Municipal Broadband Gets President Obama’s Attention

I was excited to read that President Obama has set his sights on ensuring that cities can develop their own broadband networks, should they choose to do so. While working with the Georgia Municipal Association, we had a couple of close calls that would have prevented Georgia cities from operating their own broadband networks. President Obama is going to hold a press conference tomorrow to outline his plan for improving broadband connectivity. His main initiatives include:

1. Pushing for an end to laws in states that prohibit the development of broadband services;

2. Growing a network of cities committed to growing broadband connectivity in their communities;

3. Provision of technical assistance for the development of broadband networks in community;

4. Offer of loans and grants for rural broadband providers; and

5. Creation of Broadband Opportunity Council tasked with identifying regulatory barriers with the goal speeding up broadband deployment and uptake.

This is important to watch. The US economy is bouncing back in some ways, but there is yet more economic potential to realize. After following the writings of founders and investors like Marc Andreesen and Peter Thiel, I am convinced that the internet economy will be driving that realization for the next several years. We need as many people as possible participating.

Private Equity in Africa Made One Big Little Step

I may have done a fist pump when I saw that Helios Investment Partners raised $1.1 billion for its latest Africa-focused fund – a new record besting the $908 million the firm raised about three years ago. The notion of investing on the African continent is not such a novelty any longer. Sixty percent of the investors in Helios’ last fund participated in this round. Institutional investors showed up to participate in this round. So what, you ask?

There is much work to be done on the continent, and Africa-focused funds like Helios are securing the capital to ensure that work is done – that’s the hope at least. For example, one of Helios’ portfolio companies Helios Towers raised $630 million in its push for taking Africa’s cell tower infrastructure to the next level. Last year’s Ebola outbreak exposed the need for public health infrastructure in the affected countries. Africa’s agricultural potential remains largely untapped. Transportation is still very expensive within and among African countries. Millions of people are still trying to be productive with no power for light at night. The more capital that private equity firms like Helios, AFIG, ECP, and Kuramo have to deploy, I believe they will play their part in taking out larger chunks of these problems.

So we think the industry will take off in Africa, and we now think that probably the growth rate in private equity in Africa will probably be greater than it will be in any other part of the world. [But] it will take time.

David Rubenstein said this about the private equity industry in Africa during last year’s US-Africa Leaders Summit. It will be interesting to watch this prediction over the coming years. Rubenstein says we should give it 10 years. I wonder if we will see different models flourish on the continent in that time. Bob Diamond and Ashish Thakkar’s Atlas Mara made waves last year with its rapid acquisition of a few banks across Sub-Saharan Africa after raising around $725 million. During his keynote at last year’s Harvard Business School Africa Business Conference, Bob Diamond stated that he saw Atlas Mara serving as a catalyzer of copycats. We will have to see about that. Still others point to the holding company model as working better for the African context due to their not being subject to the 10 year limited partnerships of private equity firms.

Whatever model runs the day ten years from now, I am excited about Africa-focused funds securing the capital to do big things on the continent. I hope Helios’ raise opens the door for other funds to raise funds at the $1 billion plus level.

Three Podcasts That Will Make Your Daily Commute Amazing

While working on #NewRulesAfrica last year with Cherae Robinson (Be sure to check out her app Tastemakers Africa), I discovered that there are interesting people who interview other interesting people and post those interviews on platforms like iTunes and TuneIn Radio – for free. I now listen to at least five hours of podcasts a week during my commutes to my daughter’s school and the amount of insight I have gotten into the worlds of authors, other entrepreneurs, and investors has been amazing. I used to listen to Bloomberg Surveillance and Taking Stock with Pimm Foxx on the Bloomberg Radio+ app during these listening times, but find the podcast deep dives much more rewarding.

The Leaders

Here are three podcasts that I think you would find worthwhile to check out:

This Week in Startups – Jason Calacanis is a media entrepreneur and angel investor. He has invested in at least 90 startups, including Uber. He has no qualms about making his feelings known about certain companies like Google and Secret, which I appreciate. He opened my eyes to the value of listening to podcasts. Start with his interview with Angela Benton, founder of NewMe Accelerator. I listened to his interview with Chamath Palihapitiya at least four times.

The Entrepreneurs Library – Wade Danielson interviews business authors about their books, getting them to walk through what each chapter of the book is about, portions of it that a reader should definitely take a look at, and solicits their recommendations of other books to read. He probably could improve as an interviewer, but I do like that he gets out of the way and lets the authors do all the talking. His interview with Robert Galford on his book, The Trusted Advisor was really good. Galford flips the script on “name it and claim it”.

Marketplace – I have listened to Kai Ryssdal for years now, though my consumption was dependent on my ability to get in the car at the right time. The episodes are equally entertaining and informative – providing you with a snapshot of what happened that day and of broader issues like gentrification.

Runner-Ups

Here are a few more that I listen to, though I am not blown away by every interview like the two above:

Eventual Millionaire – Jaime Tardy brings on a lot of entrepreneurs who have bootstrapped and hustled their way to high revenue generating businesses.

The Strategic Entrepreneur – I met Michael Williams years ago through a mutual friend and was thrilled to discover his podcast.

Harvard Kennedy School PolicyCast – Some pretty insightful interviews here on issues like the United States’ criminal justice system.

Freakonomics Radio – The show’s deep dives on issues like education are pretty eye-opening.

HBR Ideacast – The content is typically pretty solid. Check out the interview with Boris Johnson, London’s mayor.

Entrepreneurial Thought Leaders – These are interesting fireside chat conversations with some of the leaders of Silicon Valley.

A16Z Podcast – Andreesen Horowitz is one of the top venture capital firms in the United States, despite their relative youth compared to stalwarts like Sequoia Capital.

The School of Greatness – This podcast may move up to the “you should definitely listen to this” list, for the sole reason that Lewis Howes takes the time to affirm each interviewee at the end of every episode. He nearly brought Baratunde Thurston to tears.

Start With Why – This is another one that may move up. I appreciate Simon Sinek’s laser focus on gaining clarity on why one does the business she does.

The James Altucher Show – I enjoyed James’ interview style for a long time, then I noticed that I felt like he was pushing his “Choose Yourself” framework onto other people’s work during the interviews and lost a bit of interest.

The Tim Ferriss Show – For a while, I really enjoyed the podcast. Tim did a few shows where he did not interview anyone, and I lost interest.

EB-5 Visa and African Investment in the US

As the number of wealthy individuals in Africa grows, I wonder if the US will see more public investment from such individuals. For example, Tony Elumelu invested an undisclosed amount in a California-based satellite startup last year. Will we see more folks follow the lead of, say, the Qatari government which gave around $100 million towards Hurricane Katrina recovery efforts in Louisiana. The pharmacy school building at Xavier University is now called the Qatari Pharmacy Pavilion. A $100 million investment may be a bit steep for an African government or individual, but not totally out of reach. Aliku Dangote made waves during the US-Africa Leaders Summit when he announced an investment $1 billion in Nigeria’s rice market, and a 50/50 co-investment with the Blackstone Group of $5 billion in Sub-Saharan Africa’s energy infrastructure.

The EB-5 visa program has been a popular vehicle over the past several years for wealthy individuals from around the world to secure residency in the US. Investors commit to placing a minimum of $500,000 or $1 million (depending on the location) in an enterprise that creates at least 10 full-time paying jobs. Real estate projects seem to be the most popular targets for these investments. Regional centers registered with the US government market these projects to aspiring visa-holders and pool the funds. Chinese investors have been the heaviest users of the program, often due to the specter of crackdowns from the Chinese government’s campaign against corruption in the country.

I understand that the program has been used pretty regularly by African investors. It would be interesting to see a breakdown of where EB-5 investors are coming from on an annual basis. There’s not much recent data on the program, but it is facing scrutiny this year due to some cases of fraud. I imagine that data on the program will emerge from Congressional hearings on its efficacy. Something to watch.

LinkedIn Not Paying Attention to Africa Would Be a Huge Mistake

LinkedIn is missing an opportunity to capitalize on its reach into the top management talent around the world to capture the stories of Africa’s top business talent and their experience before and ruing the economic sea change taking place across the continent. The company’s Influencers program has been running for over two years now and it does not have much representation from African thought leaders. I counted at least three.

Africa’s growth story is a big deal. Between 1990 and 2000, GDP growth lagged the global average. Since that time, growth on the continent has exceeded the global average, considerably. Hundreds of millions of people will be moving into the middle class across the continent. Food policymakers are watching the continent while trying to figure out where the food is going to come from to feed the next billion people. How are the top business people across the continent dealing with this growth? What do they read for inspiration? Who are their mentors?

Why would it make sense for LinkedIn to pay more attention, you ask? I often hear from African business leaders that they did not know certain things were going on in other countries on the continent. At the same time, policymakers are trying to figure out how to solve the problem of traveling executives needing to secure a visa for 80 percent of the African countries they visit. Stock exchanges are upgrading their technology and deploying new investment tools. Startups are pushing for solutions to big issues on the continent. Agricultural output is increasing in some countries. LinkedIn would be at the crux of solving these enormous issues.

Another reason LinkedIn should be paying more attention to Africa is its Economic Graph project – “digitally mapping the global economy to connect talent with opportunity at massive scale.” If LinkedIn gets traction with this project, the results could be massive for African countries, many of which have worked extremely to improve the data the collect. The data provided by LinkedIn’s graph could provide actionable insights to these governments.

So, LinkedIn should pay more attention to Africa. Recruit some Africa-focused business leaders to write. Here is a sample of suggestions:

Bob Collymore

Monica Musonda

Ory Okolloh Mwangi

Acha Leke

Fred Swaniker

I’m happy to provide more!

P.S. Thanks to Jason Calacanis for the headline inspiration.

Is AGOA Right For US Trade With Africa?

The African Growth and Opportunity Act is up for re-authorization on September 30, 2015. The Act essentially makes it easier for certain African countries to export some of their goods to the United States, by making them duty-free. The goal of the Act was to support development on the continent and increase US-Africa trade. Fifteen years later, the program has fostered some development in participating countries, though the deepening of US-Africa trade is debatable.

It will be interesting to see AGOA data for all of 2014, once it comes out later this year. The Q1 2014 data showed a 34 percent drop in US imports of Sub-Saharan African countries. That brought US imports from Sub-Saharan Africa to 1.2 percent of its imports from the world – $6.7 billion. It doesn’t help that crude oil has taken the major share of AGOA usage over the years, and the US has drastically increased domestic oil production. This year Nigeria stopped selling oil to the US last year. Hopefully, US imports from the region have not dropped below 1 percent.

Source: US Energy Information Administration

Perhaps the rise of Africa’s fashion industry will show up in the 2014 data. Congress included apparel preferences in the Act in hopes that African countries would be able to replicate the success Southeast Asian countries have had using the apparel industry to develop their economies.

One thing that stands out about US-Africa trade is that the US does not have a two-way trade agreement with an African country. The last time this came up was with South Africa in the mid 2000s, but those talks fell through. Unless Ambassador Froman got some inspiration from the US’ secret talks with Cuba, I don’t imagine we will be seeing any free trade agreements or the like come up in the next year or so. If those sort of talks kicked off again, I imagine the US would approach South Africa first. That could be an interesting conversation, considering South Africa’s BRICS status and role with the development of the BRICS bank, though I’m not sure what relevance that would have to any potential trade negotiations. Would Russia try to insert itself in those negotiations? Let me put the reigns on my imagination.

Another issue is the low usage of AGOA. Apparently, half of the participating countries exported less that $1 million worth of goods. I don’t know if that is a capacity issue, or what, but it would be good to see more of the participating countries not leave money on the table here. Like Rosa Whitaker’s tax credit idea, I will keep an eye on this, talk to folks who know a lot more about the Act than I do, and put together a more organized piece on this.

Is A Tax Credit Going to Encourage US Investment in Africa?

Is the right next step for promoting American business investment in African markets a tax credit that encourage American companies to repatriate their investments on the continent? The Africa Report ran an interview in November with Rosa Whitaker, head of the Whitaker Group. She argues that this tax credit is the right investment response for US-Africa business policy. Initially, I thought this was a great idea, and then questions started coming up. I’ll lay them out here, will do my homework over the next few days and come back with another post and hopefully, a few answers.

The US’ international corporate tax law has gained increased attention with the likes of Burger King moving their headquarters to Canada in order to benefit from a more favorable corporate tax structure. Currently, multinationals pay taxes to the country in which they operate, and also pay taxes to the US. Companies like Apple go to great lengths to avoid paying these taxes while remaining within the law. President Obama took executive action to counter inversions like that implemented by Burger King, and has talked about ways to encourage companies like Apple to bring their profits back to the US. Ms. Whitaker’s argument for a tax credit for US company investments in African markets fits within this debate.

A tax credit could be an attractive investment incentive for American companies, but what could be the impact on African countries? A number of African countries with the support of the African Development Bank are working to improve their ability to negotiate deals with multinationals. Furthermore, African countries are under pressure to not become tax havens, though the appeal of multinationals parking hundreds of millions of dollars in the country is tough to say no to.

I would be interested to see available data on tax compliance among US companies operating in African countries. I wonder if Morten Jerven has any of that in his book on Africa’s data problem. During the U.S.-Africa Leaders Summit, Mo Ibrahim pointedly called out companies doing business on the continent for not paying their taxes. The rise of the big private equity firms – KKR, Blackstone, and Carlyle – has brought questions about how much of the returns from their investments will remain on the continent once an attractive exit opportunity presents itself.

What alternatives are there to a tax credit? Who are the smartest people on this topic? I look forward to working on these questions and getting my observations out in a post a little later on.