How Does Africa’s Innovation Economy Tap Into Africa’s Wealth?

Yesterday, I had lunch with a friend who is raising a fund for her Lagos-based startup. At one point in our conversation, she shared the effort she has had to go through to get people she has met with in Silicon Valley up to speed on what is happening in Nigeria’s tech space.

This has been a refrain from a number of entrepreneurs and investors who are already tuned in on what is happening in Africa’s innovation economy. Fortunately, the tide seems to be trending towards Silicon Valley getting more hip to what is happening in Nigeria, Kenya, and to a lesser extent¬†South Africa (Cape Town-based Naspers has led some massive investments that I am sure Silicon Valley investors have noticed.)

While we chatted, my mind went to some research I saw this weekend on Africa’s high net worth individuals. Capgemini’s annual World Wealth Report pegs the wealth of the 150,000 high net worth individuals across Africa at $1.4 trillion for 2016. These are people who have at least $1 million in investable assets, excluding primary residence, collectibles, non-durable goods like sweet potato pie, and durable goods like automobiles.

This is serious capital. I wonder what percentage of this wealth has gone into Africa’s innovation economy since 2009. The Capgemini report highlights three industries that are going to drive wealth accumulation globally through 2025 – financial services, technology, and healthcare. There are startups across Africa doing interesting things in all three of these areas, yet the challenges of getting Africa’s wealthy to invest in the continent’s startups has been a conversation for several years now. I think we’re trending to those conversations being fewer and fewer.

There are several people working to build a critical mass of wealthy investors across Africa committed to investing in Africa’s innovation economy, and these initiatives are gaining real traction. Further, some African governments have developed initiatives to support innovation economies within their borders. Two years ago, I watched Something Ventured, and it really got me thinking about how African governments could level up their involvement in Africa’s innovation economy. I’ll share where I’m at on that at some point.

In the meantime, what is your assessment of Africa’s wealthy investing in Africa’s innovation economy?

Bill Janeway Knows a Lot about Technology and Economics

Barry Ritholtz did a fascinating interview with Bill Janeway, Managing Director at Warburb Pincus, a private equity shop whose name you may have seen when Timothy Geithner joined as President a few years ago.

Side note: Warburg Pincus is the largest shareholder in Kosmos Energy, the exploration company that was part of the discovery of the Jubilee oil field in Ghana nearly a decade ago. Wow. Time flies. Check out Big Men if you’re looking for a movie to watch this weekend.¬†

Janeway draws on economic theory and the history of the US technology sector over the course of the interview. This is one of those interviews I will listen to a couple more times to be sure I caught all the events, people, and companies I should look up, such as Ferdinand Eberstadt. Check out the interview below.

Mother Ghana is Struggling

My neck hurts after shaking my head while reading this Economist piece on Ghana’s economic woes. Some highlights:

  • Public debt could reach 70 percent this year
  • The Ghana Cedi has lost over 99 percent of its value to the dollar (Keep in mind Ghana switched from the New Cedi to the Ghana Cedi)
  • Since 1966, Ghana has sought IMF help 16 times

Elections are coming up next year, so we will probably see more spending. President Mahama has a lot of work on his hands in the lead-up. I imagine he will cite progress made on addressing power issues and the exploding budget, and that he should be re-elected to continue righting the ship.

Elections are a lot of work. Perhaps, the better move would be to not seek re-election, double down and get reforms right over the next 18 months, and hand off an improving situation to his successor.