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Wharton African Business Forum Round-Up

As you know, last month, the highly anticipated Wharton Business Conference went down in Pennsylvania.  Though I ended up not being able to make it, thankfully, a good friend, colleague and afiive reader, Kyle Newell, was in the building for the event festivities.  We meet up afterward so he could fill us out on what we missed. Here's is the audio of the whole interview but I should warn you - it's super raw. You'll hear me typing, clicking and coughing and Kyle and I go off a couple of tangents (like at minute 17, when I get excited to see my cousin's webdesign company ad in the Wharton Conference book). There might even be a cuss word in there.  I thought of editing all that out but 1. I don't know how and 2.  we're family here, we don't have to pretend to be perfect. Authenticity matters. So there's TONS of good information - this really was an amazing convo to have with Kyle - informative, inspiring, encouraging and real.  Try listen to it in it's entirety. You won't be sorry.

Wharton Africa Business Round Up with Kyle Newell

{To begin- press the green “Play”button on the Audio Player - if you have any problems, let me know}

For a quick read of what we talked about, check out the interview transcript below: afiive: Thanks for meeting up Kyle! So, starting off, what made you want to go to the conference? Kyle Newell: When you are studying about what you want to do in the future, one aspect is looking into the future to see what industry or sector is going to be growing to 1) have gainful employment and 2) to be able to utilize our education to catalyze our future development.  In that regard, I view Africa as the last frontier in terms of investment.  Throughout our careers, Africa will become a much bigger player and there will be more opportunities on the continent, especially in sub-Sahara.  So that going to events like this is important in terms of outreach, understanding and learning the dynamics of how to do business in Africa. afiive: You think the opportunities that will arise will be more business related, in terms of private sector activity, etc? Kyle: This goes back to the dynamic of do you believe the government does things more efficiently than the private sector.  If you look over the history of growth, you need to have a strong governmental system in order to put the rules and regulations in place to allow the private sector to work.  The places throughout the world that actually have growth have strong private sector. You can have the NGOs and ILOs, but in the end, if you don’t have a strong private sector, you are never going to be able to sustain people.  You need to teach people how to fish for themselves rather than giving them a fish to eat. afiive:  Tell me about your perspectives for the conference in general? Did you have any expectations before going Kyle:  I was pleasantly surprised with the amount of finance focus there was. I greatly appreciate it because it was much more to my daily work.  Basically the entire conference, especially all the panels I went to , were just finance, finance, finance.  different types of finance.  Developing capital markets, how do you do private equity, bond establishments, etc. afiive: Do you think in focusing on finance so much, they missed out on non-finance opportunities? Kyle: There are most definitely other opportunities but if you are going to do anything business wise, you have to have the finance arm in place.  There are other conferences, like the Harvard Business Conference, that includes some finance but is much broader. afiive: What sessions did you actually go to? Kyle:  State of private equity investing, infrastructure, capital markets – next steps for development, real estate development, investments limited partners perspectives. afiive: Which ones of those you went to were standout? Kyle: I think it came from the infrastructure panel .  The panelists were talking primarily about power distribution in Nigeria. Where, there is more supply of power than can be distributed.  There is a larger demand for both but there is no reason to increase either one without increasing both.  They were talking about how do you get people to actually pay for development of a power grid.  The way it’s been proposed is to create neighborhoods, where each neighborhood would have its own power generation and the hope would be to have several neighborhoods building up with one another so they could share their power generation to lessen the load. afiive: That’s interesting. Has it actually been realized? Kyle: They are planning to do it. The IFC has invested in it as well as a few real estate developers. afiive: What was the overall tone?  What was the feeling you got from people in terms of their prospects, conversation, etc. Kyle: I think overall, especially from people like the IFC and through dialogue with African business leaders - there’s a need for human capital and for people who are going to top tier institutions to bring back the human capital necessary to develop those areas.  For example, Terry Tenow, who is the Vice President for Sub-Sahara with IFC. Said that the IFC is hiring people but they want people to go to Africa, to live in Lagos to live in other cities, because you can’t do investments if you aren’t going to be in the area.  There are a lot of different opportunities to go to Africa to do things and that the money is there, they just need the ideas and implementations. afiive: Was the IFC the more prominent organization? Kyle: They were the most well represented, perhaps the largest, because in Africa, the iFC serves as a credit risk analysis. If you can get the IFC on board, it signals viability of the project, which helps to increase investment. afiive: Were there any countries that stood out as more open to opportunity?  People talk about South Africa and Kenya all the time, but were there others? Kyle: South Africa should be included in the BRIC country if not better.  A lot of the opportunities that are elsewhere in Sub-Saharan Africa are already gone in South Africa.  People have already done them so South Africa isn’t a place you’d want to go to for the proverbial law hanging fruit.   There’s a lot of talk of how Rwanda and Uganda have done significant things to help stabilize their countries and their investment opportunities. Ghana as well.  Kenya has done well but it goes back and forth. It had political turmoil but has stable investment.  A lot of sub-Saharan countries have grown 7-8 percent, even with the financial crisis. And a lot of countries have been shielded from the financial crisis because there hasn’t been the depth of the lending that has went on in other countries.  They are positioned in a better light because they don’t have the debt that a lot of other countries have. afiive: When the financial crisis first hit, there was talk that Africa would be hit hard because exports would decrease. Kyle: There’ve been residual effects.  The primary effect of capital markets didn’t really happen.  There was a flight of money but it wasn’t a flight away from Africa because they thought it was riskier, but because they needed to cover themselves.  Although GDP from some countries went down, when you put it in the perspective of the US going down from 2 percent to a negative, these countries still having positive growth for 2008- 2009  was quite an accomplishment. afiive:  What were people excited about? Was there anything that people were like, “I’m going to pack up my stuff and go work on that right now?” Kyle: Because Africa was so big, there was no focus but people were really energized about being around other people with like interests. There was positive reinforcement from everyone else. afiive: Let’s do last words, anything you took away, anything you’d want people to know who couldn’t make it? Kyle: I wholeheartedly support people going to events like this, especially people who aren’t aware of the opportunities that are present.  If you have an interest in general business or an interest in Africa, this is the way that the market is going to go. There’s going to be a lot of investment opportunities in Africa and it’s a great place to get your foot in the door. afiive:  Do you think Sub-Sahara will become a key player in the economic community in our lifetime? Kyle:  I believe so. If you look at the numbers, there are 900 million people in Sub-Sahara, about a trillion dollar GDP,  economic growth at 7-8 percent.  You’re not going to get that in the developed world. You should see that type  of macro growth for 15-20 years. If you invest in certain sectors, you’ll see 40-50 percent growth.  The sky is the limit.  IF you can build it, you can do it.  It’s like a blank slate, there’s not a lot that’s presently there, so we have to fill it up. Kyle Newell is currently a Masters of International Business graduate student at The Fletcher School of Law and Diplomacy, in Medford MA. *** What did you think about our convo? Share your thoughts and opinions in the comments section below!