FULL INTERVIEW TRANSCRIPT
Chipo Muwowo: Hi Rupert.
Rupert McCammon: Hi Chipo, great to be in touch with you again.
Chipo Muwowo: Yes, great to see you. I'm delighted to have you on as my first guest. I really appreciate you making the time to talk to me.
Rupert, you, as I have just said, you're the Managing Director of African Investments Limited. You're the organiser of the AFSIC Investment Conference, arguably the largest Africa-focused investment conference taking place outside of Africa. And this year is 10 years since you launched, so congratulations!
Rupert McCammon: Thank you very much, Chipo. It's been quite a long journey, but we're really pleased with where we've got to.
Chipo Muwowo: That's great. I'm curious to hear why you think the conference has lasted this long. What have been some of the key ingredients, if you like, that have made it sustainable for 10 years?
Rupert McCammon: Yeah, thanks. Well actually setting up a conference is one of the hardest things that I've ever done and I've set up a number of businesses across Africa. It was quite surprising to me but really looking back on it, it is understandable because when you first set up an event you have no track record, you've got no prior years' agenda, you've got no past delegates who've attended in the past and who can stand there as references for how good the event, so getting an event off the ground is incredibly difficult, but what we've done with a very tight-knit team that's really been together for decades and we've got new people joining us all the time, what we've done is we've been very persistent in building up perhaps Africa's most actionable business network and perhaps the largest network of global investors that anyone has focused on the African continent.
So over the 10 years, we have very much focused on ensuring that AFSIC is entirely focused on matching of investment transactions in Africa. So that means bringing along the most important African investors and matching them to some of the most exciting investment opportunities on the continent. And as the event has gone on and grown larger, the usefulness of the event has grown to the extent that this year, in our 10th year, I think we have over a trillion dollars worth of assets under management represented in our investor base. We've got the two largest African sovereign wealth funds attending and we are publishing a book of over 120 investment deals that are going to be profiled at AFSIC a week before the actual event, so we're really optimistic that the event is going to be incredibly useful for the wide range of delegates that are attending.
Chipo Muwowo: That's fantastic. Sounds like a great place to network and connect with very important investors from across the continent. Just looking back over the last 10 years, can you tell me perhaps one fascinating, significant story?
Rupert McCammon: Well, I think probably the most tricky time that we had was over Covid, where about a month before we were due to hold our event in 2020, we had to really on the hop decide how serious Covid was with very little information and whether we were going to hold an event. And eventually we had to cancel the event with four weeks to go. When we eventually did hold that event, so now about nine months later in a short period of time where events were allowed in the UK, none of our team was allowed to fly in from our various African locations. So it was a pretty tricky event to host, having most of your event team actually stuck overseas because of travel restrictions. But we managed to hold it. It was a pretty successful event in the circumstances but gosh, yes, it was a tricky time over Covid.
Chipo Muwowo: Now you have a lot of experience working as a businessman and investor in Africa, so working across different countries, but mainly Botswana. Can you take us back to the days of Botswana stockbrokers and the early days of the exchange?
Rupert McCammon: Yeah, I mean I was very fortunate that I was recruited to run the Botswana Stock Exchange in the mid 1990s and I became the CEO of not only the stock exchange but also the only stockbroking company in the country at the time. And at that stage Africa wasn't really flavour of the month and so the stock exchange was trading at very cheap price-earnings ratios and so the shares were pretty cheap. And I was fortunate enough just to be there at a time when Africa was becoming much more interesting and as a result the stock exchange, while I was running it, was actually the best-performing stock market in the world and it really just took a little nudge in terms of highlighting the attractive price-earnings ratios to both local and international investors and it had quite a big impact. And I can see quite a lot of similarities between that time and perhaps the current time in African equity markets where really, I think, African equity markets have been out of favour for a really long time. Private equity is kind of flavour of the month but the listed equity space is really not focused on that much by international investors so I can see big opportunities in the same way as there were in the 1990s in Botswana. But it was a very exciting time to be there at a time where the stock market doubled in the first year that I was running the stock exchange, so really exciting.
Chipo Muwowo: You speak of the way African listed equities aren't the focus of a lot of international investors. Why do you think that's the case?
Rupert McCammon: I think it's partly a global phenomenon where, you know, the American stock market has done very well on the back of a small number of tech stocks. But if I look at some of the European markets, there's been a big move towards private equity and companies being taken out of the listed environment. I think part of that is actually the cost of a listing. So as ESG compliance and money laundering and a whole range of new regulatory requirements have been ramped onto listed companies, I think the sheer weight of regulation and the obligation of reporting has weighed on people and the private space has become more attractive. But certainly with looking at Africa, there is a broader reason with regard to Africa and that's when we look back at the last few years, times have been pretty tough for the big economies if you're looking at South Africa, Nigeria, Egypt, not so much Morocco, but times have been tough and so the investment returns have just simply not been there for investors. Now that doesn't mean to say that is going to continue in the future. Often what you find is a period of long underperformance on the stock markets means that the future is actually quite bright from an investment perspective so I'm positive that the current time, possibly, represents a bottom in terms of investors' views on African equity. I think with people's risk assessment of China as a place to invest, I think what we're going to see is more investment into locations like India, and that's definitely happening at the moment. But then, as a spill over from India, once India has continued to grow rapidly, I think we'll see quite a strong inflow of investment into Africa. It's almost the last really big continent that needs to experience rapid capital markets growth.
Chipo Muwowo: In 1999, you helped set up Capital Bank in Botswana. Could you tell me a bit more about who you worked with in that venture, but also why that was a good time to set up a bank in Botswana?
Rupert McCammon: Yeah, I mean it was actually a group of companies, not regulated as a bank, but it included a securities firm, a stockbroking firm, an asset management firm and a corporate finance firm. At that time Botswana's economy was growing really rapidly, I mean 6 to 10% per annum, it was a very exciting time in the economy. I think that there was a lot of appetite for global emerging market investments. That came to an end, I think, in the late '90s with the Asian market crisis which seems like a long time ago now, but it was a really exciting time. And what we did was we were able, so I was the founder of the operation and the sole shareholder with the exception of the corporate finance company where I had some really helpful and very talented local representation, but we were able over that period to expand the number of listings on the Botswana Stock Exchange quite considerably through a focus on attracting mining companies onto the stock exchange and also companies who were prepared to dual list on the stock exchange. And that considerably increased the liquidity of the market and was actually a really good timing from the perspective that the mining sector then experienced a very long bull market up until the 2007-2008 crash. So it was quite an exciting time. It was really from that period that I recognised that there was a much bigger opportunity, so this is really now the late '90s, to expand the business into a more pan-African operation really focusing on all sectors in Africa and all countries and that's really where I am at the moment is running a business that is looking at matching business trade and investment opportunities across Africa and across all 54 countries and trying to do it in the large for free for underlying clients.
Chipo Muwowo: So could you tell us a bit more about that? So what kind of sectors are you looking at? What countries in particular?
Rupert McCammon: Yeah, I mean I think it's important to say that during my career I started off as somebody who focused looking at all sectors in a single country, that was all sectors in Botswana. I then expanded to being a limited number of sectors in all of Africa, and now I'm at the stage where I'm looking at all sectors in all countries in Africa. So those sectors are as diverse as insurance, banking, on the financial services side, all the way through to infrastructure, to the media, the arts and literally every kind of business that you can think of.
Now, the traditional way of working on those businesses would be very human resource intensive, so perhaps phone calls and trying to match people on a one-on-one basis. But the route that I've taken really now for quite a number of years is using digital platforms to match business trade and investment opportunities. And one in particular, our Africa Business Opportunities Dashboard, is scaling across Africa. We get people from really all 54 African countries joining that platform with all sorts of businesses. It may be smaller types of businesses like local hairdressers, it could be larger ones like proper farming operations or solar power, or it could be national trade and investment agencies or investors. And those platforms, because they're digital and we're now integrating AI are allowing us to match the whole spectrum of business opportunities, whether they're large or small in whatever sector in whatever country. It's really exciting and also because they're digital we're able to do a lot of the services absolutely free of charge.
Chipo Muwowo: That sounds exciting. Now you clearly have a lot of experience working across the continent, as you've just said, working across different sectors. As you step out into a new venture, a new investment, what are some guiding principles that you hold to shape your thinking around investment opportunities?
Rupert McCammon: So I've learnt through mistakes to be honest in my career and I've set up a number of businesses and not all of them have been successful. And some of the lessons that I've learnt are that Africa, as big as it is geographically, actually has a relatively small GDP footprint in the world, unfortunately. It's something that I think will change and it will change over the course of the next century. We will see Africa's presence in the global economy expand and expand quite quickly I suspect, and Africa will shortly, within the medium term, become probably the fastest growing part of the global economy. But the problem is that at the moment, you have a continent that is relatively small in GDP terms split into 54 different countries. And each one of those countries represents a really small GDP. So you could operate in a single state in the [United] States and be operating in an economic block that is more substantial than a significant number of African countries added together. So what you need to do if you're looking at investing in Africa is you need to be quite focused on which countries you operate in, if you have that opportunity. I mean, for instance, if you are somebody based in the Lesotho or Swaziland, or in a smaller economy like Burundi for instance, you are perhaps limited to your home economy and you have what you have. But if you are not necessarily limited by home geographic constraints, then I would be looking at the larger economies in Africa. But even more importantly looking at setting up perhaps a business that spans the continent. Can you set up a tech company that can offer services at a continental level as opposed to a country level? Can you do that? Operating in Africa, if you've got operating companies in each of the African countries or in even a large number of African countries, is very difficult because each of the companies' rules, the companies' acts in different African countries requires different obligations, different reporting. I think a lot of the regulations, the in-country regulations are complex. They're becoming even more complex. Some countries just make the whole process unnecessarily difficult for businesses. So, trying to keep your corporate overheads down is really important. Thinking about your structure at an early stage is important, so where are you going to domicile your operation, and trying to get into businesses where there is already substantial economic presence. It's not easy to be a trailblazer in a new industry. As much as it sounds very exciting, it's actually not always easy to be the trailblazer. Often sometimes better to be the second or third in a new sector. Those are just some of the many, many lessons that I've personally learned through hard knocks, to be honest.
Chipo Muwowo: Sure, yeah. Thank you. And in terms of listed equities... At the start, we were talking about how often African companies are underpriced, but some are very attractive. Now, how would you advise, say, an international investor looking into the listed space, the selection of companies and sectors... I'm thinking particularly linking it to key megatrends that we see happening across the continent as well.
Rupert McCammon: I think what's so brilliant about talking to international investors about Africa at the moment is that prices in the listed equity space are so reasonable that actually it's a very easy conversation to have in the sense of you can recommend to an international investor, with a reasonable percentage of probability, that they will make a good return on their investment in the medium term. You can never know exactly what's going to happen in the short term.
What I would say is you need to be diversified. I've operated in single countries and I've been burnt where unexpected circumstances happen, where you really can't foresee changes that might happen at a political or economic level and they've just come out of the blue, and that happens reasonably regularly in Africa because the economies lack stability, because they are kind of at the early stage of really significant growth and there's no buffer zone within the economies.
So in terms of preferred sectors, I would like to focus on capital-light businesses. Your assets are much more mobile and able to move to where the money is, as opposed to if you go into businesses which are very asset heavy in a single country. So for instance a manufacturing company in an African country could be very vulnerable to changes in the political situation in that country. Now of course there are 54 countries in Africa so while people think of Africa as being very volatile politically, part of the reason for that is there are just so many countries that there's always one or two where its struggling and it hits the news and so people may get a negative view of political stability in the continent. There are many countries where they are relatively politically stable and they have been for quite a long time.
So I would go into capital light businesses. I'd go into tech businesses. I think the right tech business in Africa, it's going to be fantastic. Anything to do with retail in the long run is going to be good. So yeah, just the whole range, but of course you get opportunities in sectors that are out of favour. You know, they could be at any one time, they could be the most attractive opportunity. You may find that a manufacturing company could be so attractively priced that actually it's the one to buy. But diversification is the answer.
Chipo Muwowo: That's great. Finally, just going back to AFSIC, looking ahead to the next 10 years, what are your plans? What are your hopes for the future?
Rupert McCammon: Well, I mean, I think when I set AFSIC up, it was always with a view to building an event that is going to be a considerable source of investment into the African continent. And I never feel that my job is done. I'm always, as you've asked me the question, I'm always looking 10 years ahead.
Where I see the event has really been an event that has three interlocking focuses.
So one will be allowing us to focus at a business sector across Africa. So for instance, focusing on telecoms, focusing on financial services or mining, it could be oil and gas, could be fintech, could be any of the sectors in Africa, and building up expertise in each of those sectors so that any company in Africa feels that it's the right place to come.
The second focus is really looking at investment into specific countries, so building up our country summit. So we have very substantial presence in South Africa, the South African investment summit, the Moroccan, the Egyptian, along with many other investment summits. We've got great presence from Ethiopia, Namibia, Botswana, etc. And I really hope that those continue to grow so that investors who have single sector, or perhaps geographic constraints in where they can invest, they can come to the summits and really find the most attractive investment opportunities in those countries.
And finally the third leg on which we're building the event is really the asset classes so by which we're looking at private equity, listed equity, private debt, listed debt and property, etc. So focusing on those asset classes and allowing investors who have big portfolios, and some are international investors with hundreds of billions of assets under management, if we can tweak just a few extra percentage points of their portfolio to go into Africa, it's going to have a massive impact on the total volume of assets under management in the continent. So, really exciting opportunity and quite right, I mean, always looking ahead and 10 years is the right level and we never get there.
Chipo Muwowo: That sounds very exciting. And we're wishing you all the best in your plans. That's the end of our conversation. I really appreciate you joining me today, Rupert. And thank you to our viewers for joining us on Capital Markets Africa.
Rupert McCammon: Thank you very much.
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🎧 S1E1 | Rupert McCammon, CEO African Investments Limited