__Some things you need to know about investors.
In my last post, I talked about how I raised money from thousands of ordinary Zimbabweans by selling them shares in the company. Once they bought those shares, they were free to do with them whatever they wanted. They could hold on to them, if they liked our management, or they could sell them to others, or they could even give them to their children. Those shares were their property just like any other property they own.
# Every single person who bought the minimum 100 shares for just ZD$100 (at the time) immediately became not just an INVESTOR but also a CO-OWNER with me, and that remains the case even today.
I never imagined to buy them back, or to own them again! Years later when I started to get some dividends, I would sometimes buy shares on the Zimbabwe Stock Exchange (ZSE) because I believed in our company.
# Growth of the business is more important than who “controls” it (as long as it is well managed!) It’s growth that creates jobs and job security for workers.
As I pointed out, I sold 60% to thousands of ordinary people, and also to mostly local institutional investors (pension funds and life insurance companies). Other companies also bought our shares for investment.
I took the $10m (raised from investors) and used it to buy equipment and to roll out the business. Every six months, we reported to shareholders on our progress. Since we were managing the company well, the business grew quickly…
Every six months, I travelled to South Africa, UK, and the US to talk to investors. I was selling our company and our country. These were what we call “roadshows” and we did pitches similar to Shark Tank. We showed them our numbers. They were very impressed. They headed to the ZSE to buy our shares!
__One of the key methods investors enter a country is through a functional stock exchange to buy shares in local companies.
In the case of Zimbabwe, Econet has brought hundreds of millions of dollars into the economy from foreign investors who buy our stock. These investors buy their shares in much the same way as local institutional investors, and they want the same thing:
When there’s growth, there is demand for shares. And this demand leads to higher prices, because of scarcity. So when the price rises higher, guess what? Investors pay more, which means more foreign exchange enters your country! This money circulates and helps other industries needing foreign exchange.
Last year alone, foreign investors brought more than $150m into Zimbabwe by buying shares in Econet Wireless Zimbabwe. It was a record year for the company and the country, and because of a “Rights Issue” we raised $130m.
Now a foreign investor who invests through a publicly-listed company expects exactly the same freedom of ownership as a local investor:
# They must be able to take their money out (without any restrictions) including profits gained in the increased value of shares or dividends. If they see any form of restriction on free movement of their money, they shun a country, and head to others without restrictions of any kind.
# Investors don’t like inflation.
# Investors don’t like price controls.
# Investors don’t like more than one exchange rate in a country, even when one is considered official. The moment there’s some kind of “parallel” or “implied” (including “black”) market rate, forget serious investment!
I’ll finish up this series next week. Meanwhile in this New Year now is the time for YOU to become an investor. Yes! If you haven’t already done so, buy some shares in local African companies listed on stock exchanges.
Do your homework first, just like any serious investor would do. Talk to other investors, just like any serious investor would do. Invest as a long term player who wants to be a real “co-owner” (shareholder) in a company. This means you must study the country itself, and know everything about the company before you buy.
Who is ready this year to move #FromTalkToAction?
To be continued. . .