Too Much Money Chasing Too Few Investments?

I just came across this article on Nextbillion.net by Nitin Rao. Short and brief it summarises what I’ve been thinking of for a while, what I like most is how the article ends

There could not be a better time for DOers to take the plunge, launching profitable vehicles to use this capital to create services for those who need it the most.

The micro finance sector is my favourite for two reasons, it empowers and has empowered me as well. many studies on small business financing have been inspired by the continuous flood of dollars into this sector. It become harder by the the day to find virgin territory with the right dna for consist, well structured and preferably rapid growth.

Going forward I think it’s natural that micro-finance will loose it’s glitter and many of these micro-finance funds will either fold up or diversify in SME/SMB funds which is where the opportunity really is as far as I’m concerned. Its great that micro-finance opened the gates of capital because it opens up the gates for those enterprising or financing their the living at the micro level (the debate rages on) but its tie to unlock the volume, SMEs/SMBs.

Scaling BOP strategies in Africa

I always ask myself, how big is the BOP movement? It’s following in terms of corporates, scholars, researchers and what I consider to be the missing ingredient here in Africa, the entrepreneurs or should I say social entrepreneurs. Al Hammond posted a very insight entry on his blog on Nextbillion.net today where he’s looking at taking BOP strategies to scale. I think Scaling BOP strategies is really a huge challenge. Two issues come to mind here,

  1. The average person still doesn’t have interest in understanding what the BOP is, what commercial strategies to fighting public problems entails and how different it is from charity. This group of people includes business school graduates.
  2. What those in Europe and the US consider BOP might actually be the average target market to the average corporate exec here in Africa, so could it be said the BOP acumen comes naturally to African business people an execs?

Once again I’m afraid to report that Africa is trailing behind in the BOP space, are you surprised? Emeka Okafor and I could shake hands on what we think the problem is, Entrepreneurship and lack thereof. There seems to be very entrenched feeling of entitlement in Africa and I think it’s disruptive to this otherwise hard working populations progress. When I read my daily dose of BOP news monitor the regular players, one trend is certain, you can’t be serious player unless you are in India. We need to find a way of awakening African entrepreneurs, why are we missing from the action? The many BOP initiatives in India are successful because they are driven by locals, many time locals who have returned from the diaspora with inspiration and insight. An urgent overhaul of our education systems is in order. Ashesi University founded by Patrick Awuah is a leap in the right direction.

I need to come with an Africa conference to highlight the opportunity to do well by doing good to African entrepreneurs and improve deal flow and geographical risk of the portfolio of the organisations such as Acumen Fund, Gray Matters Capital, Unitus and Unitus New Ventures just to name a few.

Internet access in urban Africa, do we need to worry?

I’ve been thinking about the urban areas today, not least because my idea to set up an Africa wide internet chain specifically targets urban areas. Food prices are being driven up by bio-fuels, true that but there is also a silent assassin called urbanisation and climate change.

As more people move from rural to urban areas less people are farming so less food is being produced, even if it was just for subsistence, it means more people are having to buy food as opposed to growing it themselves. So what am I driving at? Internet access in urban Africa is not that great as the guys at jh-01 uncovered in the presentation below. I’m talking in terms of the quality of the internet connection, the service one gets in the average internet cafe, shop fitting design, aesthetics etc. There’s an opportunity to explore here drawing on the lessons from the micro finance industry which has morphed from an NGO activity into a commercially viable business for those seeking a triple bottom line.

The biggest question for many is how to improve access to capital for SMEs who are really the drivers in internet cafe industry in Africa. There will be trying to answer this question at a conference at The World Bank Headqaurters, titled Small Business Finance – What Works? What Doesn’t. As impractical as may be i wish they would the entrepreneurs caught in this financing gap to elaborate their challenges for themselves but then how do you contact these people?