Over the past decade there has been a paradigm shift from focusing on aid to trade and investments to address the development needs of developing nations. International trade has no doubt contributed to lifting millions of people out of poverty in the developing world especially in Asia (India and China). However in many frontier markets and least developing economies especially in Africa the benefits of International trade have not been fully realised due to their weak infrastructure and relatively smaller labour force and land availability. Therefore for these economies to participate more in the global market place they need to improve their productive capacity by strengthening their infrastructure, investing in human capital and providing sufficient financing to industry. Unfortunately though many of these countries don’t have the financial resources to begin with or their financial institutions don’t have products to support most of the private enterprises in their respective countries
While alternative models such as Microfinance, Impact Investing and Patience Capital have emerged recently to address these challenges the reach and impact has so far been limited due to inadequate capital flows. While foreign direct and foreign portfolio investment could fill this gap, international investors have typically shied away due perceived high risk due to the absence of proper financial reporting and transparency.
Those who have been following my blogs would know that I have a strong desire to make a meaningful impact on Africa’s development and that I see myself accomplishing this by having a career in Investments and Finance. Attracting foreign direct and foreign portfolio investment and channelling these funds into high growth sectors which would ultimately lead to sustainable economic growth.
Earlier this year I decided to do an Internship during the summer to further develop my soft skills, deepen my knowledge of structured financial products and develop an understanding of the corporate structures and systems needed to attract global investors. Working with both an Investee company back in Africa and an International Investment firm in a major financial center I felt would serve that goal.
My first five weeks were with Liberty and Justice (L&J), Africa’s first Fair Trade Certified apparel company who in Liberia have partnered with the Liberian Women’s Sewing Project. Although an internship, I was engaged as a consultant and the project objective was to design a Financial Tracking and Reporting System for the firm. This included developing standardized financial and accounting reporting procedures, excel based tracking templates and tools for related activities and excel based reporting templates to supplement reporting tools from their accounting software. Working in such an independent capacity was new to me; nevertheless I quickly grew to enjoy the role. I particularly enjoyed the training sessions I had with the accountant and my feedback sessions with the Country Director at the end of each deliverable. This allowed me to improve my listening, teaching and motivational skills. In addition my time with Liberty and Justice has given me the opportunity to appreciate the challenges faced by entrepreneurs in post-conflict economies, among which finding good talent ranks high. This further fuels my desire to make ‘Kuelimisha’ a reality. There are however several unique opportunities available in countries such as Liberia. More importantly though the research I carried out to develop the institutions new financial procedures and reporting manual also allowed me to learn a great deal about internal control procedures and key areas in corporate governance that are critical for the success for start-ups in Africa.
While I am only in my third week of the remaining eight weeks of my internship with the International Finance Corporation (IFC) the vast size of their knowledge database and staff specialty clearly indicate that I have at my disposal the resources needed to acquire knowledge I seek. Knowledge not only on project and trade financing but more importantly the lessons learnt in investing in high-risk markets during the institution’s 60 years of operation. My tasks at the IFC for the next few weeks will be to analyze a set of notable projects carried out by the Manufacturing, Agribusiness and Services (MAS) unit and the write up on their development impact. In addition I have been asked to review the institutions strategic relationships with companies in ‘Part 1’ companies (i.e. companies in developed financial markets such as in Northern America, Western Europe and some Middle Eastern and Asian countries) and highlight the non-financial value the institution brings in an investment project with these partners as well as track the performance of these projects. Already I have learnt so much on structured financing as well as unique sustainable business models. One aspect I admire about the IFC having been with them for about 3 weeks is the amount of knowledge the organization has and the way they approach projects building teams that comprise of Industry specialists, environmental and social management specialist, Investment Officers, Legal advisors etc. Although this structure tends to result in longer processing cycles which I understand can sometimes be frustrating to clients however, with AAA ratings you have to say in this investment climate its model is working well.
My hope is that the end of the internship I would have acquired the skills, tools and knowledge to develop models for investing in sustainable enterprises in Africa and to identify sound investment opportunities on the continent.
Written by The Sierra Leonean