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REGIONS MIDDLE EAST & AFRICA


YOUNGTECHS LOOKING TO BUILDNEWBUSINESS COULDN’T FIND BASIC FUNDING THAT YOUFIND IN THE WEST FROMFAMILYANDFRIENDS


AwakeningAfrica’s sleepinggiant


AFRICAN ENTREPRENEURS ARE UNLOCKING THE HUGE POTENTIAL OF DIASPORA INVESTMENT IN THE CONTINENT. DANIELLE MYLES REPORTS


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s a continent whose urban population is set to triple by 2050, Africa desperately needs


new cities. Now, a helping hand is being offered by an unlikely source. Since 2018, Senegalese-American rap- perAkon has pursued plans to build a futuristic $6bn city in Senegal. Called Akoncity, it is intended to


be a sustainable business hub, catalyst for job creation, as well as a platform for Akon’s name- sake cryptocurrency. In April 2020 he struck a deal to build a second version in Uganda. But while the award-winning musician’s projects ostensibly help solve Africa’s shortage of urban space, many wonder if they will only benefit – and be affordable for – the elite. Scepticism aside, Akon’s proposed smart


cities highlight the untapped potential of Africa’s 41 million-strong diaspora as a source of FDI. The African Union calculates its mem- bers hold $30bn in savings abroad and World Bank statistics show that in 2020 they sent $82bn in remittances to family back home – more than double the $38bn FDI inflows recorded byUnctad. The AfricanFoundation for Development (Afford) estimates that once unof- ficial transfers are included, annual remit- tances are closer to $200bn.


Anewmiddleman Calls are growing louder to redirect a portionof remittances, which are primarily used for sub- sistence, into investment. Afford deputy direc- tor Stella Opoku-Owusu sees increased appetite among the African diaspora to invest, but says there are not enough formal vehicles for them to do so. “Those that are able or bold enough will find a way to invest more formally, but the


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majority will simply continue to channel all their resources through the informal and for- mal remittance avenue,” she says. Attuned to the opportunity, a new breed of


diaspora entrepreneurs are setting up syndi- cates that allow their fellow countrymen to invest alongside them in the continent’s tech start-ups. One is led by Jason Njoku, the British- Nigerian who founded Irokotv – dubbed the Netflix of Africa – and was an early backer of Nigerian fintech Paystack. Following Paystack’s $200m sale to Stripe last year, Mr Njoku was approached by small-scale investors wanting to be part of his deals. “The first thing I realised was that these peo-


ple had ambition but not the kind of money that gets you [into] any of these start-ups,” he says. “My view was: howcanwego about democ- ratising that?” His response was to launch Investzilla, which enables itsmembers – around 40% are fromthe diaspora – to invest as little as $3000 in African start-ups vetted by him. It has already helped finance six businesses.


Techsyndicate Nigerian Bosun Tijani launched a similar plat- form last year. Best known as co-founder of African accelerator and technology hub CcHub, Mr Tijani got the idea for so-called CcHub Syndicate after seeing Nigeria’s shortage of early-stage capital. “Young techs looking to build new business couldn’t find basic funding that you find in the West from family and friends,” he says. “We thought one of the best ways to do that was look to the billions of dol- lars of diaspora remittances that come into the continent each year.” CcHub Syndicate has 650 members and Mr Tijani, who worked in the UK and Switzerland,


www.fDiIntelligence.com June/July 2021


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