Vusi Thembekwayo on why Africa is next frontier for venture investments in #startups .

Vusi Thembekwayo on why Africa is next frontier for venture investments in #startups .

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[Music] and what a wonderful panel good morning we're still hanging out in the mornings no no we're not we've moved to afternoon so it's so lovely to see everyone there so jason thank you so much for that panel and to all of our great speakers on this i hope you're enjoying the morning we have a shorter day today of course but uh again content-led knowledge rich i mean we're just so excited with all of the great events that we can bring you some of the speakers some of the tremendous examples of people not just talking theory and not just talking about the future i think also actually talking practical application of some of the great work that is going on and perhaps some of the great work that maybe we don't get a chance to observe on the top headlines of the media sometimes when it comes to africa so it is it's very very encouraging to see all of the great work that is happening here and i do have to thank our swift turnaround we're we're pretty much ready to go now the um the road shows that we've had have been greatly a huge success of course the virtual road shows we had and in a way this one is now linking back to the roadshow so i'm going to bring my panel on i think in three two one they're going to join me here and we're going to be looking at investment and in agriculture so we'll just head off and we'll get this started thank you [Music] so [Music] and let me quickly introduce our panel we have so much to talk about and we will unveil all of their great work so they don't need a long introduction on this um the ceo of my growth fund venture partners in south africa a gentleman you have seen a little earlier and i'm sure you have been very impressed and know who he is so you see timber cryo so lovely to have you back i'm delighted that you're taking part in this panel and also probably another of the key industries in the world we're going to be talking about agriculture so okay segregate o.j pat joins me also known as oj so oj for me i'm delighted to have you here with me thank you you see timbre if i may start with you um you see you talked earlier you know about and you look at your role in terms of venture capital yes in africa but also globally i think at this point here the health of the venture capital industry i mean it didn't exist what 10 years ago talk to me just about how vibrant it is in africa right now so there is a lot of empirical work that's been published both by the southern african venture capital association which represents the body of vc companies as well as private equity companies in the southern part of the continent as well as avc which is the african venture capital association both of them publish several quantitative studies to give us a sense of how much capital is flowing and what we've seen certainly over the past five years is an exponential rise in capital venture in the southern african region in the southern african region has experienced decay golf about 28 over the past five years so that's astronomical rates of growth the diff i think the the reason is because for the first time in a long time people are understanding the asset class um and so ten years ago it wasn't that there wasn't an appetite for it but rather that there just wasn't an understanding of the asset class how does it work how is it priced how do you manage your risk and for the first time in a long time we're seeing firms like ourselves that understand the environment that have credibility with investors institutional investors and uh you know wealth wealthy families etc etc who want to take position in the continent and it is it's a very exciting time in that sense because also a lot of the areas for investment indeed every sector i would imagine is wide open right now um okay let me bring you in here when we think about agriculture and when we think about food security i think it's possibly on the top of every government's agenda in the world not just africa how important and how much you know attention should we all be paying to the concept of food security thank you so much um one thing we must agree let me start by saying the world population is growing high by day and um because the world population is going high the arable land is becoming smaller by day and therefore these need for us to be able to get tired we must be able to give science innovation and technology it's best for us to be able to feed the world population is therefore important to get to know that it's not just about africa but most importantly for africa is because then we are the source of the raw material that the world requires uh it's time for africa it's time to rise up it's time to transform agriculture is trying to get everyone on board whereas we go into tech science in farming it's not going to be disconnected in full security then it's going to help us to be able to get the world secure because then you cannot engage with anybody who is a hungry person so it's important to get to know that food is what we're dealing with and therefore from where we sit in africa it's time for us to be in action we need to transform the land we need to add value and we need to be able to ensure that everything that we do is done right because the population is going up and there's no shortcut about it yeah and i think the concept of adding value is so important for every industry in africa we'll talk a little bit more about that you see you talk about the concept of building a spirit of enterprise and you're not just talking about entrepreneurs you're actually i get the feeling you're talking much more of of a mindset of an ecosystem and it's about really bringing all parts of society together to make sure that we think of this word maybe in a very very different way yeah you know the the the old african expression is that it takes a village to raise a child and i think if we talk about building the economies of africa and the economy of africa into the future we have to recognize that there is a village and the village is not just the entrepreneurs themselves building these businesses it's not just the traditional capital markets it's also heavy and large industry it's the old legacy industries of africa mining of which is a part who have to recognize the role they have to play in becoming a part of the transformation of the continent too you know the the old example about if you look at any technological device anywhere in the world it's powered in some measure by a mineral that comes from a part of the continent so the spirit of enterprise is is not just about saying well let's go in and take a bet on an entrepreneur and a founder in a sector it's about saying let's take a wider view of the value chain of opportunities that are available what we've seen work for our investors is this view take the value chain perspective so if you are going to invest in a fintech platform think a little bit about um not only a fintech platform but the enablers of that fintech platforms think a bit about the off-shelf off-the-shelf technologies and how those off-shelf technologies need to be um augmented to operate in a particular ecosystem think of it about regulation and how you can so if you take a value chain point of view you as the investor are in charge of your destiny rather than leaving it to the vagrances of the markets and again you mentioned that oj very much this concept of added value and i think we look at africa and it's a very resource-rich country it always has been a resource-rich country i think we look back on the legacy of you know the energy sector whereby that raw material was just taken from the ground and moved it was there was value added elsewhere the mining sector is i think going through this at the moment when we look at the value-added that almost could be and needs to be done in africa but in the agricultural space where do we begin to add value there that can you know grow ecosystems that can grow communities and also that can provide a good living for people thank you from where we see energy ski energies for manufacture energies for lighting energy is for small things that we do every single thing we do is about energy so it's time we thought about energy in a totally different way in terms of transformation we need to transform energy we need to conserve energy and we're not going to run away from it because we need energy in every place we still in a continent uh taking an example of kenya where whereas the government has worked very hard to ensure that these energy penetration electricity penetration but we still have populations in africa they have no electricity and therefore that makes it very difficult for us to be able to achieve value-add processing and be able to enhance our productivity and when we talk about a value add we talk about food security we talk about logistics in our agree we need energy right from the farm in terms of coal storage managing the coal storage chain in terms of processing in terms of packaging in terms of even flying to this place even we all flew here we used four and that's energy so it's important we have a critical discussion around about energy and for us in agree there is no way we're going to separate it with energy we need to run our park houses we need to run our greenhouses but for us in kenya even the irrigation system in africa must be run through the energy so it's important that we see and we get into mining it's all clubbed into the soil i must do soil test i must do everything and therefore energy is not something we're going to run away with and time for investors to look at energy in a totally different way and find out how innovation comes in how science comes in as i said by the end of the day the entire world requires energy to be able to feed itself if not we'll all be dead one day we need to look at it in a totally different way and this is the time in africa is where we need to go to because we have what it takes in terms of running solar and running literally everything called energy and just let me stay with you a moment now here in this region agritech is getting a lot of attention and you know there's quite a lot of investment i think coming into agritech in africa how could you perhaps lure some of that investment money to you know are there projects in africa that would actually suit the level of investment production um particularly in the agritech space right now let me speak to to the investors and let them know that listing here there's no better place to invest other than africa today we have the raw material and therefore first of all we look at raw material you do not want to carry raw material from africa to other parts of the world to process and return it back to africa it's easy to invest in africa because these in their incentives and i will talk about here for example in kenya the incentives that government has put in place to be able to bring you there's a private private public partnership and the investment they are in has been opened up and this africa is open for business um in terms of crude oil in terms of timber in terms of literally all agri products when we're looking about we're looking at raw material africa is the place to be so where would you want to go and invest elsewhere and carry raw material from a totally different part of the world when you can be able to process and manage from the same place and just send out a finished product so it's a time to come and look at africa and i want to invite anybody who's not been in africa and was looked at africa differently to get to know the governments have worked on the legislation yesterday we're talking about free africa continental free trade area that allows us to be able to break the barriers and that's an opportunity for us to invest in africa listen for the investors from uae i want to say this we are your neighbor and they have a safe place for you to invest we are only four and a half hours from here and therefore it's time for you to come in we will governments and ourselves work to facilitate and time for you to come in and listen to africa is ripe your africa is ready for business africa is ready for aid but we are ready for trade it's time to invest it's time to talk and i'll talk about this because i want to connect that energy i want to connect that investment and i want to connect that with food security where else you will get we indigenous the original we are ready to engage we don't need a broker anymore just come over we will support you and get you to get what we are to do so i want to say this early listen that it's a time for us to look at africa with a totally different eye it's time to look at africa as the only place that we need to support yes and i want to say this again yes i want to say this that we have a young population our labor cost is fairly cheap and you can be able to affair we are able to innovate we have fairly educated group we have young men and women that are looking straight we have women and the youths that are energized and ready to go so we've said you only need to plug in and all you need to do is which part of africa you want to go kenya is next door we have mumbasa we have the ports we have the airports we literally have everything and infrastructure has opened up and it opens up every day so really if you don't invest in africa i don't know where else you want to go and invest no no and i mean i i see i i get your message i listen to you i hear what you're saying but but there's a lot of people not getting your message out there and you look at the international media at the moment and yes we've read some very good encouraging stories about what's happening in africa we're hearing a lot more of them here and i think also it shows the importance of the african continent and how it plays in to our life here in dubai in the middle east and all of that you see talk to me about who is investing because right now some people are scared i just did a big mining conference the other day and they're you know they're they're sitting on the fence are they going to invest and or are they not so how do you get them over i suppose the hump in terms of being scared to go to africa yeah so fully support your sentiments by the way thank you and i think what's important is to make this point that like every region in the world africa is not its headlines so you have to go beneath the headlines right um your question for instance about agritech i remember being in kenya it must maybe six years ago or so and there was this young upstart at the time called trigger foods which i'm sure you're familiar with and what they did is they built a technology platform that aggregates the rural disintermediated industry that produces a lot of food and brought it into a centralized platform to give them access to market gulen bali made the point yesterday he is on the money that in other parts of the world particularly the more developed parts of the world you leverage technology to disrupt the incumbent in africa you leverage technology to include the excluded yes so our mandate is very different we don't build fintech platforms because we're trying to unseat banks we build them because you've got a percentage of the population that doesn't have access to financial services they're called the invisible average these are the people who are more than the average but they're invisible because you don't have data on them so what do you sell who do you sell at what price point how do they pay how do they buy this is important because it answers your question in this way i'm old enough to remember a time when in africa we were talking about unicorns that came out of africa and 10 years ago i think the number was one i think we're at over 10 now and of that 10 5 has happened in the past 18 months your question was who's investing well the most recent transactions that have been done have been transactions that have come from soft bank which is for those of you who are not aware one of the largest venture capital funds in the in the world as well as tiger global so the rest of the world got the memo that if you want growth and you want spirited growth at a low barrier to entry with high margin markup potential africa is the place to go so today we talk about go 1 is a unicorn flutter wave is a is a unicorn and and several and these have just happened in the recent past in our own business in my own business let me tell you what this means we have an education business because a part of the work we do is we believe that giving capital to the underlying entrepreneurs and business owners is only half the problem in my boardroom i've got a placard that says as we speak the federal reserve is printing money so just so we're clear money is not a differentiator in africa it's just money the question you got to ask yourself is beyond this instrument of fiat what else are you willing to do for us we built a strong and robust education business we harvard we partnered with harvard online and we deliver to each and every single one of the businesses that we impact educational programs that are built by the best institutions in the world so i not only give you the currency but i give you the ability to understand how do you build a business how do you scale how do you know when you are the right entrepreneur for the right moment because businesses go through life cycles and funders don't mature businesses matured managers don't build a business for the second wave how do you do that so it takes a village and the village is about recognizing that there is an ecosystem i'd hate for us to come out of this conversation and think well it's just about we need to invest and put the money down sure invest and put your money down but bring the best people as well bring technical skills and expertise being people that understand how to build relationships understand the local cultures and the environment bring the educators bring the accelerators bring the scalers all of that is the village this ingredient that it takes to make this incredible salad we call africa and i think at the very opening of this conference when the chairman of dp world talked yesterday to he actually said that really that it was education um you know that was going to be i suppose the new currency to make sure that the rest happened o.j when we look at education too and you know i can see its accessibility possibly in the cities and everything more you know with your background and you've done a bit of farming yourself but you're probably more in close in contact with the people in some of the rural areas and we look at rural development and we look at really how you know you you move this forward and you add value there how important is education you know in perhaps the rural areas but even more important and also maybe keeping people in the rural areas and making sure that they can actually develop the resources of the land to become you know yes you know maybe the angry tech comes back there but also to become actually very successful people thank you um let me say it again as i said earlier africa is ready education is an equalizer education is purely an equalizer in today the rural communities in the penetration of tech let me take an example of kenya if it was not for education we'll not be having m-pesa in m-pesa it's basically because of education and if that comes from a rural young man that came from the village it means that education can be taken there so it's time to invest in education because it's the only edu equalizer for all of us and this has nobody in terms of a class the difference i keep saying between each one of us is not about anything about how much exposed we are so it's time to invest on education and for where i come from it's time to encourage the young men and women to get into education and particularly agree because by the end of the day after this session we'll all be going for lunch where do you think that food is coming from it's coming from people who are exposed were educated were able to bring it here for us to be able to eat in farming we talk about traceability we're talking about tracking that we talk about logistics we're talking about money and we talk about agribusiness it can all come out from people who are not educated so it's time for us to look at agree differently and educate people but listen before i finish let me just drum support for kenya and say listen we have the best flowers in the world in the world we come from educated community we sell best avocados in the world we have monks we have beans green beans we literally have all fresh produce that we export all over i can't forget tea i can't forget coffee that is what educating our people and our populations and therefore investing and when you invest in agree you're basically investing in supporting that rural farmer in kenya in africa to be able to take the children to school because we're educated because largely we are an agree based economy in africa generally apart from a few countries but most of african countries are basically agreeable so if we are looking at investment let's invest in agree because the the returns from that investment to the farmers takes our students our children from the local community to school and now brings an equalizer we're here because of education if i didn't go to school i won't be farming all over here it's because education does has brought us together an equalizer but i want to speak this way and say listen here again i repeat that none of us can survive on the face of the earth today without the other listen you can be a powerful person but unless you are satisfied it's all nothing we must all go down and say how do we balance take how we balance science how do we bring education in because science and tech is not coming from anywhere other than education so if there's anybody looking at investing this is the best time to invest and invest in education so that we are an equalizer because the world is becoming a global village by day speak about this more and more but listen it's not time to talk it's time to get into action i think we've been in boardrooms and conferences enough i want to see action moving i want to see things moving i don't see one step at a time i want us to rally together we are stronger and therefore we need to work together friends we need to work together and i think we i think we've started on that and i think if i have two people here you know who can actually begin to lead us there um i just want to say oh partially right kenyan has good avo's but south africa has better i just i'm just saying i'm just and as you're just saying and you can buy a little bit here and there yes yes but we keep an eye on on what you're selling at the minute but talk to me about again locally owned business um businesses who are investing africa investing in africa are we seeing much more of that and then where does where can dubai fit into this so the great thing is this right so i love this monaco about africa beyond the headlines so if you think about a beautiful country like botswana for instance right i think the population is just over two million people there they're about the botswana story has often centered around its mineral wealth but what most people don't know is that the financial services industry of botswana is actually growing right and it's not just growing but it's becoming one of the preferred centers to set up a regional investment hub if you want to get in so even if you're thinking about investing in southern africa you've now got south africa which for the longest time has been the leader in in the market and as a south african i hold a particular view and that view of course is biased which is that we are the best but we're the best because we're the best but beyond that you've got a beautiful country like botswana great place to base yourself you've got mauritius and so there's been a development of these new territories that are thinking about how do we become the gateway to the continent i mentioned this only to make the following point which is that for the first time in a long time you have opportunity and options just two years ago one of the leading banks in the continent rand merchant published a study talking about what was happening in north africa and some of the north african countries looking to become the base for capital to get into the continent and what they were seeing was that it was not just the external investors coming into the continent but internal investors investing themselves you here later uh puti who i have a lot of respect for who runs uh one of the the largest kind of you know conglomerate media empires but they have an investment business called the naspar's foundry whose entire foundation is about taking capital and investing it in the continent they're not the only ones anglo-american has done similar de beers similar so large industry recognized some time ago that you can't have an economy built purely off the base of big business it is as chairman said letting a thousand flowers bloom that you needed to create an environment where even the smaller players had the opportunity but the large business had to become a part of that your second question was quite direct which is so work what can we do right where can we go i've been here now a month we've been setting up here and one of the things i've noticed in my conversations with different business people and different investors is there seems to be one question one question who can i trust that's the question it appears that the question is around credibility i like the story of nigeria over 200 million people and the rate of growth the rate of industrialization the rate of electrification i like that story but if i am going to go into nigeria who can i trust and i think the most important piece of work that all of us here have to do beyond the action steps is just to begin to do the work with finding credible partners to have the conversation just the conversation understand the nuance the environment the market the players study the track record look at the people with whom you're talking to and the people with whom you're partnering even the investors that i've met with and spoken to here from whom we're raising capital for the work we want to do in the continent even those conversations all i've said is the following don't give me money yet let's understand each other let's talk to each other let me understand how you work and how we work do we connect on values do we see the world in the same way do we have the same the same cycle about how do we think about return because in my environment i don't measure return quarter and quarter i measure return generation on generation so it's not whether or not i can deliver good growth in court on court and deliver to the investors it's am i raising a different generation of africans but not everybody has that type of outlook i mean you see not every investor is going to take that approach and have that exactly and this is and that's fine which is why even the afrika story is the story that the africans themselves need to need to write and the africans themselves need to go this is what we're looking to do i'm not by any means trying to say that there isn't an opportunity for short-term opportunistic investments of course there is of course there is you want to get into telecommunications in the african continent to go through the jsc you buy mtn you want to go into financial services you go through the jsc you buy standard bank and just with those two instruments alone you have access to telecommunications in much much of the continent and financial services in much of the continent sure so so there is definitely opportunity in the traditional capital markets to put your money down and go let me test and get a sense absolutely but the question you must ask yourself is do you have trusted credible partners who give you true local knowledge and insights about what's happening in the market do you understand the the environment that you're operating in and what's your what's your perspective what's your view short-term term long term do you want to deliver a good quarter on quarter portfolio growth or do you want to do what dp world has just done with their acquisition of imperial and think about how do we become a part not only of the industries but of the logistics that connect the industries that transaction sent waves across south africa not because it was an external party saying we believe in the story of this of this pan-african logistics business but because it was in an external investor coming into the pan africa and going we want to invest beyond what is the headline not just the mining and the banking but we see a logistics infrastructure that we know is going to be necessary to power the growth of this continent and we want to be part of that and you say follow on from this this concept of trust which i think is probably key in any investment but um or sorry oj i want to bring you in here and also when we look at you know the fresh product consortium that you're working at and indeed the agricultural business you know how formalized is that business to the point where investors you know can come in and see it or are we looking at a very scattered approach around the country is there something there that investors can come in and kind of see and feel and know that they can get returns even if they're measuring them yearly you know decades whatever things it's it's true we have opportunity we are organized we organize in such a way that we known our smallholders work in groups and cooperatives identified they are bankable you can trust them then they are linked to the a greek exporter or an aggregator before it comes out so we're very organized and you can be able to invest and the kind of investment we're looking at here could be semi-processing or could be final processing you can extraction because it's doable it's possible but just as he said about trust i keep saying nobody postpones eating so whereas we want to invest on many other things but which has to we are rich in food we rich in horticulture are we able to provide food security food nutrition but i just wanted to say this before i go into that direction again is to if i tie it up which one if you want to know africa's position is important is ask yourself what happened in april last year with a pandemic heat the entire world chickened out but africa fed the world we gave our food it means this hope and we were able to feed the world it means we can be able to we can you can trust us with your investment we are organized we can link you up to the entire system that is integrated involving men the young men young women the youth and the women in every level so we are banking we are structured in a certain way that investors shouldn't fear to come down we work very closely with the governments and also referring to our discussion yesterday with the african continental free trade area you're not just investing in kenya you're investing in the biggest economy in the in the world today and therefore it cannot be risk when it's a big economy look at the economy look at the 54 countries coming together in one block breaking down all these barriers that we've seen before we in engagements therefore if there's time to invest in africa it's now so i want to give you an assurance that for the investors it's an opportunity to come and for the uae being a gateway for products i want to say this we're only four and a half hours away from you we are your neighbors there's no other place you can go to invest the best place to invest is to ensure that your neighbor is as happy as you are so how do we just closing from you i want to hear maybe a call out to how do we escalate that how do we get more people to really look and and what do you know what like in terms of the fresh products consortium the agribusiness what do you need what's the next step that needs to make sure you're heading in the right direction what i need here is partnership proper partnership with the leadership here and we can start small and build it up one at a time so we look at business connection are we able to work together with the leadership i'm glad that the conversation between ourselves and parts of people in the uae particularly the leadership the chamber and certain markets we continue building that relationship once that relations comes in it's possible as it talks about trust it's possible for them to invest on the other side as we invest on this other side and as fresh produce consortium of kenya i want to give an assurance that we even opening up an office here to be able to ensure that those linkages are happening and we are opening an office in this month by the time i leave this place we have opened an office to ensure that the linkages that take place immediately then we can trust us because we will station people here to help us to move so we are ready more than ready for business and listen you are not and i say again you're not investing in one piece of a country in africa you're investing in a block of 54 countries that have come together we produce under the sun it's 12 months of the year 365 days we are not in anything in terms of greenhouse emission we are minimal and when you look at the climate change we are championing we have forests and we want to ensure that it's sustainable in whatever we do so it's time for us to work together so friends let's dialogue come over let's talk our governments are ready the private sector is more than ready this proper robust legislation that has been put in place in the last couple of years so really any reason anybody has any fear then they have their own fear it's time to open up please come let's work together let's start one by one and build up the momentum and look at how it grows i'm there with you i think we're we're all there you know talking getting getting familiar knowing knowing who your customer is knowing who your client is you know understanding that i'm going to leave you uh you see the the last word here your your own personal mission your corporate mission your wider mission as you say really is to change that african narrative in terms of business investment in terms of like again bringing the trust element to the very core of everything that business will do how do we move forward on that so i'll leave you with closing word on and lead us forward when i started my growth fund i had just exited my uh my business and i was thinking long and hard about the what to do next that moment you get to in your life where you go what does the next decade of my life look like and what do i want to dedicate it to and i'd done one or two investments on the side and i thought that must be this might be an interesting hobby to keep investing i didn't recognize that it would consume me the way it has and the way the reason it's consumed me is not because of the investments themselves but because of the underlying people in whom you invest it's seeing the impact in the community and the families and the countries where you're making those investments so my clarion call would simply be this first start the conversation you were talking about say we're set up here and the reason we're set up here is not only to raise capital but to talk to people who have bases of capital and say i want to chat to you and advise help you understand what the opportunities are and frame investment opportunities so number one start the conversation number two be clear on what your objectives are short term medium term long term which industries which sectors and understand the underlying opportunities as well as risks because those two things do go hand in hand and number three which is the most important is frame the narrative beyond the headline it's not just about what how much capital can we put in but it's also about what impact can we have where else can we go and how can we leverage the ecosystem it takes a village to raise a child and i'd like to think that this village has the opportunity at the very least to raise a few children super thank you so much and i know our our village of dubai and our ever expanding market here in the united arab emirates and i think the great work that the chamber of commerce particularly is doing in really really driving this forward i think is you know commendable and it's we can see the results of it we can see this from the very beginning of you know the global business forum with the focus on africa and it really really has shifted and i think we're all beginning to learn and have have a deeper conversation gentlemen i want to thank you oj thank you so much and uc thank you so much for for your your great content of course but your your great inspiration i think and um the ambition that's there and also without a doubt i think you you bring us with you and we'll soon be be ready to run with you but we have to wrap this up and we have to run so i want to thank you all for being with us gentlemen thank you so much

2022-03-04 23:04

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