South Luangwa

South Luangwa National Park, in eastern Zambia, claims to be one of the most unique safari destinations around. Why? Because it has among the highest densities of game, and lowest density of tourists, of any game park in the world.

When my mum arrived to visit me in Lusaka over Easter, I decided that we should go and check it out. The result was an incredible and beautiful week, which brought us within hugging distance of lions, elephants, giraffes, hippos, crocs, hyenas, and Norwegians. I’ll never forget it.

Our accommodation was a beautiful wooden hut perched on the side of a lagoon, from which we could see hippos and crocs playing with/killing smaller things. The feeling of being a trespasser in the animal kingdom, of being truly exposed to the wild, was overwhelming.

Our hut (note hippos in water...)

Breakfast on the deck at Mfuwe Lodge

Breeding colony of Egrets

Yellow billed storks in flight

An ibis fishing at sunset

a dry river bed - from april to november there are no rains

Lunching with some elephants

A family of giraffes (see the baby, on the right)

mental

I did start shitting myself at this point

But turns out she was just going for a drink

The enormous Baobab tree vs. my ridiculously small mum

Not every african is an entrepreneur

For those of you who are wondering what the hell I am doing in Africa...Thomas Friedman explains my project goals (more or less) in his latest article for the New York Times. The basic idea is to bridge the gap between the world bank's $500k loans for multinationals, and the microfinance industry's $50 loans for individuals - i.e., to develop small and medium businesses that create jobs. After all, not every african is an entrepreneur...

NY Times
April 20, 2007
‘Patient’ Capital for an Africa That Can’t Wait
By THOMAS L. FRIEDMAN

Last week, I was touring northern Tanzania when our car passed the small town of Karatu and we suddenly came upon an open field splashed with colors so bright and varied it looked from afar as if someone had painted a 30-color rainbow on the landscape.
As we got closer, I discovered that it was Karatu’s huge clothing market. Merchants had laid out blankets piled with multicolored shirts, pants and dresses, much of it used clothing from Europe, and were hawking their goods.
This was not Nordstrom. A man with a tape measure dangling from his back pocket and a megaphone in his hand was shouting: “A thousand shillings for these trousers. It’s like giving them away.” Men and women, themselves dressed in brightly colored native Tanzanian garments, sifted through the mounds of clothing, holding shirts or slacks up against their bodies to see if they fit.
Scenes like this remind you that Africa is neither all tragedy nor all renaissance. It is a diverse continent that’s struggling to find its way in the global economy and has both of these extremes, but is much more in a middle place that looks like that field in Karatu: a wild, unregulated, informal, individual brand of capitalism, which we need to channel into formal companies that can grow and scale up, even with corrupt governance.
Africa needs many things, but most of all it needs capitalists who can start and run legal companies. More Bill Gateses, fewer foundations. People grow out of poverty when they create small businesses that employ their neighbors. Nothing else lasts.
Whenever you read about capital flowing into Africa, though, it tends to be from big lenders like the World Bank, which have very strict criteria and work on big projects, or from microfinanciers, giving out $50 to a woman to buy a sewing machine. Microfinance has a role, but many people don’t want the pressure of being an entrepreneur. They want the stability and prosperity of a job created by capitalist risk takers and innovators. See India.
In some ways what Africa needs most today is more “patient” capital to spur its would-be capitalists. Patient capital has all the discipline of venture capital — demanding a return, and therefore rigor in how it is deployed — but expecting a return that is more in the 5 to 10 percent range, rather than the 35 percent that venture capitalists look for, and with a longer payback period.
A good example of what happens when you combine patient capital, talent and innovation in Africa is the Kenyan company Advanced Bio-Extracts (ABE), headed by Patrick Henfrey. He and his partners put together a fascinating group of both white and black African farmers and scientists to build the first company in Africa to cultivate the green leafy plant artemisia, often called sweet wormwood, and transform it into pharmaceutical grade artemisinin — a botanical extract that is the key ingredient in a new generation of low-cost, effective malaria treatments commonly known as artemisinin-based combination therapies (ACTs). Malaria still kills nearly one million people in Africa every year, more than H.I.V.-AIDS.
From its factory outside Nairobi, ABE is not only processing the feedstock for the drug, but has also contracted with 7,000 farmers, most with small farms, to grow artemisia in Kenya, Tanzania and Uganda. The crop gives farmers four times the financial yield of corn.
“We are commercializing a product that had never been commercialized,” Mr. Henfrey said. To make it possible, though, the founders had to not only scrape together all their own money, but also had to find investors, like the Swiss drug giant Novartis and the Acumen Fund, a nonprofit venture capital investor based in the U.S., to put up patient risk capital. (Banks demanded collateral that ABE did not have.)
“Those little windows of support make these things happen,” Mr. Henfrey said. “We could not have done it otherwise.”
Nthenya Mule, Acumen’s Kenya country director, commented to me that the stereotype of Africa is that it is hopeless and just waiting around for the West to come to its rescue. In reality, she added, “there are positive things happening in Africa, but they are not happening overnight, and some are happening quietly. ABE is exemplary. You will not see it as front-page news, but in 18 months they set up a factory with 160 people interfacing with 7,000 farmers and supplying one of the major pharma companies in the world.
“Those stories need to be talked about. It is critical to see things in action. A pothole in the road does not require a workshop. Fill it. We need a new kind of drug — let’s go out and make it instead of let’s talk about it for the hundredth time.”

“Corruption is subjective, but fraud is not”

So it’s about time for an update on Mr Ltombi Kawana, the chairman of the microfinance organisation I am consulting, who was asked to take forced leave in light of corruption charges one month ago.

The charges against him, made by several of his employees, accused him of making loans to relatives and employees and, in certain cases, making multiple loans to the same person under slightly different names. Auditors funded by the Swedish government (who also fund the microfinance institute of which he is CEO) were brought in to check these claims and in due course he has been cleared of all accusations. According to the auditors, who are pretty ruthless, he's clean.

As I said in my post about him a little while ago, I was desperately hoping this would happen. Or in other words, I was hoping he was innocent – because I definitely like and trust the guy, and it would have been a bit of a blow to my idealism if he’d turned out to be stealing from the very cause we are trying to help.

It turns out that the claims made against him were largely made up, but there were a couple of interesting exceptions. Loans HAD been made his sister, but he had markedly redirected the authorisations of these loans so that he did not bias their issuance. In addition, a loan that he had supposedly issued to his secretary (illegal) turned out to be issued to someone completely different, who happened to have an identical name (not illegal). It turns out that the newspaper which initially published news of his suspension definitely sensationalised the case.

Another point of interest, although legally irrelevant, is that Mr Kawana had been recruited from Citibank, after having worked there as an Anti-Fraud officer for several years. After becoming CEO of Pride Microfinance, he identified several employees who he suspected were taking bribes from real customers and fraudulently issuing loans to fake customers. It was these same employees, now under the spotlight themselves, who had tried to frame him with corruption charges - but not before they tried to poison him (I’m serious).

Last year, after he kicked up a fuss about missing money in the company, an assassination attempt was made on him through the use of a local poison in his coffee – this was carefully orchestrated...his secretary was bribed to call in sick so that the aforementioned employees could get access to the coffee that she is usually asked to make. This may seem very far fetched, but ask the doctor who dealt with Mr Kawana’s case at the hospital that day, and you will soon realise that creative methods such as this are not uncommon in this country. In fact, just yesterday i tried some local Zambian cuisine in the canteen opposite my office and was momentarily convinced that it contained a deadly and unnatural substance; but after some consideration realised that it merely tasted like shit. Another phenomenon that is not uncommon in this country.

Mr Kawana, due to be reinstated tomorrow, is now reconsidering whether he wants to spend any more time as CEO of Pride. I suspect it won’t be long before he resigns, and adopts a job that doesn’t carry quite the same threats to his life and career. Sadly, that means he will no longer be Chairman of the Association of Microfinance Institutes, and I may have to finish my project with somebody else. But before he moves on, he has some work to finish: “I don’t care what happens to me, but I want to make sure the people who are stealing money from Pride aren’t allowed to get away with it. Anyone can make claims of corruption on anyone else, they can make something up and people will believe it, but I have real paper evidence concerning these employees. And Nishant, let me tell you something: corruption is subjective, but fraud is not.”

P.s. As I’m sure you know, there’s another leader of an altogether different development financial institution, also hired for the job on an anti-corruption mandate, who has recently been accused of backhand dealings. Unlike Ltombi Kawana, however, Paul Wolfowitz hasn’t been cleared of charges – in fact he’s admitted his sins publicly. Evidently size doesn’t matter…whether it’s micro lending or world banking, one thing is clear: handling aid money is a dirty business.