One takeaway is crystal clear from the recent World Economic Forum in Addis Ababa earlier this month: The trickle of strategic resources flowing to Africa is becoming a river, and will rise to a torrent. Private equity funds are investing in companies and growing them. International supply chains of raw and semi-finished resources are forming. Multinationals are setting up, expanding, or acquiring operations. The whiff of venture capital, still far away, is in the air in Egypt, South Africa, and Nigeria. The surging resources include the human kind as well: Highly-trained Africans are returning from the Diaspora, investing with their feet, so to speak.
Yet at the same time that capital -- human, social and financial -- is flowing in or poised at the gate, many (not all) African leaders are not really aligned with the "investors." They are talking the talk, but when it comes to walking the walk, I suspect that many are footing it in the other way. They are not physically leaving, so what do I mean?
I know that this comment will bring a few indignant outcries from the leaders themselves, while the majority of their constituents will smile ruefully at my seeming naiveté. But let me explain: As a former venture capitalist, and active angel investor, I have learned to invest in the people, in the leaders, who will use our money to drive value creation, creating a win-win for us all. And one of the fundamental, ironclad tenets of investing in people is that I want to have their interests completely, 100 percent aligned with my investment.
But I wonder whether many African leaders, those who are loudly, and rightly, encouraging inbound investment of all kinds of capital, really have their interests aligned: A simple quiz will put my question to the test:
1. YES/NO. Do you and your immediate family have the majority of your personal liquid assets in local bank accounts because you trust your own financial system? How about your ministers and their families? I am not referring to ill-got gains, which are obviously a more complicated story: I am right now only referring to legitimate financial assets.
2. YES/NO. Do you and your immediate family stay inside of your country for critical health care? How about your ministers and their families?
3. YES/NO. Do you send your children to local public schools for K-12 education? I am not referring to universities, because those take decades to build their knowledge generating capacity; just K-12. How about your ministers and their families?
As an outsider, it is difficult not to be impressed with the amazing energy, talent, and commitment of the upcoming generation African leaders. And I am of sure that for some of the incumbents, for some outstanding leaders, the answers are YES. But the utter simplicity of the questions belies their importance for the large number for whom the answers are negative. Just imagine how more confident investors will feel -- including those investing their lives, their own human capital -- if they knew that the answers to all three questions were positive. Just imagine how fast financial institutions, health care delivery, and public education would improve if leaders forced themselves to have their and their families' interests completely aligned with those of their constituents as well.
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