Investing In Africa Is A Different Game. Here Are The Rules

One uncomfortable truth, especially for me, was that you need to work with governments. And governments, as we know, across Africa can be a bit dysfunctional. So what did you see? Is it like you kept trying to build certain things in every way around it? You noticed that government had to be part of the conversation. Andrially, investor, institution builder, and quiet power broker. Before venture capital was fashionable, he was helping design the systems that fund power plants, ports, and economies. First at the IFC, then at the helm of the Africa Finance Corporation, where he helped grow a billion dollar institution into a continental powerhouse. Private equity as an asset class in the last decade also has returned less than 10% IRL. That's not good. I can earn more just putting my money into US stocks, which is way safer than unlisted African PE. Where do you see hope? What recommendations would you have for us to get to that point where we're producing at least 50 million jobs per item in Africa? Development is really actually around two basic things. One is. Quick one, before we jump into the Afro-Paliton podcast, I have a problem. So my issue is that 72% of you are not subscribed to the Afro-Paliton podcast. So I need you to click the subscribe button so you can join the Afro-Paliton family. Now we can jump back to it. Andrew. So someone's going to click into your specific episode and they may be winding down from a long day. Maybe they're going on a walk. Maybe they're just listening to us while they're at work. So the first thing I want you to tell our audience is if they're trying to build power, impact, and influence in Africa, what is one uncomfortable truth that they need to accept? So I think that one uncomfortable truth, especially for me, was that you need to work with governments. And governments, as we know, across Africa can be a bit dysfunctional, but you still have to work with them one way or the other. It's unavoidable and you need to figure out how to do that. That fits your business model and your ethics as well. Okay, I like this because people are going to be like, what? There's no way around it. So what did you see? Is it like you kept trying to build certain things or kept trying to analyze certain things and everywhere around it, you noticed that government had to be part of the conversation? Well, if you look at what I've done in the past, it's actually heavily government involved. You know, when I was with the IFC, we did a lot of infrastructure projects, but also just, you know, even regular investments, people need licenses, people need property building permits, whatever. Financial institutions need to be registered and licensed wherever they are. When I was at the IFC, we did a lot of infrastructure projects, which are very heavily government involved. You know, they often give you the contract to operate whatever it is or let's say a power purchase agreement if it's a power project, for example. But even, you know, more private sector businesses, I think, need to operate with government one way or the other. You know, you're in the healthcare business. You're probably going to come across NAFDAQ if we're talking about Nigeria or the equivalent in other countries. So I think, you know, at all levels. And again, if you look across most of Africa, you will see that government one way or the other is much more involved in things than it is in other jurisdictions. And you've, you know, worked across Africa. So I also want you to talk about where do you see hope? Because a lot of times with Africa, people just feel like, again, if they talk about government or other things, it's long, it's complicated. It will never get there. Africa was rising now. What's happening? Is there some glimmers of hope that you see in different parts of Africa? So the way I look at it, I tend to look at things in a cross-cutting way. And for me, I think the hope is really in the young people of Africa. They are very enterprising. They work very hard. They're very smart. They do need platforms, pathways, things to be opened up for them to really perform. So I often, again, Africa unfortunately is rather vulcanized. There are 54 countries on the continent, which is way too many to be frank. So a lot of them are sub-optimal in terms of size. But it's often good to look at Africa through other lenses rather than the pure geographical ones. And so that's why I look at the people. So I think that, again, for me, and if you think about sort of economic development and all that, people always talk about resources. Africa has all these resources, that are done, where it's always being cheated out of what's due to us. And clearly some of that does happen. But the real resource of any countries, actually, is people. And what they're able to do, what they're able to output. And I don't think we properly harness the resource of our people across Africa, and particularly our young people. Now, when you look at what's happening in the world, where there's this demographic implosion, you know, in the future, a lot of the supply of people on earth will be from Africa. Now, we can discuss about AI and how much that will eliminate the need for people. But my own view is that you'll always need people. You always need workers one way or the other, even if AI reduces that considerably. And Africa is the source of that. But it's not only just in terms of labor I'm thinking about it. It's also in terms of intellectual capacity as well and the ability to add value in many different ways. Andrew, you know, I've been looking forward to this conversation. And I was doing a lot of research and I was saying to Tika, like, I can't wait to have Andrew on the show. So thank you for joining us in the show. Now, on your thesis and statements you're made about private equity in Africa, you said that you don't think it's sometimes a sustainable model for execution, I guess, in Africa. And especially with your point about less avoidance, can we talk a little bit more about your thesis around that in regards to Africa as well? So I'm not exactly sure which thing. So let's start with private equity, you start on private equity and then we can then dive into your thesis around lots of avoidance when it comes to investments in infrastructure in Africa. Right. So it's all in a way related. So I think that again, a few weeks ago, I actually a former colleague of mine that was teaching some students at Lagos Business School around company valuations and all that, asked me to speak to them. And you know, the thing I said is that when you're investing and I think in most things in life, the first thing to do is to understand the game you're playing. And then once you fully understand that game, you can then sort of make sure that whatever you're doing is structured according to the game. And we talk about investing as if is just one thing. But investing in infrastructure, investing in companies, private equity, investing in startups are actually different games. And therefore they have different rules and you need to look at how you manage those investments differently. The thing with private equity is that if you look at the track record across Africa, it's not being great in terms of investment returns. The last figures I saw were that private equity as an asset class and there are people who have performed way better than this. But private equity is an asset class. In the last decade or so has returned less than 10% IRR. And you know, that's not good because most private equity firms at least state that they're looking for 20% IRR. And if you get into the mid teens, that's difficult. So you know, you can make 10% if you're investing in the American stock market. So one of the things that you know, people trying to raise private equity struggle with is well, you know, I can earn more just putting my money into US stocks, which is way safer than unlisted, you know, African P8. Now there are many reasons for these returns. Some are macro. So the the currency is is a big problem. And I remember I was speaking to a large sovereign wealth fund, which had invested in a Nigerian-based private equity fund. And the person told me that, "Well, you know, it feels really sorry for them because in Naira terms, they've made three times their money, but in dollar terms, they've made just 6 percent, as in not 6 percent per annum, just 6 percent." And this was well before the recent devaluation. So I'm not quite sure where those guys are in dollar terms right now. So that's one aspect. And to be frank, I think that the fact that it's a dollar-based industry already puts it at a disadvantage to some extent, because most of the investments that they make, most of the companies operating here are Naira, right, or local currency. So that's one issue. But I don't think it's the only issue. The other issue is around exits. So typically, you want to buy a company or invest in a company and then sell it in five, six years' time. Again, I was talking to somebody recent. So most funds have a theoretical life of 10 years. But I was talking to somebody the other day who invests in African PE funds. And he was saying that actually the average life that they're seeing is closer to 14, 15 years because of the problems with exits. And of course, the longer you hold onto an investment, mathematically speaking, the lower your IRR becomes. And with private equity, as with many things, it may be the first couple of years where you see an increase in the profits, revenue, etc. that would drive a higher valuation. And then it just goes to kind of normal growth. So you're not getting a spurt in growth to compensate for the additional time. So that's another issue. The third issue, which is what a lot of people don't talk about, is actually the model of private equity here. So the model tends to be that you work, you buy 30% of the company. There's a typically an owner who has the bulk of the rest. And that does two things. One is that it limits what you can do in terms of turning the company around. If you contrast that with private equity in the US, they typically buy the whole company. So they can change the management. They can do whatever they want. Whereas in the African model, you're typically relying on the entrepreneur and often, not always, but often they can do some things, but they can't take the company to really take the company to the next level. And then there's a lot of emotion involved in companies and ownership in Africa. So selling them becomes a problem. Now, the truth is that if you bought 30% of a company, it's very hard to sell that. Let's say you bought a soft drinks company. You bought 30%. You've grown the company. Now it's worth above a certain amount. You know, the likes of coal or people like that, and not going to buy 30% of a company. They want to buy the whole company. The entrepreneur, on the other hand, doesn't want to sell. So that limits your exit. Of course, the capital markets don't really offer IPOs. And even if they did, the IPO in local currency, how do you convert it back? How do you exit? You have that local currency exposure. So that's one. That's another reason I think that is not spoken about so often as to why these exits and why these private equity vehicles don't always work. Now, as I said, they are some that have been very successful, but on average across the continent, they haven't been. I think you and I talked briefly about the whole development model stuff last night, right? And I wanted you to expand a little bit more on your thesis days. Well, and for our viewers who are watching, Andrea Biscay said, you know, Africa, we needed to be developing at least 15 million, maybe jobs per year, per annum, right? And so on these development models, like, you know, one from Asia is the manufacturing base. Some of them also include services industries. Some of them include aid. What recommendations would you have to say like for us to get to that point where we're producing at least 15 million jobs per annum in Africa? So I think that 15 million comes from quite a while ago. And I'm not sure what the number is, but it's probably higher than that. I would guess one. I think that there's no one size fits all solution to this. But if I were to sort of try and generalize a lot again, we really look, development is really actually around two basic things. If you actually just take a step back and look at it, one is human productivity. So how much value can you produce in an hour? Right? And if you, and that's obviously on average across, you know, the time and across your country and what have you. But if you, if on average, your people can only produce so much of value in an hour, then, you know, you can't aspire to be a rich country. And, you know, our productivity is very low. So you need to think about ways to increase productivity. The second dimension of development is really energy use. So again, you could almost say that development is really a way of figuring out how to use more energy more efficiently. And if you look at energy use is typically correlated very closely to development. Now, again, to give you an example, the average Nigerian consumes the same amount of electricity as a fridge. Right? So if you, I mean, obviously we probably consume more than that. I can see the looks on your faces. We just never thought about it that way. We do more than that. But on average, that's what it is. And therefore, again, if you don't, and if you think of everything you use energy for, if you don't, if you can't use more energy, if you can't access more energy, then, you know, you also can't develop. So, I mean, you know, all the fancy equipment you've got all the iPads, all these things, you know, need energy to make and also need energy to use. So that's another thing. And you can see that, you know, in, just as an illustration of this, how energy is like now that seems to be one of the major bottlenecks for AI in the US. And you know, they want to get to the next level of their economy. They're at what is called the technology frontier. So they need to develop new technology. And in developing that new technology, surprise, surprise, they need to consume a lot more energy. So even in the US, that is an issue, not to mention here. So I think those are two things. So actually at the base of it, right, education is extremely important. And education, both in terms of school education, but also in terms of form of a better word, vocational education, how to do things. And that is something that, again, you know, we've neglected. I mean, I went to high school here in Nigeria, here in Lagos, and, you know, it was, frankly, a world-class education. I went from my school here to the UK and fitted straight in. And, you know, there are a lot of people who still do that. And, you know, I was in a fairly good school when I was here. But, you know, I think that the education levels have declined to be frank. And we don't even do vocational education. By vocational, I don't just mean when when people say vocational education, they mean tiling, roofing, laying bricks, that sort of thing, woodworking. That's all important. And we still need to sort of train people for that, because, you know, but I'm also talking about know-how. So, for example, you know, a DangoTe group just opened or the refinery just started. They've had to import a lot of engineers from India because we here don't have the know how to operate, maintain that equipment. Now I guess that they will be training people. This is something that's new in the country, but just to illustrate that on the job training doesn't just mean sort of occasional training in this respect, doesn't just mean plumbers and tylers. So education is important. The problem with education is that it takes 20 years for you to see results. I mean if you change the education policy now, people entering in school, they'll be joining the workforce give or take in 15, 20 years time. So it takes a long time and governments are looking for short term fixes. So that's one thing. As I mentioned, energy is another thing. So sorting out your energy, grids is important. And again, this is this dates from quite a while ago. But there was a study going round of power utilities or power utilities in Africa. And if I recall, there were only two utilities which earned enough money to cover both their operating and their capital costs, which were financially viable, you know, in any which way you want to look at it. The, there were about give or take nine that covered their operating costs but not their capital costs and the rest didn't even cover their operating costs. So that just shows how sclerotic this problem of energy, and I'm talking about electricity, energy obviously goes further than that, but it's a good illustration. And that's why you constantly hear people always trying to talk about electricity, et cetera. You know, again, if you think about it, you're trying to set up a business, you need to figure out your generator, your inverter, all this stuff. Even here, I'm sure that's a consideration for you. You don't know the half of it. I'm sure, I'm sure my inverter just blew off. So I know there's sorts of things you're talking about. But so there are those things. There are also a number of other things that people don't talk about, which are, again, boring, basic, but unnecessary. So one of those is macroeconomics stability. And that essentially means stable inflation. Now people want stable currencies, but that's not, I think, really what drives development. And in fact, stable currencies can actually go against it. I mean, there are many studies that show that weaker exchange rates actually allow for development because it sort of makes your country look cheap. And therefore, people come and invest in a very short-hand way. But too high inflation, which then goes into things like government spending, how they finance their budgets, et cetera. Those things are also important. And macroeconomics stability is, you know, and we've seen it over the last couple of years, not just here, but in Nigeria, but in other parts of Africa, you know, Ghana, defaulted on its debts, had massive inflation. I mean, the inflation that we had here was nothing compared to what they had in Ghana, for example. And then the other thing, again, which is kind of obvious, is security. You know, you cannot have development if you don't have peace and security. And I've deliberately not talked about development in terms of, you know, following China or following whoever, following the US or what have you and all those debates that one has. And I could go into that. But, you know, I think that we need to sort out some of the basics first, rather than trying to sort of, you know, get into. Back in the day, I always used to hear people talking about, oh, you know, should we follow the China model or this thing, a poor model or whatever. And I'm like, we don't even have light. Let's relax. Yeah. And so let's think about basic things. And there are many models around the world. And, you know, I think that nothing, you know, there's no one model that works and no one model that doesn't work. I do believe that, again, having proper markets and allowing markets to operate. So proper price discovery drives investments. And therefore, you know, sort of interfering in markets is something that governments shouldn't do. And they should try and avoid, you know, having things that disrupt those markets, rather than sort of them disrupting those markets one way or the other. But, you know, we see that's a strong temptation with governments. We see price controls on housing in New York, for example. So it's not just in Africa, but those, I think we need to start thinking about how to get those basics right. And then we can layer on top of it different development model. Etch, remember that time I walked into a bank. I'm not going to give the name. And I asked them for $1,000 and they told me, no, they cannot withdraw any dollar for me. And I was so upset. And I just remember asking everybody, how can I solve this issue? And I'm so happy that I finally have VBAN to finally solve this issue for me. You know, the thing is, you should be able to have access to your money anywhere in the world when you get paid, right? So I'm grateful we have VBAN as a sponsor for that part of the podcast. But VBAN, you're able to get paid in foreign currencies, whether it's pounds, USD, euros, and you can actually spend it in local currency as well. Now you're also able to get a virtual card, which you can use to spend and pay for services across the world. So I'm grateful to have VBAN as a sponsor. You can download it on the Apple or Google Play Store. And remember when you sign up, you use Apple Policy, so they know you came from this podcast. Where did we diverge? My family also had a manufacturing business. We actually got loan from the IFC back in the day. But I remember this country did have some sort of manufacturing base, right? You could make Italian shoes here, the letter from the North. Just different things could be produced here. At what point from a historical perspective do you believe that we diverged as a country? Because someone could argue that we had a better manufacturing base than even China 40 years ago, right? And maybe not necessarily at that level, but that China took on the work and has been able to now become a powerhouse. So at what point would you peg us like, this is where this country made a left turn? So I think that's when you look at, and it's a coincidence, right? So when you look at the West and particularly the US, a lot of things, and you look at charts and things, a lot of things actually started going wrong in the 1970s. So for example, real wages of workers started stagnating in the 1970s. And I think if you do the calculation, the real wage of an average worker in the US is pretty much the same as it was after adjusting for inflation and all that, pretty much what it was back in the 1970s. And I think that we also started going south in the 1970s. And it's all to do with oil in our case. So basically we just suffered, and a lot of people say, "Oh, Nigeria, the rules of economics don't apply." They totally apply here. We follow the classic, what they call, Dutch disease. So you have a lot of oil that generates dollars. The dollars come in that pushes your currency up when your currency gets pushed up, because you know, people are changing dollars into NIRAS, so they're buying more NIRAS, selling more dollars. So your currency goes up. When your currency goes up, it makes people local manufacturers less competitive compared with people who are manufacturing abroad, and therefore, it starts to drive people out of business. Now, when you couple that with the fact that a lot of that money was squandered in different ways and squandered not just in terms of corruption, but squandered in terms of why telephone projects that didn't really last and didn't deliver what they were supposed to do, that sort of doubles down on that, because it means that there wasn't even the real underlying economic growth that happened. We also started putting in place policies that would come and bite us 30, 40 years later. So things like that. the fuel subsidy, things like trying to peg the exchange rate at a rate that was too high, which effectively meant that school fees, imported goods, etc. were sort of cheaper than they needed to be. And I think one thing to point out, broadly speaking, is that if you take sort of 1980 as a data point, we made a population, I can't remember exactly what it was, but it was give or take 70 or 80 million. And we were producing give or take 1.5 million barrels a day. Today, our population is whatever you want to believe it is, 200 million to 10, I see all kinds of figures. But sort of give or take three times each, what the population was back in 1980. And guess what, we produce about one and a half million barrels of oil a day. So all the things that were done predicated on a lot of oil money like the fuel subsidy have become massively, and sorry, just to add to that, if you take the fuel subsidy, in addition to the population tripling give or take, many more people as a percent of that population own vehicles. So it's actually a double thing, the population has gone up and then their vehicle ownership has gone up. So the demand on fuel subsidy, even if it made sense in 1970, whatever when it was brought in, definitely stopped making sense a long time ago. And if you recall, there were protests in, I can't remember, against fuel subsidy removal. So it's not the first time that governments have tried to remove fuel subsidy. I mean, this time it's been successful, but for those reasons. So that is, I don't think there was like a moment or a thing, but that is what happened. Also I think, and what's in a way worse, is that oil sort of changed mindset. So the mindset is very much around extractive industries, extraction, and rather than sort of value add and production. And that's why, for example, you see that a lot of, I mean, this is a wild generalization, I agree, but you see a lot of the industries owned by people of Indian descent, people of Lebanese descent, because in a way, if you're kind of son of the soil or daughter of the soil, maybe you think you can go to Abuja and win that big contract from NMPC. Those guys can't. So they've got to roll up their sleeves. Again, that's a huge generalization, but I think it illustrates to some extent the mindset change and often it's things like the mindset change that is more important than the physical things. You know, there's a lot of interesting threats I want to pull in from a lot of the things you've said. So I think the first thing, I need to go back because you said something very interesting, and it felt tiny, but I think there's more to extrapolate. So you talked about we have 54 African countries, it's too many, right? I'm curious what made you say that, and what have you seen? So that's not a, just to be clear, that's not a political point, and I'm not advocating at this point that, you know, we might have we reduce, because that's not going to happen. But if you think about it, every country has its own airport, every country has its own stock market, every country has its own everything, and those things are not efficient. Now, you know, you can see this in Nigeria, for example, where you know, now every state is building an airport and they're not being used. If you go and look at the stock markets of many countries, you'll see that they're only like four or five stocks trading on it, you know, but you have a whole stock market, you have all the infrastructure for it. Again, trade between countries, right? So if I want to sell something in Ghana or even in Togo, you know, I've got across two or three borders. And just to get there, I've got to waste, you know, if I'm a truck driver taking some deliveries, I've got to waste, you know, X hours every time I cross. And that's again, not even counting on all the corruption and all that stuff they have to go through. But, you know, it's just inefficient. Whereas, you know, if you're a big country, then you just go. And it's not surprising that the, you know, the two most successful economies happen to be very large countries. Of course, being a large country doesn't guarantee you, but the biggest economies do tend to be large countries because they can be, you know, that much more efficient. That's also, by the way, at least one of the driving forces as to why you have the EU and particularly the common market because again, they realize that I don't know how many countries are, I don't think 27 or so now that, you know, having 27 countries in Europe, even though these are, these tend to have at least a lot more GDP than most, well, than all African countries. But that's why they did the EU, at least one of the reasons why they did the common market as they called it originally, was to sort of drive down those costs and those inefficiencies. And we try it as well, you know, we've got echo as it's supposed to be a free trade zone. We've got the FCTA also trying to make free trade in Africa. But it frankly doesn't work very well, at least not today. Yeah. And then, you know, you talked about just, you know, laying a foundation of all the different things we need to understand, why certain things may not work. But I'm curious with the young population, right, if they're listening to you now, they may say, okay, there's a lot going on in this place, right? And I want to build something. I'm enterprising. I have ideas. I have thoughts, right? Right? Are there specific industries or maybe businesses you see that you're like, you know, more people need to go into that? So I have this view that you can find opportunities almost anywhere. But you know, you need to have a deep understanding. You need to combine having a deep understanding of that industry with also being sufficiently detached to see new things and new approaches. I mean, just to give an example, the cocoa industry in Nigeria has been maribund for quite some time, right? But then there's a young guy, I can't remember his name, who inherited the company from his father. So, okay, he did get a kick start. But he has changed, like, he has turned that company around, company called John Vents. He's turned that company around. And you know, now it's getting a lot of financial support from a lot of DFI's. It's raised a lot of money. They seem to be doing good things. So, you know, even in that sort of industry, which people would think was dead and no one would consider it, that's, he can find some opportunities. I think for young people, I would say two things. One is that, and you know, people are impatient. One is that you do need, you know, over and above your, over and above your sort of formal education. You do need to build a solid foundation of experience. And I think a lot of people kind of want to develop too quickly. Now, of course, there are people who, you know, just graduated from college and formed some startups and they went very far. But actually, I think if you look at many of the very successful startup founders here, they did other things before and they developed some degree of expertise, maybe not, you know, 10 years, but they did something. So I think that that's very important. And you know, people want to move up and I understand that. But building that solid foundation, I think, is important. And that's what gives you insights. If you are, you know, if you have done some sort of finance before, for example, you kind of have a better understanding of what's going on in the finance, how it works, etc. For example, you know, I, sorry, if I go into the example, but on the flip side, then why I say you need a certain amount of detachment. You also have to be detached enough to see new things, new ways of doing it, new opportunities. If you're undetached and you just follow the herd, then you're not going to come up with new opportunities. Now, the example I was going to give is Fintech. right? So I've spent a lot of my career in monformal banking or the other. And I say to people, okay, you're starting a FinTech, eventually become a bank. And there are reasons for that. And as you can see, many FinTechs are buying microfinance, etc, etc. So you get to a point where you kind of hit a wall and actually being a bank is what can open the door for you. Because of my background, I can see that and I could see that quite a long time ago, whereas a lot of people are fixated on the problem they're trying to solve, which is fair enough. And as we've seen with all the FinTechs, you don't need to start off as a bank and actually starting off as a bank could hold you back. But you're going to need some of those things that you can only get on the banking license eventually. And actually speaking of banking, this is very interesting because I know I'm going to go. So recently, I would say in the past six months, three different people have come up and said, oh, we're starting a bank. We're starting a bank, right? And I have different thoughts around that. I think I'm curious as someone who's been in the, you know, in the financial sector for a very long time, do you see any more gaps in FinTech that still need to be solved? Or do you feel like everybody just wants to say, oh, I'm starting a bank? So there's again, you know, one can pick this in different ways. So I think that with FinTechs, there's a lot of me too happening right now. And you know, everybody's solving the FX problem, everybody's solving the remittance problem. So a lot of these guys are really me too. And I'm not really seeing a lot of FinTechs that are, you know, that are doing anything unique. Now, you know, the second point to say is that if I spotted that, I probably wouldn't be here. I'd probably be trying to solve that problem. So, you know, a lot of times people do these things to solve particular problems they have. I think that there is, there is opportunity in technology. I wouldn't necessarily say FinTech, but there is opportunity around things around the sort of more boring wholesale things around trade finance, you know, which is very process oriented around sort of treasury management. That sort of thing. Maybe asset management as well, although there are people who are doing that typically coming from the asset management side and then digitizing rather than starting as FinTechs. But, given what I said about, you know, the sort of me too phenomenon, I actually think that people should be looking at non-FinTechs. I understand the temptation of FinTechs because, you know, in a way, that's where the money is, right? So, and you know, people have seen it and a lot of even the funders are only looking to fund FinTechs. But I really think that the opportunities are in places other than FinTech today. Now, I don't know because if I could tell you, as I say, I'll be doing it. But, and, you know, that's where you have clever people who spot these gaps. But that's what I believe. I wanted to take us back to your time at AFC. Prior to joining AFC, you had the AFC for a bit. When you got to AFC, what were some of the differences in operations and just in general, like, were there any like sticker shock moments where you're like, "Ah, this is not how they used to do it, that's AFC, but now as chairman, as a CEO of AFC, you have to transform it. What were some of those moments like back then in the early days?" So, it didn't quite work like that because when I joined AFC, even though I wasn't the first CEO, it was still a very nascent organization developing its processes. And, you know, sort of what I was brought on to do was to develop those processes and the way they did things, the way they looked at things. And so, it wasn't a completely blank slate, but it was a very blank slate. And so, you know, I wasn't just me, it was my team, but I and the team were really about sort of developing those things. And what we tried to do to be frank was to take the best things from organizations like the AFC. And, I mean, you know, I talked about having a solid foundation and all that. And, you know, I'm very thankful that I worked with the AFC, because it did give me that solid foundation. And it gave me the solid foundation, not just in, again, you know, a lot of people always look at the, if you like the front end, if I'm to take a software, you know, sort of term. People look at the front end, which is, you know, making the investment putting money into things, but people don't look at the back end. So, you know, the back end is the risk management is the treasury operation. It's all those sorts of things. But those things are equally, and by the way, that's to some extent why I said FinTechs end up being banks, because the banks give them a lot of those back end type of things. So, a lot of people don't think about those things though, but those are actually equally important, if not more important. I mean, I think one of the achievements I'm most proud of in the AFC was that we were able to get it, what is it, an A- minus license. Now, there are very few financial institutions on the African continent that have an A level credit rating. Sorry, I said license, I meant credit rating. You know, we had an A- minus credit rating. The ADB was the one that was higher than us, which was a AAA, but that was, America, UK, lots of developed countries were big shareholders there and basically supported it. But AFC was essentially purely African owned, and we were able to get that allowed us to access the international markets for financing. And today, I think that that is actually still one of the, if not the most important assets that AFC has. And that was something, I was a project that we worked on for three years. We didn't just run out and do it, because we knew we wouldn't get it at that point. But we were quite careful in terms of planning it to get there. What would you say were some of your most challenging projects at AFC? And what did they teach you? I'm not going to mention particular names of projects or anything like that, but I think that the common, one of the common themes, actually, we looked at, there's a point where we sort of took all the projects we've made. Sorry, let me just backtrack one second. If you're in an investment investing business, you know, you're never going to have 100% of your projects that are successful. Your investment is successful. But in an infrastructure business, you can't afford too many of them to go south. So we actually had a very kind of rigorous way of portfolio management looking at it, trying to identify problems coming up earlier, early so that we could tackle them. And at one point, we're like, okay, let's take a look at the universe of things we've invested in that haven't gone well. These are where we've lost money or maybe they're just troubled, but we haven't lost money. And literally 95% of them had a governance issue. So governance is actually super important. And again, that's one of those things that is in the background that people don't really talk about, but it's really very important. And again, people think of governance as, oh, you know, we're following this code. We've got a board of directors. We've got three independent directors. But governance is really much more actually about your culture and about how you make decisions. So if you have all that, but there's still one person making decisions. Which was the case with some of those banks that got taken over by CBN back in 2009, for example. If you looked at them, they had everything that they were supposed to have. They ticked all the boxes. But really, when you scratch below the surface, all the board just voted for everything, the owner, quote, unquote, wanted, etc. Those were also not well-governed institutions. So it's really more about the culture of governance and the appearance of governance. But that is, I think, again, one of those below the surface things that is extremely important. I remember when I was in college, I actually studied political science for my first degree. And one of the classes was political philosophy. with John Rawls, a theory of justice, right? I know he's somebody you've recommended for African leaders to read. And for our audience, just to explain John Rawls philosophy, specifically in this case, if they're your justice, he came up with this idea of a veil of ignorance. So imagine you're somebody who's been set up to create society from scratch, but you don't know what your position is going to be in it. How do you set up society? Most times, you most likely set it up to be fair, because you don't know if you've been most vulnerable person in this society, right? And so that's what John Rawls philosophy was, which is like, can we set up a society where we take care of our most vulnerable people in society? I want to need to speak a little bit more on that thesis and why you feel like African leaders should read more of John Rawls when it comes to developing society as well. If you take a step back, right? I sort of talked about some of the things that you need to have in an economy for the economy to grow. Now, I think that actually one of the most fundamental things actually is for you to have a society, a nation, a country, however you want to call it, that is somewhat coherent, right? And that people are kind of pulling more or less in the same direction. And to me, that is actually really the most fundamental thing. And again, a lot of people, and you see this in the debates that happen around Africa, in Nigeria, that people want to carve of themselves into their own sort of ethnic countries. And I think a lot of people look at other countries and they see, they look at France and they see everybody's French and they're kind of more or less the same. But what they don't realize is that 200 years ago, that wasn't the case. And there was actually a-- I mean, in France, for example, there were places where people spoke Breton, Norman, Ossitane, et cetera. And there was a deliberate move, I think, post-Napolian, to really make France into one country. So everybody started learning French. They all sort of started having the same standards culture, et cetera. Italy, even up to sort of the 1950s, after the Second World War, not everybody spoke Italian. They were different dialects. You went to somewhere and they wouldn't be able to understand-- you went to the south, and you were from North Italy. They might not be able to understand you. You can still see a little bit of that issue in Italy today, because the North Italians are way closer to the Germans and the Austrians and the Swiss. And you've got the Lombard party that kind of doesn't really like the south. So they still have that, but it's obviously way more muted than it is in Africa. So I do think that-- and I think that one of the ways to bring about sort of national unity for one of a better phrase-- I think there's a better word to use, but can't think of it right now-- and it's fundamental is that you need to have justice in a society. Because if people do not feel that they have skin in the game, then they can't feel loyal, feel like they belong in a country. And that's where I think that people need to start thinking about that. And again, these are some of the plumbing that are needed for development that again nobody really thinks about, but this is how you build the foundation. Now, rolls a theory of justice, I think, the critiques of it, etc. So it's not like-- I'm not saying everybody should-- Yeah, I'm not saying people should just take that and implement it into law. But I think it gives you some idea about how to think about creating a just society. I mean, again, you're looking at Africa. Some people get justice. Others don't-- we can tell all kinds of stories today. But if you're at the receiving end of this, if your relative is at the receiving end of this as well, because remember, it's not just the individual, right? It's what you see. Then how can you buy into your country? You can't. So in a way, that's kind of what at least precipitated the NSAR's protests in 2020. It was young people being accosted and maltreated by the police and really having no other outlet to get justice other than going on to the streets. So a lot of the comments, especially from folks in the diaspora sometimes critiques or criticize China's involvement in Africa. And I think I hear some of the AFC you are there at the time when a lot of those infrastructures were happening from the Chinese side in Africa. Looking back, do you believe that it's a net positive? And can you give a much more nuanced explanation as to China's role in these infrastructure developments that have happened across Africa? Whether it's from Nigeria, to Zambia, to Ghana, that you are familiar with? Every country pursues its own interests, right? And as a government, you sort of have to figure out what the best thing for you and your country is. And the Chinese, I think, are just part of the puzzle. And China is just another player in that game, which has something to offer. And as I've said in the past, I think that at least back in different times, I think that China was very welcome because it increased competition. Again, if you are the only people funding projects, then you can charge a lot of money. You can put all kinds of terms and conditions that aren't favorable. If someone else comes into the game and starts also providing finance, then you get some degree of competition and you get better terms. Again a lot of people talk about Chinese debt trap diplomacy, but if you actually look at the countries that they talk about, yes, China is a large portion of that. But typically you will find that Euro bonds, Western lenders, etc. actually more. So I think, again, I don't remember the exact number, but I think in Zambia, the Chinese money was like 30% of what Zambia was owing. And then the other thing with China was that things were actually done. It was a famous quote by a European who said that a president of Africa told him that, "Well, when the Europeans come to visit me, I get a lecture when the Chinese come to visit me, I get a stadium." Or words to that effect. So yeah, the Chinese are and we're putting things on the ground. Now I did the introduction to the answer to say that the Chinese, not everything the Chinese have done is good, but I don't believe that the Chinese are necessarily a malevolent force and it's really up to us as countries and as individuals to figure this out. I'll give you an example. Well, again, when I was at AFC, we were involved in a part project and we were looking for the contractor essentially and we bid it out. And you know, the finalist came down to a Chinese-led consortium and a South African-led consortium. And two things were actually interesting. One, the South African-led consortium actually worked out a little bit cheaper. And two, again, I think because we kind of knew what we were doing, we were able to negotiate something with the Chinese. So the Chinese didn't win, but they came very close. But you have to sort of understand it. So we were actually negotiating with the Chinese, you know, how many workers that bring from China versus, you know, how many locals that would hire. Of course, we were pushing them to hire more locals. They were saying, you know, we can't guarantee that we'll complete the project on time if you don't let us bring in our own people. And there's some logic in that because there are people know how they operate and can move faster whereas you bring in locals, you have to take them up a learning curve. But we felt that it was important, you know, to bring some locals in as well. you know that's how I think a relationship where the Chinese should work. - Yeah, and then I wanna transition into the diaspora, right? We have millions and millions and millions of Africans diaspora all over the world. Some of them are coming home, some of them are staying abroad, but there has been this interesting theme that we've talked to different African leaders they're saying, you know, if you want Africa to change, you have to come back. Do you feel the same way? And do you think there's a way we can better leverage the African diaspora? - So personally, I'm very much a support of individual choice. So, you know, if you're in the diaspora and you choose to stay in the diaspora, great. If you're in the diaspora and you choose to come back, also great. I think that everybody plays a role, but ultimately, I think everybody is responsible for their own lives and doing what's best for them and their families and only they can know what that is. So, you know, personally, I don't criticize anybody for being abroad, for Japan, or for anything like that. I think that, again, in that same context, I think that diasporas can play roles which are different roles according to different people and different diasporas. So, one thing, and again, it draws on a theme that I've mentioned before. One thing that's very important that people don't think about when they talk about development is what is called Know How. And I sort of touched on this when I was talking about the Dango Te Refinery. So, Know How is somewhere between, okay, I'll give you an example. There's this joke about, you know, somebody's plumbing isn't working, or somebody's car isn't working, and you know, it's tried everything, it hasn't worked. And it calls a mechanic and the mechanic comes, looks at the car, brings out a spanner, hits the engine, and it starts working, and then charges the guy $100. And the guy is like, why should I pay $100? It just took you 30 seconds or five minutes or whatever. And the guy responds, well, yeah, but it took me 10 years to figure out what the problem was, and exactly where to hit the engine with the spanner. And that's why I'm charging your $100. That's Know How. And that's something that people don't really figure. So, you know, and I think, again, going back to some of those white elephants back in the '70s, people plump factory here, but we didn't have the Know How, we didn't have the sort of value chain that fed into that. And so we're kind of dependent on people from abroad, and these things, you know, the wheels eventually fell off. Again, you asked me about AFC, you know, to be frank, I imported a lot of Know How that I picked up from my 10 years in the IFC beforehand about how to invest in infrastructure in Africa. We also brought in, you know, there are also people who had different backgrounds, and, you know, we kind of fused all those different things into, you know, how AFC operated. That also is Know How. And that, I think, is actually one of the most valuable resources that the diaspora possesses. It's not money. You know, we too often default to money being the solution to our problems, you know. We just take agriculture, you know, there was this Nessala, whatever the agricultural loans. But if you're giving money to somebody, and, you know, they don't know how to use fertilizer, they're not using the right seeds, they can't track the weather. There's no market for their goods, they go rotten, et cetera. You're not going to get paid back that money. So, you know, you need to figure out how to solve those problems. And, yeah, money will definitely be a part of that, but you shouldn't lead with money. I think, actually, it's the Know How. Not necessarily the technology, the technology you can always buy. It's Know How, that diaspora possess. And it's how you can bring that Know How back into the continent that I think is really most important. And that can be, again, in many different ways. You can come back personally. You can invest in companies that are doing that. You know, I, you know, where I go for sort of medical stuff, the doctors come in from the UK and you ask for a week or two to do what they do and then go back, you know, so they don't have to come back here permanently. So there are many different ways that you can do that. But I think that, to me, that is what is important. I also think that, again, if you look at other countries, right? So India comes to mind. Israel also comes to mind. They have been, and China, to some extent, they have been able to harness their diaspora much better than most African countries. It's much more organized, you know, and there's a lot more sort of two-way flow in their diasporas. And so again, as I said, right at the beginning, you can't escape government. And, you know, that is something that I think governments, to some extent, need to organize. Diasporas can and do have their organizations. But for example, in India, they used to be at least, I don't know if it's still like this, something called a non-resident Indian, which is essentially a diasporan. And they had like a certain status so they could go to India without visas and stuff like that. You know, that sort of encouraged the flow, et cetera. So those sorts of things, I think, could really help to bring some of the knowledge, some of the expertise and eventually money as well from the diaspora. And then I want to tap into your Twitter, right? Now, your Twitter is quite amusing. And I think it's humorous, but you also share a lot of gems and information. I'm just genuinely curious, what made you get on Twitter? - I can't even remember. I got on it at 2000 and 2009. And, yeah, just something that's distracting, maybe too distracted. (laughing) But I think it's also good because again, I try to share thoughts and information. It gets a, you know, decently wide audience. It can be done quickly, so, you know, often very busy, so trying to sit down and write a, you know, a long essay every week. I just don't have the ability to do that. But, you know, you can share things, you can make comment about what's going on, you can sort of try and give other explanations. I think people sort of jump to some obvious conclusions, whereas really they're often deeper explanations. And I try to lead with a bit of humor because I think it just, you know, engages and catches people rather than being just dry things. - I want to talk about why aunties are so important to African history. Aunties represent curators of the African experience. And oftentimes they have been unacknowledged. They have literally held our archives before there are archives. They were literally institutions before we had institutions. They held so many important cultural artifacts, such as the way we rate our hair, the recipes of our cooking. They represent abundance. There's literally a reason why we call an African culture rich aunties. And we believe that with partnering with Anthony, we're able to showcase this type of history through arts. So to connect to African history and get a piece of the Anthony and Afropol to a collection called On C, make sure to click the link in the description. And this is your way you can support our channel. - So I think we're going to transition to a rapid fire question. So essentially during this round, I just want you to tell us the first thing that comes to mind. What is your favorite Nigerian food? - Ophéne Salah. - Yeah, you're saying Salah, I'll be telling you. - Okay, no, I need a little bit of background. Is it because of someone made a disarmament of home, like why that specific suit? - I just like it. I mean, that many Nigerian foods that I like you asked me for the first thing that came to mind. So, yeah, Ophéne Salah. - Okay, okay. And then what is your favorite city in the world to travel to? - I don't have one. I actually like to experience new things. So I like to go to different places. And yeah, so I really don't have one. - Okay, so if you were just to live the rest of your days, UK or Nigeria? - Mm, I'll pass on that one. (laughing) - I did have one additional question around the AFC. The inaugural Euro Bond was six times over subscribed. Was it? Well, some of the 50 million was the initial target. I think it was 4.7 billion. So maybe yeah, five, six times. What did you understand about global capital markets at that time that maybe some other African institutions did not understand around that time? So, like I said, we worked very hard to do that. We sort of worked on credit rating, which is the most important thing, and really gave you access to the Europeans. And one of the things that we did understand was that, you know, when you got to a certain level of credit rating, it actually opened up to different types of investors. So there, as you guys know, there are a lot of investors who are just not allowed to invest in a non-investment grade instrument. And the vast majority of African institutions and governments are non-investment grade. So I think that that was one thing. Second thing was, again, we started this market for quite a long time. So we actually chose the people who who ran the EU bond for us in a way that gave us geographical spread. So we chose a bank that was very strong in the US. We chose another one strong in Europe. And I think we had three or four, I can't quite remember, but we also looked at the Middle East and Asia. And, you know, each of those banks was chosen for that so that we could get as broad a market coverage. And the other thing we done was we'd also done some sort of non-deal road shows where we'd gone and met people. So when we actually issued the bond, that wasn't the first time they were hearing about AFC. So those were a few of the things that we did to achieve that. We had Aldo McCurry on the show. And he had talked about this idea of the warm monetization of Africa, which is, I think your own comment was you'd read a lot more beta as well as a champagne. Could you speak a little bit about that, especially for our audience? Because a lot of the diaspora founders or people move back and we're all in the champagne mindset, okay, what can we sell? How can we get it to a market? But the consumer markets in Africa are much more, you know, on the developed that may be aspirational. So can you speak a little bit more to that? Yes, absolutely. So most Africans, sadly, are poor. Most Africans spend, again, if you look at it, a large amount of their budget on food accommodation, all the sort of basics and really don't have much leftover. There are statistics in Nigeria that I can't remember is exact amount, but like a shockingly small number of people have more than, you know, what is it? In their bank account. And it's interesting that you call it warm monetization because I often have said that, look, if you want to really, you know, do extremely well in Nigerian, actually Africa, you need to have a product that does the following things, you know, one that is cheap. So ideally, you can buy it for 100 Nira in Nigerian terms, but let's say $8 a short give or take. One that you can distribute easily and cheaply so that you can actually touch the whole market. And one way you can do all that and make a large margin, I typically say 35%, but you know, it's a large margin because you've got to be able to ride through all the various shocks and things that happen and, you know, you need a margin for that. Now that defines things like Indomie noodles, telecom recharge cards, gambling, you know, beer soft drinks. And those are really, I think areas that people have made a lot of money from consumers. You know, when you go on Instagram or Twitter and you're looking at that it is sent by everybody's in some club, you know, popping, I don't know what it is, I don't know, is the Ace of Spades still popular? It used to be back in the United States. Yeah, it's a zoo. Yeah, yeah, I'm talking. Yeah, I don't go out and, well, popping all these bottles, you know, and people running around with, you know, lighted candles and nightclubs, or whatever, the sparkles when you're ordered, which I was so it was quite dangerous with fire risk. You know, you think that that's the market, but it's not. So, I mean, you know, if you are going to do a hotel, you can do like one nice luxury hotel in Lagos, maybe you can repeat it in Abu Jam, I'm not even sure. But if you want to have a hundred hotels, there's going to be something where, you know, for five thousand a night, somebody can stay comfortably. Five thousand a year. Yeah, 10, I don't know what. No, no, I'm just, I just went with yeah, five thousand. I'm not saying that. Five thousand a year, 10 thousand a year, something like that where you can stay cheaply comfortably, cleanly insecurity. It doesn't have to be fancy. Then I think would do better than, you know, having a big luxury hotel and the other problem with all those luxury things is that, you know, when there's a global recession or something, people don't come and, you know, then you run into trouble. Whereas, you know, if it's a more locally focused business, you know, you'll always have business. I think we can go back into the rapid fire. I did have a question in a rapid fire segment. What was the best infrastructure deal you never closed? Like, what got away? Hmm. So there were a lot that never closed. So we were at some point trying to see if we could revive. I think it's called Alskomb, the aluminium smelter in Aquibomb state. That didn't happen. We were trying to do something around leaky port. That did eventually happen, but it happened probably 10 years after we were trying to do that. Unfortunately, so many infrastructure projects fall by the wayside for one reason or the other. Yeah, so there were quite a few that we looked at. Who's your most underrated African leader in history? Sir Ed Seikama, the first president of Botswana. And the last question we asked every single guest on the Aproposalton podcast is who do you want to see in that chair and whose story needs to be told? Ouch. So that's a that's a that's a difficult question. The story would I like to be told? So you haven't had a leko in the chair. I mean, he would be if he opens up, you know, he would be fun to have. And I think he's got a great story. But who is an unsung person I can think of. I mean, I think there are many people who have built really good businesses. But I think that people who have built businesses that have lasted after them are particularly interesting to speak to. So I would say Teto Peter's side would be one of those. Somebody I think has done great things in the countries. He's still around, but he stepped out of the business. He founded, he's still going from strength to strength. So that's one example. And you thank you for stopping by. Thank you, Andrew. Thank you. [BLANK_AUDIO]