MONTREAL — Irish rock star Bob Geldof didn’t mince words when he told a room full of financiers that they should be looking for investments in Africa right now.
“Where else are you going to go in the current world that offers you the sort of returns that Africa is offering? Are you in commodities? Are you in equity? Look at the market — it’s crap,” said Geldof during a speech in Montreal at the CFA Institute’s annual conference for investment professionals.
“The job of you guys is to take care of your clients’ money. Surely you’ve got researchers down there that can answer these questions and if you haven’t, are you doing your job?”
Geldof, the businessman, political activist and songwriter who made his name raising charity aid, is also founder of the 8 Miles Fund, a pan-African private equity firm focused exclusively on investing on the continent. Perhaps best known for organizing the 1985 Live Aid charity concert to raise funds for relief of the Ethiopian famine, Geldof said he was pressured to try his hand at private equity as a way of making an impact.
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“I decided to do something I thought I’d hate and that I’d have no interest doing — basically your job — because you weren’t f—ing doing it so I had to,” he told the crowd.
“It turns out that I really liked this.”
Geldof says there is no other area of the world where investors can get the same return on investment as in Africa. At 8 Miles (named after the proximity of Europe and Africa at its closest point) he says the firm has seen a 25 per cent internal rate of return after raising about US$300 million since 2012.
Since then, 8 Miles investments have included Uganda’s Orient Bank Ltd., Egypt’s Eagle Chemical Group and the Awash Wine Share Company in Ethiopia.
Though Geldof says his firm does not invest in the extractive industry — “I won’t go there, it’s dirty”— he does believe Canada’s strong presence in the African mining sector is a net benefit to the continent.
“With you guys bringing skill transfers and foreign exchange, you’re bringing your ability to trade. But because it’s at a very high level, you have to ensure that there isn’t any level of corruption involved and that’s really difficult,” he said at a news conference following the speech.
“If that money stays in that country as opposed to being siphoned off to some tax haven then of course it’s a net benefit.”
Geldof says there are multiple ways to invest in Africa: Canadian companies, many of them miners, do so through their projects across the continent, but investors can also put their cash to work by investing in African companies that need capital.
The place where he sees the biggest investment opportunities are for deals between $15- and $25-million in the consumer space, not only in companies that produce goods, but also in banking, insurance and other financial services.
It’s the best spend you’ll ever get for return on minimal investment.
“Into (Africa) falls most of the problems of the past century and the opportunities of this one,” he said. “On behalf of your clients, go down there, kick the tires, smell the earth.”
Still, he says that abandoning foreign aid is not the way to go as it is the easiest way for governments to establish “soft power” that later pays off.
“It’s the best spend you’ll ever get for return on minimal investment,” he said. “Soft power in this continent that will be absolutely critical in the 21st century.”
Geldof also took issue with Prime Minister Justin Trudeau stating on Tuesday that meeting the U.N.-endorsed goal to spend 0.7 per cent of Canada’s gross domestic product on foreign aid is “too ambitious.”
“It seems unambitious for a man as ambitious as Trudeau to limit that,” he said.