An introduction to Africa Invest

Ethical Investments has been involved with promoting many new funds over the years. Rarely has a new investment opportunity captured our attention as much as Africa Invest. Read the story here and make up your own mind.

In the summer of 2005 I became increasingly concerned about predictions of orphan numbers in sub-Saharan Africa. Major international agencies were disputing orphan number predictions between a range of 12 and 19 million, numbers that were worse than any war, ever.

I am 46 years old and from a child I have only ever seen pictures of Africa that rotate around disease, famine, war & corruption. Not surprisingly to developed countries. Africa is an embarrassment as we wonder how she will ever take her place as the final piece of the global economic jigsaw puzzle. In my experience the overwhelming majority of people I meet share my views that giving has failed Africa, that G8 initiatives, pop concerts, comic relief and Red Nose days have actually changed nothing. So I decided to go and see for myself to try and answer my key question - why is it that Africa never gets better?

I asked a family friend well versed in African issues to recommend a country for me to visit and see for myself why Africa does not work and where in poverty. Famine and disease are endemic. He recommended Malawi, one of sub-Saharan Africa’s poorest counties and one of the 12th poorest counties in the world with an overage annual income of £57 (yes, £57per annum).

On arrival in Malawi, I determined to visit the rural areas where 85% of the population lives and where poverty is rampant. So I visited villages comprising of mud huts with ached roofs, where AIDS victims lay out on mats during the day, dying as the children play and jump over them, and chickens and goats are running free to create an over whelming picture of chaos. All these villagers have no money in circulation; they rely entirely on subsistence agriculture. They have limited access to fresh (uncontaminated) water; they have no electricity, no sanitation, extremely limited education and no health care.

I visited such one village called Dwambazi which sits beside the share of Lake Malawai, one of the largest fresh water lakes which forms part of the African Rift System. Here I met a man called Pastar Wilson who had an A4 book in which he had drawn lines of rows and columns that named the 260 orphan children malnutritioned children, AIDS sufferers and the very elderly who had no access to food and were starving. His original list can be seen at www.cruim.com/africalist.

Personally I was deeply moved because as a parent I could easily understand how the names of my children could be on this list. It was a list of desperation and desolation. I returned to my hotel and decided to setup a UK charity, called “Pastor Wilson’s list and invite wealthy people to take 20 children or elderly people at a time off this list and place them into feeding programmes which we would establish.

However I had some niggling doubts about Dwambazi village and so I returned there to ask the villagers, why they were not working their land. They replied to say that as it was August, there was nothing they could do - the rains would not arrive until November. I then pointed to Lake Malawi that was right next to their land and suggested that they should be irrigating their land from the lake. Their response was that without money how could they possibly afford irrigation systems that need pumps and pipes and diesel.

“Fair Point” I thought, and returned to my hotel where I picked up their national newspaper and looked at the jobs vacant section. There were no real jobs, just jobs working for the government or international AID agencies or the EU or the British High Commission etc. It then dawned on me what was really going on in Malawi. The moment I left the capital city the roads were practically empty. I realized that Malawi does not actually have an economy that the private sector was so small so as not to be noticed, and that without an economy, how could she ever grow to be independent of donor aid?

Over a glass of wine, contemplating the reality of Africa, I decided to visit Dwambazi. I went there to do a deal to ask them if they could create sufficient land to enable me to justify irrigation systems and everything else you need to create a farm. EG irrigation systems, working capital, roads, storage, accommodation, clever farmers etc. May I say at this point, that I am the son of a Baptist minister, and that there is zero farming history in my family (although, as my Dad was Irish, it has amused me that one of my crops in Malawi is potato). The Dwambazi chief organized 120 hectares of land which I rented on a 10 year lease and Africa Invest was born.

As we built the farm, we created the feeding programme that turned Pastor Wilson’s list into a register for our feeding programme. Those on the list are fed a nutritional porridge seven times a week. It’s really difficult to explain the emotion of seeing children so excited about the food, it is just incredibly moving to witness.

I had no idea as to whether this venture would be profitable although I knew as an imperative that without a substantial return on capital my attempt to resolve the plight of the rural poor of Malawi would fail. I have been blessed in drawing together an exceptional executive team who have created a tremendous backbone to Africa invest and it is with great pleasure that I can tell you that we have not failed, that CRU has invested its own money. Circa 2 million pounds, in to commercial agriculture in Malawi and that our forecasted return on capital is in the region of 30-40% per annum.

I would like to conclude the following:-

• It is an imperative to prove the investment case for Africa Invest; I do not want people to invest on the basis of charity. The investment case stands for itself and I believe it to be head and shoulders above any other and I say that as an investment professional of more than 20years.
• Not withstanding the overwhelming case for food production, ownership of farmland and food processing. I am a parent, I have three children and by the grace of god they were born ‘where lines have fallen in favored places’. To invest into the long term future of African families is a privilege.

I appeal to you as a parent, grandparent, great grandparent or future parent to make an investment that serves you both investment objectives and transforms the finances of some of the poorest people in the world.

Start investing, stop giving, believe me, this is the only way to transform Africa. Do join me and make a truly wonderful investment.

Jon Maguire