“I can’t believe this is happening to me! Zuri panicked as she shook her head and stared at her account balance. It was the middle of the month and she had a little over eighty thousand (Naira) left in her bank. To be fair, this would seem like a lot to some, but her expenses told a different story. This balance would barely make a dent in the bills she had piled up, and she wasn’t expecting any new funds ‘til the end of the month. Even then, she wouldn’t be able to cover the bills that has just arrived.”
In the very first chapter of The Smart Money Woman, this is how we are introduced to Zuri Goubadia, the protagonist of The Smart Money Book series, who finds herself in a position most women (African to millennial) know all too well, living from paycheck to paycheck with a middle-class lifestyle. Set in the hustle and bustle of Lagos, Nigeria, the book follows Zuri as she tackles debt, building her wealth, her career and relationships. She is joined on this journey by her friends Tami, Ladun, Adesuwa and Lara whose different circumstances and relationship with money adds to the texture of the multi-dimensional representation and complexity of the black woman (across the Diaspora and continent) in dealing with life’s many money ups and downs.
The author, Arese Ugwu is a high-powered entrepreneur in wealth management, executive producer and the voice behind The Smart Money Tribe podcast. She credits much of her success the many years in corporate Nigeria, being educated across Africa, Europe and Asia, and her own financial freedom journey.
I met Arese in 2019 at one of the events for the World Economic Forum on Africa in Cape Town, South Africa, and since then I've consumed and engaged with her products (from the books to the interviews) as she communicates financial management with a rich finesses.
Throughout the book series, Arese employs a principle of communicating financial wellness and wealth creation effortlessly through the circumstances of Zuri and her tribe, coupled with Smart Money Lessons and exercises that are practical enough even for the non-financial reader who is flirting with the idea of investing and financial freedom.
In the first book, The Smart Money Woman, where we first meet Zuri who finds herself in an insurmountable amount of debt, we are ushered into her state of wellbeing as she navigates her fears and beliefs about money that have led her to only a few thousand Nairas. Through the lived experiences of her shared relationships, the book does justice to unloading concepts like financial abuse, intrapreneurship, emergency funds, the power of networking and understanding the roots of your money language.
The evolution of Zuri, Tami, Ladun, Adesuwa and Lara’s relationship unfolds in The Smart Money Tribe, as Arese provides the readers with the Guide to Making Bank through the main theme of the book of group economics. From setting financial boundaries with family, to the transition of a lifestyle adjustment and raising capital for your business to setting a framework for group savings and investment consortiums, the second book of the series expands the concept of what a Smart Money Woman is and how her network influences her networth.
“Intrapreneurship is the implementation of start-up practices in large corporations to produce valued innovation. Those kinds of workers are value-driven, adopt critical thinking methodologies and use innovation to solve problems within the business.” – Smart Money Lesson, Intrapreneurship: Chapter 4, The Smart Money Tribe
How do all of these converge to bring you best-selling books that have impacted women across the continent to invest and build their wealth, and fall in love with these five fictional characters who have now been turned into a TV series? You’ll have to read the many chapters to find out.
Conversations about money for me have always been anxiety inducing, unless it was about spending it. As I’m going through my own Zuri (with a bit of Lara and Tami) financial journey of wealth creation through Vuyolwethu as a Service and InnovTel, all while in a wahala of a global pandemic, going into the new year with these two books that I re-read from December January to 2021 was the exact guide and affirmation that I needed.
The Smart Money Woman and The Smart Money Tribe are the books you need if you are ready to start making the necessary steps to understand the financial situation of your life, and take responsibility of the relationship that you have with money, as well the language and mindset that you carry about money into your relationships across the many facets of your life. And, with the Yoruba and pidgin spoken in the books, I’m positive that my next trip to Nigeria will be filled with more jollof and spicy rice, and a better understanding of the language
As I’m writing this, I’ve a bottle of Prosecco Doc Luxury opened and multitasking as a writer and an impassioned drinker of Italian sparkling wine with my flute champagne glass. And due to COVID-19 (well, to some extent), I’m at home in my bed going through how I’ve documented 2020 across my social media platforms and my somewhat illegible printed journal. It’s been a year that has qualified in many books as forgettable and unforgettable, and in its wholesome character has been one that has summoned courage and resilience.
This year started with the embrace of calling me out of familiar environments, and into new territories that knew my capabilities and added capacity along the way. When I left the firm that I was with in late February, I was sure of a few things which included a moderator engagement in Kigali, Rwanda as well as a deserved vacation to a few emirates in the United Arab of Emirates – the trajectory of my career and life was from this point onwards was what I could not have mapped out happening in a space of a few months.
After taking about three months to wallow in the reality that showcased itself through the violence of a pandemic, these months were filled with the relentless job applications acceptances and rejections (that returned with over or under qualified response, or non-culture fit), refining the messaging and positioning of my personal brand, upskilling and consulting businesses and startups in business innovation and strategy. Garnering the momentum in these months, through the work of consulting and continuous effort in Vuyolwethu As A Service was an opportunity to work in the wait, as well as prepare for what the months of stupendous grace that August and the months that followed would present.
It’s often joked about that in 2020, you should at least come out with one skill and I suppose I took that joke a little too seriously. I’ve always been one to outsource the work of skills that I don’t have, which includes the building of this particular website, but through Innovtel, I had a bit too much time on my hands and tons of insomnia to challenge myself to build a website. Through this engagement came an opportunity to work with Lufthansa by being a keynote speaker at their inaugural Impact Week for South Africa and produce a guide of the talk available exclusively to my newsletter community; and a few weeks later, InnovTel (Pty) Ltd was born. Innovtel is an impact design studio that facilitates impact innovation and shared value through Marketing and MIL (monitoring, impact and learning and development). To date, we’ve worked with companies like the University of Cape Town and the Mastercard Foundation, and ShEquity and Bright Insights Global to mention a few, spanning our work across three continents and operating as a five figure business. I stubbornly had to let go of the idea of becoming an entrepreneur by 30, and honour the space in which I was and am being placed in at present.
The experience of shedding through loss of family and friendships, habitual lifestyles and an old self, commanded the fierce submission of the a new way of doing and being. Personally, one of the ways in which I did was through sitting and being at home instead of on a plane and sleeping in a newly made white sheet-fitted hotel room. It felt as if I had lost a sense of mobility and the perceived value that I had attached to it. At home, I had to buy a desk and set aside a space to operate as if I was in a hotel suite or an office, and it’s become a continued way of operating in awareness.
Words and paragraphs are not enough to encapsulate the year of the pivot that was, and the learnings and losses that it carried with it to benefit or throw us completely off. What new ways of being and doing have you had to adopt and adapt to?
I had a brief chat with Viresh Harduth who is the Vice President of Small Business, Sage Africa & Middle East about the vision and mission for Sage for small businesses across the region, and how your business can ready itself for the digital transformation and risk beyond COVID-19
1. Viresh, as Vice President of Small Business, Sage Africa & Middle East, what exactly does your role entail and how does it, and Sage support small businesses?
My job is to lead sales and renewals, channel development and customer engagement for our start-up and small business solutions portfolio. In practical terms, that means building awareness of our solutions in the marketplace, working with our business partners to help customers meet their business goals, and providing education and information to the market.
Sage’s vision in small business is to help our customers thrive by automating accounting and compliance and by coaching them to success. The way we do this is by reducing administration for our customers, helping customers to comply with tax regulations, and enabling businesses and their accountants to collaborate better.
2. In the established distinction of an SME and a Start-up, do Sage products apply to both? And at what stage should a business consider bringing in the skillset of accountancy and financing in their business, digitized or human capital?
Our goal at Sage is to build relationships with customers for life, so our Sage Business Cloud encompasses offerings for small businesses and start-ups through to sizeable medium businesses. Our solutions, designed for smaller businesses, are tailored to their specific needs, so they can subscribe and get up-and-running at an affordable cost.
Clients can start with a simple solution that makes it easy to invoice customers and track expenses, then move up the ladder to online and accounting solutions with richer functionality for budgeting, forecasting, multi-currency management, inventory tracking, employee self-service, debtors management and more.
Formal businesses – that is, limited companies – will need an accountant to prepare their annual financial statements. They will usually start by outsourcing to an accounting practice. Generally, it is only when the business grows into a larger and more complex operation that they will consider a permanent accountant. We are seeing accountants in practice become real advisors to small business clients, helping them with strategic advice around optimising costs and finding growth opportunities.
3. Before your current role, you were the Director of Optimisation and Operations at Sage International and I’d like to think that you, more than anyone else recognises the importance of embedding business optimization tools to contribute to your business’ success. How does and can Sage do this for small to medium businesses?
Our business solutions help our clients to optimise their business in two ways. Firstly, we streamline and automate many tasks for them, from financial recordkeeping, invoicing to filing tax submissions, saving them hours of human time each month. That time can then be directed to sales, strategy, billable work or other activities that add value. Automating red-tape and paperwork is a significant cost-saver.
Secondly, we understand that making the most of business opportunities must be balanced with managing cash flow and keeping costs under control. Companies need a clear, real-time view of how the business is performing to achieve that goal. Our solutions empower them with the business performance information they need to make good financial choices that translate into higher revenues and profits.
Making an investment in your business’ digital transformation is an investment that takes more than one purchase and optimising one process, it is an evolving strategy that takes time, skills and the right technology.
4. As small businesses are moving from being digitally resistant to the aspirational observers and challengers, and ultimately digital natives, what would be your advice to founders of things to consider as they map out their digital strategy?
Digital technology doesn’t need to be as complex as some small businesses outside the tech industry might imagine. A good place to start is by identifying areas where manual processes are slowing you down, costing you money, restricting your flexibility or hampering your customer experience. From there, you can look for cloud-based solutions that address your pain points through automation. Many of these tools can be trialed for a month or two for free.
To sum up: digital technology is at its most powerful when you’re starting with the goal of solving a business problem. As a small business owner, you might have limited budget and time to rapidly incorporate new technologies and skills into your business, so look for the quick wins. And remember that the cloud can adapt as your business changes and grows, remaining a valuable business tool that evolves with you.
5. Your message to founders as they are coming out of Global Entrepreneurship Month, and into a 2021 that will definitely still require us to do business differently?.
At Sage, we know the pandemic has compounded the effects of the recession, and that many small businesses are struggling just to pay the rent and keep the lights on. Their grit and resilience are inspiring, as is the role they are playing in maintaining jobs and economic activity throughout this time. But if you are running a small business, you’ll know that platitudes are not going to be enough.
There are no quick fixes for the damage that the pandemic may have dealt to your cash reserves and your cash flow. Nonetheless, there are also opportunities to get closer to your customers and find new purpose in a crisis. Stay focused on your vision, watch your cashflow, and look out for how customer behaviour is changing. Aiming for small wins makes you flexible, adaptable, and able to make faster decisions.
It’s the year that no futurist or economist could have predicted, one inhabited by a virus that would (and still) impact livelihoods, businesses, economies and our way of living. The negative socio-economic rippling effect of COVID-19 has been felt across all vectors, and in a similar light, has inspired entrepreneurial and innovative activity that’s yielded products and partnerships that have impacted and pivoted the world as we know it. On the 14th of October, I announced such a partnership, a SAGE Partnership to benefit small businesses across South Africa.
In the midst of the pandemic, and after weeks of anxiously contemplating whether to take the plunge and spending a week of building a facilitated learning platform, I launched www.innovtel.org which houses courses, e-books and InnovTel and Teach webinars on impact innovation. Birthed through our first partnership with a global leading aviation company in providing advisory and mentorship on impact innovation, InnovTel (Pty) Ltd (an impact design studio that facilitates impact innovation and shared value through design, advisory and project management) was registered a company was born.
You’re probably thinking, what a crazy time to launch! Me too, at first. I also thought, what a relevant time to engage on impact and tools that can innovatively impact the way in which we practice and understand impact. A necessary opportunity to map out what impact means for your business, and what tools to use when listening to the potential impact and growth that can be achieved.
Recently, through InnovTel and Teach, which is one of the products of www.innovtel.org , we engaged with an entrepreneur on how she is building her multi-million venture, and one of the core principles of this impact was finances. She simply said to build your business as though you are building a legacy baby and it was her accountant who gave her this sage advice.
Being a small business owner, I knew that I could waste no time in tracking the finances of my business, and in my relationship with data and intelligence, Excel was my chosen tool of choice for my business, coupled with my relationship with my banker in understanding the trajectory that I wanted to take my business in. However, I knew I needed more to optimise my operations, and my partnership with SAGE could not have been more timeous, especially since I didn’t have an accountant on my business speed dial.
SAGE, a multinational enterprise software company, and I, will be engaging in #SAGEAdvice harnessing insights and expertise, and sharing how #SageForSmallBiz tools and capabilities for SMEs can optimize business operations through digitization. Over the next few months, we’ll be unpacking what this exactly means, and how things like automated processes, getting the right tools for your business finances, choosing the right business program partners, what impact is and how getting these process right and much more can contribute to the growth and success of your business.
For now, here’s a little gift from SAGE, an e-book guide with 10 tips to transform your productivity and how changing something as simple and important as your accounting admin can have a huge impact on your business.
In February, I had honoured the invitation of moderating the Investor Forum at the annual Timeless Women’s Conference in Kigali, Rwanda which is one of the leading women empowerment conferences in Africa, and truly a Pan-African experience. Garnished with high-level speakers such as former First Ladies, Members of Parliament, Executives and Impact -driven Entrepreneurs, it was a convening that invited an opportunity to measure and see how Africans and those in the diaspora can do so in engaging discussions, and through that, create shared value.
Traveling to Rwanda for the first time, it certainly lived up to the expectation of it being one of the technology capitals of Africa. The moment I landed at Kigali International Airport, I was met with the warmest of service at the counters and my visa processed on arrival without any hassles. Before I knew it, it was time to get on stage at the two-day event, and moderate the investor forum which highlighted about Investing in Africa through themes including and not limited to Policy and Regulation, FDI and DFI, SMMEs, Digitization and Inclusive Capital Deployment. If anything to come out of the session, it’s that capital and innovation can’t solely be reliant on the private sector, government has to not only be visible in and during elections, but throughout the year, and so its work.
“Intra-Africa trade has been historically low. Intra-African exports were 16.6%
of total exports in 2017, compared with 68% in Europe and 59% in Asia,
pointing to untapped potential.” – World Economic Forum
“According to the UN Economic Commission for Africa (ECA), under the African
Continental Free Trade Agreement (AfCFTA), intra-African trade is likely to
increase by 52.3% by 2020.”– United Nations
Taking the above statistics into considerations, the engaged conference and traveling to one of Africa’s Foreign Direct Investment (FDI) Hotspots and one of the five fastest-growing economies on the continent, inspired me to analyse and share the concept of CSV through the diaspore lens, and through the channel of lessons learnt through my few days in Rwanda.
An academic concept coined by Harvard Business School Professors Michael Porter and Mark R. Kramer and was introduced in 2011 in the Harvard Business Review article ‘Creating Shared Value.’, this concepts looks at the core of wealth creation through shared value. CSV asks the question of how do you capitalise the very capitalism to trade, scale and share in profits and social impact by not trading off the one for the other?
CSV has been proposed to be achieved in THREE ways, and that is by Reconceiving products and markets, Redefining productivity in the value chain and Enabling local cluster development. Let’s take a look at how we can enable. Nurture and catalyse the principle of CSV and dive into examples and proposals of such an effort:
- Reconceiving Products and Markets
The first of the three keys of CSV in unlocked in creating new products and services or markets that will serve the socio-economic needs identified. This is the opportunity for intrapreneurs and entrepreneurs to activate value through the channel of new product innovation, and/or integrate them in products and markets that already exist.
Market-creating innovation (innovation that doesn’t rely on post infrastructure society and the financial markets it’ll create) that will help close the infrastructure financing gap in the range of US$68-US$108 billion. We need to propel further access into education for this opportunity and retain young people as per Whitney Houston (I believe the children are our future) – we need to let them lead the way. We need to center the youth in these dialogues, we encourage that.
Examples of such innovations are crowdfunding platforms as open innovation tools for co-creation, startups changing the course of African innovation and a COVID-19 investor matchup tool for startups (piloting). These examples continue to call upon the power of collaboration, creating new products (new or incremental) and a desire for a new market.
- Redefining Productivity in the Value Chain
Creating new products is great, but how do we ensure that efficiency is created, monitored and evaluated on par with the excellence that the product is created with? The value chain in Africa disrupted by one of few mechanisms, that of which includes the role of government in actualising the full potential of its nations. Looking at channels to access, use and manage resources, energy, suppliers, logistics innovatively and to full potential, and more productively is a unique opportunity as it is a challenge. African leadership is more than unfortunately regarded for the moral decay in leadership. Africa needs to become deliberate about the type of leadership that the continent requires to continue to open the runway for investment. Transformational leaders who are thinking generationally.
The difference in policy and regulations is that sometimes the policy frameworks doesn’t gel as well as with the outcome of the policy. We need to ensure that the AfCFTA and its compliance will bear the fruit that the projections of impact are highlighting. Government must lead prioritize in creating an enabling environment where better policies and regulations can be established for not only the multinationals but the SMMEs – creating Startup Acts and executing AfCFTA (now delayed due to COVID-19).
- Enabling Local Network and Development
Over the course of the years, we’ve witnessed and some participated in the FDI and particularly the investment in education, youth and technology as we’ve seen with Andela, Africa Netpreneur Prize (with Alibaba and Jack Ma), the expansion of Facebook Developer Circles across African cities and Mark Zuckerburg’s visit to Nigeria – this trend is one of clear opportunity that has potential to alleviate many social ills of our society. Improving the local operating environment through skills development and development training will invite coding academies like GirlCode, startup competitions like Seedstars World, incubating organisations like Foundervine and government-led innovations like Kigali Innovation City and its collaborators to pave the way. This is nothing new for Africa, and the through the interconnectedness and shared passion across the diaspora, CSV can be leveraged for its economic benefits to serve.
Ready to Create and Impact Value?
When we refer to the industrial revolutions and mention the empires that changed the course of history, that of the African Renaissance is often eclipsed. In his book Tech Adjacent, engages on the pioneering continent that Africa was and still is when it comes to technology, research and development and innovation. This leads us to the statistics provided earlier on the African Continental Free Trade Agreement, and the need to develop mechanisms that something like 4IR can bring to radicalize economic value and growth.
So what will it take to tap into this value and create it? The secret sauce is Africa is in the continent’s true diversity, resources, youth, (cross sector) collaboration, intra-African trade, community and innovation.
Investing in Africa and the diaspora is a paradigmatic moment for the continent and is inviting various stakeholders including DFIs and independent investors from across the globe. AFCTA is the heart of investment confidence at present in interstate trade and development talks. Partnerships and collaboration are prime in executing the policy frameworks and projects, and conferences like these hotbeds for creating such opportunities.
Although the science of CSV is that it pays for itself and is Daviding the Goliath of capitalism, capital resource allocation is the root of why the scales are not balanced, and how Corporate Social Responsibility (CSR) has come to pass. Also, in areas and communities where capital and its resources are needed for economic activity, a priority needs to place beyond championing the gift of food parcels. Africa and the diaspora can, are and will maximise the profit of nations and their organisations and continue to connect the thread and networks to inclusively innovate and develop for economic and development purposes.
Whether you’re working from home, or in your car or public transport on your way to work or simply looking for an outlet to be inspired and informed, a podcast is always a good idea. It’s a medium that has seen a great surge over the years, with a range of sectors and topics covered. In this article, I’ll share some of my top podcasts covering Inclusive Development and Investing (Impact) and Innovation Strategy from regions including and not limited to Africa, North America and the UK; let’s have a look (and listen):
This particular category focuses on podcasts that dedicate their content to inclusive development across diversity and inclusion, entrepreneurship, economic development and regional and international relations globally. Some of my favourite episodes from the selected podcasts below include “A Conversation with Rebecca Enonchong” by The Flip Africa, Diaspora Talks with Annette Abena’s “Investing in Africa” and IMF Podcast’s “Kristalina Georgieva on Gender Parity: Inequalities Erode Society”. What’s important to recognise about these podcasts is that various stakeholders are contributing to the conversations are entrepreneurs, intrapreneurs, investors and professionals who deliver stellar insights in their expertise.
With the assault of climate change, global health outbreaks and pandemics and heightened conversations on diversity and inclusion, global investment conversations and funds have shifted over the past few years to be bedded in the triple-bottom line return on investment also under the alias of impact investing. These selected podcasts not only cover stories of what’s happening at that present time like Equity’s “The VCs behind Libra, Facebook’s new cryptocurrency”, breaking down how the science of data and its intelligence impacts VC decisions with Venture Stories in “Using Data in Venture Capital with Jonathan Hsu” and how the entertainment industry prepared Ashton Kutcher for his VC career in his interview with The Twenty Minute VC in “Ashton Kutcher on Early Lessons from Investing in Airbnb and Spotify, Why VC Ownership Requirements are Becoming More and More Egregious & What Being Good at Product Truly Means”.
The differentiator of this category for me, is the resources that are provided post the interviews as well as during the interviews. The structures of the shows allow for the viewer to engage with the content and the strategies provided in the episodes, as well as in the show notes are centred around innovative best practices for entrepreneurs, individuals and greater corporations. Inside the Strategy Room’s “How to take the Measure of Innovation” paired with Negotiate Anything’s Negotiation Preparation Guide will prepare you to tap into the innovation strategist in you and negotiate the terms of it, and one of my favourite from HBR Ideacast’s “How to have a Relationship and a Career” focuses on the shared value element of relationship, and the couple interviewed have some unorthodox measures placed in their relationship that I know you’ll enjoy.
Some honourable mentions for me across these sectors include Vision 2030 and Africa Gender Indaba by Channel Africa, Jeff’s Asia Tech Class by Jeffrey Towson and The Women in Tech Show: A Technical Podcast by Edaena Salinas. I listen to my podcasts via Google Play, but other platforms like Apple Podcasts, Spotify, Stitcher also host these shows, with some having their own websites where you can stream and listen to. Whatever your preferred channel, I hope you have a listen to these 20 (now plus) podcasts that I’ve curated, and I hope that you enjoy them. I’d love to hear from you on what podcasts you’re enjoying, and which platforms you’re streaming them from.
A few months ago I penned an article which engaged on the importance of inclusive capital in the startup ecosystem, this based on my cumulative years working in the startup development and advisory ecosystem, as well as having researched the appalling data on why men-owned and led startups continue to receive almost 100% of startup capital funding, globally. The success of the article invited global conversations and opportunities to consult on various enterprises, and it also highlighted how industry (and outside industry contributors) saw the conversation as not only exclusionary, but as a means to absorb the old boys club legacy of mirrortocracy and investing in women as only a tick box exercise with no merit. So I’m going to bring some data to the table, and engage on the Risk on Investment on funding of the female economy.
Funding the Female (owned) Economy (FOE) is not just diversity and inclusion aesthetics, it’s an economic development catalyst to amplify sustainable impact. This FOE is not an exception to how the investment model works sustainably (i.e. creating a return on investment), but rather a necessity to expand the capacity of the investment model and create accelerated triple bottom line impact.
The 63% (Risk) On Investment Opportunity
“Female founders drive 63 percent better ROI than male-only led companies. It’s a no-brainer. We have 40 companies in our portfolio -- Zola, The Wing, Glamsquad -- with more than $1 billion in enterprise value. Some people would say, well, all of these are “women’s” ideas, right? But I would just call them businesses for a really big section of consumers! When Susan and I launched the fund (BBG Ventures), it was never with a do-good intention. We knew we could drive a great return.” - Nisha Dua, co-founder of BBG Ventures as quoted in an interview on why the venture firm is doubling down on investing in female founders.
In 2015, First Round Capital, a seed stage venture capital firm released a report that highlighted its 10 year mark in the venture ecosystem, and shared insights on their portfolio. A key finding was that companies with female founders performed 63% better than portfolios with all male counterparts. Further data from a Illuminate Ventures whitepaper also highlights that in particular, high technology firms venture-backed and led by women are great custodians of the capital that they receive by using it more efficiently and overall having higher annual revenues than firms led by their counterparts. So why aren’t funding institutions funding the FOE, and seeing female owned companies as risk on investment instead as return on investment?
Through the above mentioned data, we’ve established that the reason cannot be due to seeking higher financial returns on investment. Perhaps it’s because men are building businesses faster than women?
Building Businesses TWICE as Fast
If that were the case, then that would untrue. In 2019, the State of Women-Owned Businesses Report, which is commissioned by American Express published that US women “ … with women with diverse ethnic and geographic backgrounds started an average of 1,817 new businesses per day in the U.S. between 2018 and 2019”. The report further expresses that over the past five years women-owned businesses increased by 21%, while all businesses increased only 9% and that total revenue for women-owned businesses also rose slightly above all businesses: 21% compared to 20% respectively.
This data is not only exclusive to the US, as maintained by the MasterCard Index of Women Entrepreneurs 2017, sub-Saharan Africa has the world’s highest growing rate of women-owned and led businesses at 27%, with Uganda (34.8%) and Botswana (34.6%) leading the pack globally.
In demonstrating financial performance and the business growth and acceleration of women-owned businesses, what else could motivate the slow progression of funding in the FOE? In Africa, only 4% of capital went into female founders (that raised over $1M in 2019) as compared to the average of 2.2%. Are there not enough diverse sectors that women are enterprising in, that year after year, cumulative deals and capital is constantly on a single digit number?
Innovation across Diverse Sectors
Enterprises like the Cartier Women’s Initiative showcase that women are not only breaking through various industries like luxury fashion, construction and real estate, information systems and energy and utilities; but that the FOE is diverse as it is a triple bottom line hitmaker like Manka Angwafo in Cameroon who is an agri-tech entrepreneur who provides access to finance to farmers, equipment hire and have to date not only boosted the farmers’ income by 200% but also has helped helped 373 farmers, with a repayment rate of 97% through a group economics strategy
I’ve also recently curated a list of funding/capital opportunities for Africa women-owned and led businesses, with industries ranging from technology and human rights based enterprises to grants and angel investors from across the continent. Recipients of funds and grants vary in investment size and in industry, and country, worthwhile to have a look.
What Will it Take?
Tanzania, one of the fastest growing economies in the sub-Saharan Africa region with an annual GDP growth of 7% since 2013 is driven by Small Micro and Medium Enterprises (SMMEs) of which more than half are women. However, their SMMEs cannot grow because of lack of financial capital. This is unique to the FOE, and doesn’t discriminate whether developing or developed nation. In the United Kingdom (UK), the Rose Review reported that due to a lack of financing, this barrier resulted in women “ … start businesses with 53 per cent less capital on average than men, are less aware of funding options and less likely to take on debt.”
So, how many more articles, conferences, research and campaigns you may ask in order to close the gender investing gap? Too many to tell. The gap closing also shouldn’t have to be solely reliant on more female investors equal more investment in female owned enterprises, but rather collaborative efforts like The Next Billion, investment in training female fund managers to have a (non decorative) seat at the table and continued conscious investment in the Female (owned) Economy (FOE).
Upon the invitation of the German Corporation and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), last week I was in Johannesburg, South Africa as part of a delegation of pan-African ecosystem enablers to represent Cape Town, South Africa at the Seedstars World Africa Regional Summit 2019. The full week spanned across cocktail evenings and dinners, intense boot camps and 1-1 sessions with mentors and investors for nearly 50 technology startups and the highly anticipated summit with an audience of 300+ comprising of 26 Sub-Saharan African countries.
To kick off the regional summit at an evening cocktail, I was joined on stage by Anicha Abdul who is the Managing Director of EP Management and Consulting (Mozambique) and the Program Manager for Empow'Her Côte d'Ivoire, Chloe Roncajolo, moderated by Seedstar’s Fanny Dauchez to be part of an incredible panel called "Generation SHE" to engage on gender equality across the ecosystem. This discussion inspired a series of conversations, and actions which included men and women who actioned for gender parity during another panel discussion, not to discuss gender equity within the ecosystem, but to contribute to the solutions driven workshop based on their expertise. And throughout the course of the week, Seedstars seems to have been intentional about this role of not only diversity, but that of inclusion too.
Equity Scale is Transferable if Intentional
Highlighting the role and participation of women across the border in the technology, startup and investor community was a focus for the global organisation. This was made visible in the rising number of senior persons in leadership held at Seedstars across the Africa region, the 40% of female attendance and the articulate (and strategic) history making of having an all female jury panel for the pitching competition made up on 10 women-led businesses amongst the 24 that pitched.
Shifting the equity scale and accelerating gender parity requires continuous action, surgical focus and enabling conversations that are in inclusive spaces to inspire the actionable change to design the necessary frameworks to thrive.
Africans need to become Connected
By now, it should be no secret that Africa is not a country, however it shouldn’t diminish the need for Africans to become interconnected. This week, what enlightened me the most, was how eager everyone was to connect with each other and expand their networks to benefit the 300+ people in attendance; if this is what the African Trade Agreement has in store for the continent, then hope there is. However, with the provision of the opportunities of trading and investment opportunities, comes the vile reminder of the fact that Africans still require visas to travel to over 50% of other African countries, restricting the continent-spread movement and making it more expensive to travel. And, as a result, we had a few startups who unfortunately weren’t able to be present at the summit to pitch their entities and had to opt for a video-recorded pitch. Even with the launches of milestones such as the African Continental Free Trade Area and the Single African Air Transport Market, the state of a truly connected Africa is not changing significantly over the years.
The President of the African Development Bank Group, Akinwumi A. Adesina articulated it quite well when he said that regional integration and trade based upon the free movement of persons, goods, services and capital should be and is at the core of the business of the African Development Bank, because it recognises the opportunities in the economy that these agreements have in place, this in the 3rd edition of the Africa Visa Openness Index Report 2018 published by the African Development Bank and the Africa Union Commission.
There is no shortage of Scalable Solutions
Powered by the African Development Bank Group, with my fellow mentors, we had the opportunity to contribute to these high impact and high growth startups from across Africa in various sectors at the Investor Forum ranging from business development to investor readiness advisory. It was an opportunity, and one of the many sessions (including rigorous bootcamps) delivered by respective experts and investors to prepare the 24 Seedstars local winners to advance to the final stage of the competition, the Seedstars World Final stage in Lausanne, Switzerland to win up to $500k in investments. In the end, only 10 startups from the Sub-Sahara Africa region were able to make it: Exuus (Rwanda), mVocia (Ghana), Pezesha (Kenya), Teheca (Uganda), OKO Finance (Mali), Afrikamart (Senegal), Nadji Bi (The Gambia), Vectra (South Africa), Roque Online (Angola) and Crop2Cash (Nigeria). Although not every startup was able to be chosen, the capital (monetary, intellectual, social etc.) that was injected this past week speaks to the true value that both Africans and non-Africans, investors and ecosystem enablers, government and private sector sees in the potential of scaling solutions across African markets.
Diversity is a great conversation starter, and the right direction in the role that inclusion has to play in investing in an Africa that is ready and geared for the global takeover, because the world is ready to if we’re not up to the task. Inviting more women to become a part of decision making processes, pitching at startup competitions, inviting government and policy makers to make intra-African trade less taxing and more open and engaging in these conversations is a step that Seedstars, and the week that was last week showcased that not only the organisation, but the stakeholders involved are promoting and working towards.
A few weeks ago I attended a two-day national conference that invited some of the most prominent women in leadership, business and economic empowerment in both the private and public sector. The line up included the likes of Economic Advisor to the Republic of South Africa, Trudi Makhaya, World Champion and Human Rights Activist Caster Semenya and UCT’s incoming chancellor Dr Precious Moloi-Motsepe. In bringing together these women under the theme of empowering an inclusive and empowered economy, the role of investing in women owned and led businesses quickly became an emphatic theme. And in this editorial, we’re going to explore not only the role of inclusion in Venture Capital (VC), but the consequences of innovation and discrimination that has lead to the future of alternative capital.
VENTURE CAPITALISTS ARE DEVALUING THE DATA
It is no secret that the more diverse your team is, the more likely that your business is to thrive, and moreover, when that diversity is lead by women. In a study conducted by Mass Challenge and the Boston Consulting Group entitled “Why Women-Owned Startups Are a Better Bet”, over 350 startups were interviewed and assessed to determine which enterprises were not only more risk averse, but who yielded better financial returns. The results determined that businesses founded by women deliver higher revenue (at that, more than two times as much per dollar invested) than those founded by men. To add to this, the study also provided insight of how much more VCs could’ve made (an additional $85 million over five years) had they invested more money equally into both women and men-founded startups. This is a global phenomena, not only unique to the United States. The growing equality parity in both entrepreneurship and venture capital translates to men being more than 92% of the Top 100 venture capital firms and as an impact investment correlation, female-founded businesses are only receiving 2% of total investments by these VCs. This underpins the essence of what we’ll unpack soon, of how the VC mind works, and later why individuals (both men and women) and organisations have to deal with the consequences of the VCs decisions to devalue and disregard the data.
But first, let’s bring the ball back to the continent for a moment, and frame not only the consistency of the return on investment statistics, but also the challenges that female entrepreneurs face in an attempt to acquire or raise capital.
According to the MasterCard Index of Women Entrepreneurs 2017, sub-Saharan Africa has the world’s highest growing rate of women-owned and led businesses at 27%, with Uganda (34.8%) and Botswana (34.6%) leading the pack globally. As great and impressive as these statistics are, what compliments this ideal is that while on the surface more women are entering and playing the field, the staying power doesn’t read quite well. The continental region also lists it as the community that has the most women-owned startups shutting down due to little for opportunity for growth and lack of access to capital and resources.
In 2016, Venture Capital for Africa (VC4A) disclosed in their ‘VC4A Venture Finance in Africa' report, which captured the performance of early stage, high impact and growth enterprises from Africa at their crucial stage of early stage investor activity. Some of the data that is based on data collected from 1866 ventures from 41 African countries and 111 Africa-focused investors from 39 countries around the world unveiled included that only 9% of startups have women leaders, and that there is a direct correlation to the success rate of the venture based on the gender balance of the entity.
So why, as revealed in the African Development Bank’s inaugural Africa Investment Forum in 2018 hosted in Johannesburg, South Africa, do women entrepreneurs experience a significant funding gap of US$42 billion annually even though the numbers, time and time again support that they are better yielders of seeded capital?
A thought leadership piece in the World Bank blog shared by Makhtar Diop, the World Bank’s former Vice President for the Africa Region and now Vice President for Infrastructure, may help us in shedding some perspective.
BETTING ON THE HORSE, NOT THE STATISTICS
In his opening remarks, “Walk around a major city in Sub-Saharan Africa and you will quickly realize that women are a highly visible part of the economy, selling all manner of products and services. In some ways, women are powering the economies of the continent to a greater degree than anywhere else in the world; Sub-Saharan Africa is the only region where women make up the majority of self-employed individuals.” Diop affirms what the many studies conducted and reports released say about not only growing but visible rate of entrepreneurial activity by women on the continent. He then textures this foundational introduction with a much more granular approach in partially answering why this is the case of stumbling growth in women-owned ventures.
“What this fact conceals, however, is that on average women-owned firms have fewer employees, and lower revenues, profits, and productivity. In many cases, women’s businesses contribute little beyond basic subsistence. This limits the potential of women entrepreneurs and hinders economic growth and poverty reduction in Africa.” he continues.
Is he incorrect in his statement? No. However, two ideas that I do want us all to be cognisant of which one he further explains in the article, is that the patriarchal systems which are still in place for African women across the border of the continent. Women do not, and lack the access to the collateral that is required to enable them to access the credit capital, like land and property, these policies and framework are things that need to change so that women can start or develop their businesses.
The other big elephant in the inclusion conversation of venture capital that is widening the investment gap, is that of not only who carries the capital, but why and how that capital distribution always ends up circulating amongst the same racial and gender recipients, call it intentional super inclusive circular and shared value economies of and that scale. In as much as VCs look at outliers and the business and investment cases of startups, it is no secret that they also bet on horses that mirror them. Men (whom we unpacked earlier comprise of 92% of the Top 100 VC firms) are much more likely to invest in men-owned businesses than female ones, and according to a study led by Babson College's Entrepreneurship chair Dr. Candida Brush, it found that startups lead and managed by all-male teams were “four times more likely to receive funding than companies with even one woman leader.”, even with the shocking discovery that gender diversity at the top improves a startup's performance.
If VCs are such risk takers, why not take the biggest risk of them all, women?
THE INNOVATION CONSEQUENCES OF EXCLUSION OF ACCESS TO CAPITAL
It’s happening, too slowly but surely. This gender investment gap has actualised innovative solutions and some, even going back to the basics of group economics to ensure that more entities owned by women are funded and grow to the scale of potential that they truly deserve. Let’s unpack some of these solutions:
· Using metrics like partnerships, capital investments, total number of companies invested in and the social and financial return on investment, Billion Dollar Fund for Women (TBDF) is committed to ensuring that its holding venture companies to investing in more women-founded companies. Implementing a self-funded, non-profit model, TBDF is a global consortium of venture funds that have committed to date (November 2018) $650 million to tackle the gender investment gap by pledging to increase their investments capital pools to women-owned companies, globally. The lobbyist approach has garnered some success stories like Rethink Impact, with continued increased investment in businesses founded by women.
· Group economics is an ancient economic practice that’s now positioned itself as one of the most pivotal ways in which to raise capital, for pre-seed and early stage investment businesses. Entities like The People’s Fund, UpriseAfrica, iFundWomen and Portfolia are some of the companies who are doing exciting things in the space of impact investing and creating not only diversity of opportunities for minorities, but also enabling entrepreneurs to tap into capital that they wouldn’t have otherwise, had the access to.
· The rise of the gender gap also gave rise to women-owned venture capital firms and venture networks who are intentional about investing in women owned businesses. Africa has provided great case studies and momentum to this with venture companies like Dazzle Angels, and Rising Tide Africa which is a group of women angel investors that are harnessing their power, network, passion and capital to positively impact and invest in an empowered and inclusive growing economy, and society.
· Startups and organisations have now had to become technology adjacent in understanding their customers, business model and particularly financial services company, HOW they deploy capital. In his book Tech Adjacent, serial technology entrepreneur and thought leader, Mushambi Mutuma engages on doing business in the future and the importance of constantly evolving with the exponential technology and innovation that’s also growing quite exponentially in business. “What would make you absolete in a day? What technology are you terrified your competitors will figure out? How would we run this company with 10 percent of our current staff? How would you monetise if consumers expected you products/services to be free?”. These questions are some of what, I believe, have influenced how capital and credit is becoming more inclusive for women to be able to bypass the archaic banking structures and enable them to get their food in the door. The Women’s Entrepreneurship Development Project has contributed to the rise of female-owned businesses in Ethiopia by providing women with an alternative to collateral. This is in the form of a 45 minute psychometric test that provides a reliable indication of whether an entrepreneur and whether you will be able to repay a loan without any collateral required. At present, the repayment rate is at 99.4%. Another example of how being technology and future adjacent has served the venture capital and investment ecosystem is through the constant data science application and introduction of technologies like machine learning and artificial intelligence to aid with decision making, and also democratising who can become an investor. The funds in magnitude still lie with the wealthy to invest in “lesser risk averse male-owned entities”, but the opportunities to value the data and tap into the industry with impact investing and seeding the billion dollar potential of the global economy is fair game.
With all the data on the table supporting why inclusion, and particularly why investing in women owned businesses is important for the current and future of the economy, and AfDP’s President Akinwumi Adesina’s call for increased support to for women to be active stakeholders in the economy, why are we constantly accelerating towards the opposite direction when it’s time to seed the capital? The answer may not be as complex as we may make it to turn out, however we can applaud the innovative strides being taken to drive inclusivity and capital returns on these investments. The future of venture capital and investments is democratized, technology and data science adjacent and inclusive of breaking down archaic, exclusive and oppressive systems to ensure that we build inclusive futures and shared growth economies.