The CFA Institute Annual Conference is an unrivaled opportunity to access high-quality, unbiased educational content that equips investment professionals with the latest thinking on critical industry issues. The 71st CFA Institute Annual Conference will be held in Hong Kong on 13–16 May 2018.
Bob Geldof has many different public identities. Most know him for his pioneering Band Aid and Live Aid work in the 1980s that addressed famine in Ethiopia. Still others know him as lead singer and songwriter for the punk rock band the Boomtown Rats.
Far fewer, on the other hand, know him as a businessman and advocate for investment in Africa. At the 69th CFA Institute Annual Conference in Montréal, Geldof shared a stirring vision for Africa. Not surprisingly, the lifelong activist pulled no punches in calling on finance to do its job and invest in the continent.
The Failure of Free Market Capitalism
Geldof began by highlighting the global challenges created by the vast inequality wrought by modern capitalism. “Where is the public good?” he asked. Is it enough to only aspire to happiness in our personal lives? Or is it possible to ask the world for more? Be careful of your answer to his questions because Geldof continued, “More is just a euphemism for greed.” To support his point, Geldof pointed out that GDP is expected to grow by 1,200% in the next century. Yet, our resources are fixed. How this is possible is a reasonable question to ask.
Geldof has spent his life traveling, and he says he has never felt greater fear and greater anger than he does today. “Is the only way to relieve the tension carnage?” he asked. “Surely, we all reject that notion.” He holds out hope that in the wired world we live in, internet and mobile technology will lead to better outcomes. “It is the modern day printing press and has the power to change the world,” he said. Just as Johannes Gutenberg sparked revolutions centuries ago with his invention, new innovations can do so again.
“You who put on and are a part of this show need to consider what you are doing!” Geldof cried. With his introduction done, he then shifted his attention to Africa.
Justice for Africa
Geldof observed that for too long, Africa has been left out of the global chess match. In fact, he compared the African situation more to a game of checkers, where pieces are jumped over. Africa is ignored because it isn’t part of the solution or part of the problem. But on the continent, there is a sense of hope. “It bodes well to look at the part of the world that normally does not swim with our economic ken, but finds a way to do new things,” Geldof said.
For many African nations, 2005 was Year Zero, as the shackles of debt were removed thanks to a massive write-off by the G–7 nations. Moreover, there is far more tension and corruption elsewhere in the world than there is in Africa, Geldof said. Implied, though, not asked, was, “Why are investors not investing in Africa?” “The data are there,” Geldof observed, “but you lot [us in finance] never look at it. Weird!”
One of the frequently referenced obstacles to investing in Africa is the continent’s instability. According to Geldof, that instability is largely created by terrorist groups funded by Middle Eastern countries. Why do the Africans fight? Because it is a job, they need the money, and there are no alternatives, Geldof explained. He implied returns in Africa might be had if, instead of investing in instability, capital was directed toward building the African economy.
Investment for Africa
Refreshingly, Geldof understands that finance has an important role to play in ending the suffering on the African continent. If ever there was a place and time to deploy the principles of the Future of Finance, it is in Africa right now. Because he cares about the continent so passionately, Geldof has raised hundreds of millions of dollars of private equity. In part, this was Geldof’s response to a challenge from the finance community. They didn’t think he could do it.
He worries that if others do not follow on soon, then the horrors of the mid-1980s will return because of a rapidly expanding population; desertification; a lack of basic necessities, such as seeds to plant; and a dearth of infrastructure to support these (mostly) peaceful nations. But despite all of these challenges, many African nations experience economic growth in the high single digits year in and year out, according to Geldof.
How to Make a Difference
Invest in Africa! Or, as Geldof put it, “There is only one place left on Earth where growth can start from almost zero! Why don’t you do it?!” He also pointed out, “The richest African did not make his fortune in tech; he made it by selling flour and cement.” Put another way, returns can be had for low risk.
Geldof knows that finance is a force for good and that those of us looking for growth should turn our attention to the long-forgotten continent. There, financiers are satisfied with meaningful returns amid moderate risk while the people are happy because the financed enterprises transform their lives.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
Photo courtesy of W. Scott Mitchell