Money: it makes the world go round … (note: may include random murmurings)

Capital with a Capital C
As I’ve been saying, much of my time has been devoted to thinking about raising capital for the start-up seed company I’ve been working with. We need US$130,000 to get going, though (depending on the level of production) we could also use US$2,000,000 in our first year (couldn’t we all!?).

Financing is a huge problem in Africa. Many entrepreneurs (like the ones I’m working with) are stuck in a financing catch-22 – they have a business idea that will make lots of revenue and generate employment, but they need money to start – and they can’t get money because they don’t yet have revenue (and most importantly, collateral). Furthermore, banks are scared to loan money (with agricultural loan default rates up around 50%!) so for a start-up seed company, it’s very difficult to, um, start up.

The biggest barrier to fighting poverty here
From what I've seen, the lack of available financing for these reasons is probably the biggest barrier to economic growth in Africa. Until companies (large and small) can get financing, unemployment will remain high (only 20% of people in the cities actually have formal jobs … I see so many people sitting around, waiting for some kind of work, nothing else to do) and industry will remain backward, as few people have money to put into new investment or innovation. My conclusion from three weeks’ experience here is that the start of the solution to African poverty is the difficult task of removing barriers for private enterprise to pursue profit making investment: barriers like slow bureaucracy and, in particular, getting finance.

… which is quite sad and really ironic, when you think about it ... to think, as a human race, the only way that we are able to be united and effective in fighting poverty is through maximising the pursuit of profit, that is, selfish financial gain?!

Yet this has been the way of human development throughout history – even Southern Africa’s settlement, as a stopover port between Europe and the Spice Islands – trade makes the world go round. Our biggest advances have, in so many cases, come about by smart people thinking of new ways to make a buck. Inventions and efficiencies come as a result of it; wars are fought and re-fought over trade routes and natural resources; the locations of capital cities are determined by the ability to receive shipping containers and generate trade ... from individual to nation, the pursuit of financial gain shapes our world.

The import market and … the bible
I’ve met many interesting entrepreneurs traveling through Mozambique, trying to import new things at giant margins and make a profit. As I’ve been meeting them, hearing their stories and ambitions, and thinking about all this stuff, I have been reading through Ecclesiastes. Two verses in particular stuck out to me …

“I saw that all labour and all achievement spring from man’s envy of his neighbour. This too is meaningless, a chasing after the wind …” (Ecclesiastes 4:9)

“Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income. This too is meaningless …” (Ecclesiastes 5:10)

I know my work here is valuable in ultimately fighting poverty. Yet I find it strange that the desire for personal wealth (or, at least, to have more wealth than one's neighbour!) is the best way to do so. What a strange world we live in!