country is only using 12.5 percent of its 400 million hectares of uncultivated arable land. The Economist article qualifies these figures with the caution that Brazil drove agricultural growth systematically, and that growth on the African continent will not come quickly. Brazil spent years improving its soil, in concert with seed development. These developments led to new farming techniques that have enabled farmers to significantly increase their yields.

One can imagine the implications of Brazil’s agricultural growth for the African continent. McKinsey and Company projects that by 2040, African countries can increase the collective value of their agricultural output from $280 billion to $880 billion. To do this, countries will have to bring more land into cultivation, increase crop yields, and replace low-value crops with high-value crops like fruits and vegetables. Furthermore, if African countries are not able to implement these key drivers faster than Brazil has, 2040 will not be the year that the continent realizes $880 billion in agricultural output. The celerity with which African countries have driven the boom of the mobile phone industry makes me hopeful that it will be able to implement agricultural growth at a faster pace.

My tension lies in Brazil being second only to the United States in utilization of GM crops. Proponents of GM foods point to the necessity of these crops in establishing food security and production levels for generations to come. Critics argue against GM crops due to their potential danger to humans, and the threat they pose to other plants. A number of African countries are already producing GM crops, and scientists in Brazil continue to develop new plant technologies and farming techniques. Scientists, farmers, and policy makers are going to have to commit to thoroughly vetting the costs and benefits of employing GM crops in pursuit of a robust agricultural industry on the African continent. The economic potential of agriculture on the continent is quite impressive and will be an obstacle to objective cost-benefit analysis of policy options. Decision makers must champion thorough research and holistic conversations in shaping the premise on which countries drive agricultural development efforts. Without this hard analysis, the realization of Africa’s agricultural potential could come at a significant cost to the continent’s one-billion people.