Commentary: there are fortunes at the bottom and there is no mystery that capital can unlock poverty

The idea of investing in the developing world is not new, though in the past this has been done through personal contacts and experience in these markets. Often it was ex-patriots who found new lives in developing countries who brought money to start businesses. This, for the most part, still continues to be the case. To invest in most, if not all of Africa, requires on the ground research, and the slow development of trust and information about the markets. Our friends on Wall, or Bay Street, might say is that this is high-friction and that the lack of information is a major factor for limiting investment. They might also cite a multitude of other reasons that are listed in the Doing Business Guide, provided by the IFC (a great resource).

This personal experience is how I have come upon an opportunity to invest in a business in Africa. My own business, Adapted Consulting, is largely focused on economic development in Africa and as a result we do see opportunities from time to time. Though many argue that it should be local people who are left to develop these endeavours alone, I would argue that in some cases that is certainly a good choice, but as happens elsewhere, the infusion of expertise and capital from elsewhere is an important shot in the arm in development. NGO established economic development projects are often plagued by a problem of a mis-alignment of incentives and perhaps agency issues -- the people funding and managing may have quite differing goals. These people also are not vested in the success of these operations.

While working in Africa for the better part of the last 5 years, I have developed a set of principles that I believe in, for how economic development should be done. One of these ideas has emerged from the Prahalad school of thought, that is that I do agree with his thesis that there are economic opportunities at the Bottom of the Pyramid. I also have come to agree with many of the ideas of de Soto, that capital is essential to developing more robust economies where economic exchange can happen with reduced friction (to grossly paraphrase). Moreover, in that sense, I believe that one of the weaknesses of the current 3rd party donor model, is that good ideas that have economic potential are not easily capitalized and financed so that they can be scaled. As a result, we have vested in this idea, Rob has taken lead by pulling together academic research to help fet our or practical knowledge. I trust that we are right and that we can find a scalable and sustainable means to invest in those countries where so far, few have dared but that so much is needed. There are fortunes at the bottom and there is no mystery that capital can unlock poverty. This next decade is again about innovation, but the greatest triumphs will be in finding new ways to do business. There is great potential in these undeveloped markets, we just need to find out how to do it. Here is our effort to that end.

Ian