A Case for More Hedge Funds Investing in Africa
Kurt Davis makes an interesting case for why it makes sense for hedge funds to be more active in core sectors across African markets – financial services, metals and mining, oil and gas, and agriculture and land. I admit that I bristled a bit at the thought. I’m still wincing from the episode in Billions when Bobby Axelrod, desperate to salvage his quarter, corrals a group of billionaire head fund managers to short the Naira and speed up its devaluation. The thing is, this sort of scenario isn’t a potential bad dream. Anyone remember George Soros breaking the Bank of England?
Hedge funds increasing their activity on the continent could be a real thing. I’m sure the industry already has a good bit of exposure during the Oprah-like bond issuance party African countries engaged in to raise capital for things like infrastructure investments or fiscal deficit management. That makes me nervous in situations like what Mozambique is going through right now, defaulting on its debt. That’s not what you want if you have activist investors like Elliott Management buying $100M of your debt, then dragging your country through courts around the world, seizing one of your historic ships in Ghana, and forcing you to a deal where they flip their $100M into a $2B payout. Just ask Argentina.
That said, hedge funds could play an important role in moving sectors along in their growth. Folks who are working with hedge fund money should just be sure that they’re doing everything possible to ensure things don’t go left. You don’t want that kind of stress in your life.
Africa’s Urbanization Problem
Daniel Knowles, in typical Economist Magazine style, applies sharp cynicism to the urbanization of Africa’s largest cities, arguing that while millions have added to their folds, they are just as isolated from the globalization taking place around the world. I can’t really argue with him.
He starts his case with Kinshasa, but my mind goes to Nigeria where Nnamdi Azikiwe International Airport was closed for six weeks to repair its lone runway. This isn’t a random airport. This is an airport for the capitol city Abuja. Imagine Hartsfield-Jackson closing down in Atlanta due to road resurfacing. I probably shouldn’t even mention that considering the infrastructure issues Atlanta is having these days, but I digress. The airport reopened last week, but caused a lot of inconvenience for transport to and from the city. We’ll have to wait and see what the economic impact the closure had on the economy, but I’m sure it wasn’t good.
As we move into an age shaped by the internet of things and artificial intelligence, it is going to be critical that Africa’s hubs are not stalling out. It is critical that leaders have the basics at good place, such that they have sufficient bandwidth to think through how to engage with a world of self-driving cars, robots, and human brains meshed with computers.
Speaking of Artificial Intelligence
I’ll leave you with an interesting list of African startups making their way through the world of machine learning and artificial intelligence. I look forward to adding these to my list of startups to keep an eye out for. It’s really important that African startups play a role in the development of these technologies. I’m working through The Singularity is Near: When Humans Transcend Biology by Google engineering director Ray Kurzweil. The future world people are dreaming up is starkly different from the one we live in and Africa really needs to be in the game. My fear is that if Africa isn’t part of shaping an AI world, it’s resources and people will become commodities in the sustenance of that world.