So have you have been working hard at your day job and have managed to put some money aside as your savings and are now shopping for that shiny investment opportunity. If you live in Nairobi, you definitely have been made to believe that buying land and waiting for that land to appreciate is the in thing.
Let’s see which are the most popular investment vehicles around the world. In the developed markets assets like government securities and stocks are popular, commodities are also a major asset class. Housing is a key store of value that investors have been keen on for several decades now if not centuries. In the recent past however there has been a rising appetite for risk that has spawned the growth of angel investors and venture capitalists. The startup ecosystem is booming. Africa has 314 active tech hubs in 93 cities and 42 countries. More than half are located in Nairobi, Lagos and Johannesburg. Most of the capital funding these startups come from abroad.
Speculating on land
This risk taking investors have both made money and lost money but truth be told, if it were not for this high risk investors we would not have some of the world’s biggest and most revolutionary companies across industries from fintech to Uber, solar to electric cars. A country’s choice of investment vehicle determines how it will look in the next decades. If we continue speculating on land, only foreign multinationals will afford land here and housing problems will persist forever.
When a country’s population invests in land speculation, it does not build anything for the future generations. It does not create employment, there is no ripple effect of that money on the economy. It is not the best use of the human brain to put it bluntly. But when we invest in startups, we take a bold move together with the founders to move societies forward. Those who invested in M-Pesa have fixed the problem of financial inclusion not just in Kenya but in many places in Africa to Afghanistan. Those who invested in Uber are not just proud of being behind a billion-dollar company but are also proud of bringing efficiency in the transport sector across the world. In short they have moved society forward.
Young Africans have very many brilliant ideas but access to angel investors is very difficult, it’s a tough battle. Investors want to see something that is already proven but the owners of ideas do not even have that money to build that prototype as proof of concept. We shall soon modify this website to include a section that allows startups to pitch for funding from the public.
Take over the world
Unlike in the past when companies took decades to make major returns on investment, in today’s global village, most companies take a few years to turn profitable and even take over the world making their backers well richer than any investors in other asset classes.
If you remove entrepreneurs from the history of the United States, you will be left with a heap of dust, well not entirely true but America’s biggest companies ranging from Google, to General Electric, Apple, JP Morgan, US Steel, Ford, Tesla and even key infrastructure installations are the work of entrepreneurs, they can be traced to one or two people. As I write, am looking at the financial pages of the Financial Times and without counting I can see that almost half of the world’s 500 biggest companies are US based. The credit goes to entrepreneurs and those who dared believe in them.
Let us believe in ourselves, we can do this by investing in ourselves. Listen around to young people and you will be amazed by their ideas. I hear people saying that Africa is rising but looking at our data in which we track African startups, you will be surprised to find out that more than 70 percent of the scalable high growth startups in Nairobi are owned by young adventurers’ youth of foreign descent, most of the angel investors are also from abroad. Africa seems to be rising without Africans anyway, it is rising because of cheap labour and higher returns on investment. It is not rising because of some miracle that we hear some talking about, it is shear hard work and risk taking.
When Mark Zuckerberg came to Lagos and Nairobi, he said that the future will be built in Africa, not necessarily by Africans. When Africa has risen, shall we be slaves or slave owners? Let us take risks and build something or help our youth build something. You don’t have to quit your job to do this. You can provide your savings to owners of brilliant ideas.
You may not know how to single out a good idea but you can ask around from various incubation centres, co-working spaces, or you can start a venture capital firm with others to back local founders. You can attend pitching events, some of the brilliant startups do not get financed in the pitching competitions because the investors in the panel cannot see ahead. You may just see something others cannot see.