Growth or control? (Part 6)

__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…

#InvestorsLoveGROWTH!

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:

#InvestorsLoveGROWTH!

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. . .

by 20 Replies

About Strive Masiyiwa

Strive Masiyiwa is the Founder and Executive Chairman of Econet, a diversified global telecommunications group with operations and investments in over 15 countries. His business interests also include renewable energy, financial services, media and hospitality. Masiyiwa serves on a number of international boards, including Unilever, Rockefeller Foundation, the Council on Foreign Relations’ Global Advisory Board, the Africa Progress Panel, the UN Secretary General's Advisory Board for Sustainable Energy, Morehouse College, Hilton Foundation's Humanitarian Prize Jury and the Kenjin-Tatsujin International Advisory Council. He is one of the founders, with Sir Richard Branson, of the global think tank, the Carbon War Room, and a founding member of the Global Business Coalition on Education. Masiyiwa took over the Chairmanship of the Alliance for a Green Revolution in Africa (AGRA) from Kofi Annan. He is also Chair of the Micronutrient Initiative, a global organization focused on ending child hunger and improving nutrition. In 2012, Masiyiwa was invited by President Obama to address leaders at the Camp David G-8 Summit on how to increase food production and end hunger in parts of Africa. In 2014, Masiyiwa was selected to Fortune Magazine’s list of the “World’s 50 Greatest Leaders”. As a philanthropist, he is a member of the Giving Pledge, and his contributions to education, health and development have been widely recognized. Masiyiwa and his wife finance the Higher Life Foundation, which provides scholarships to over 42,000 African orphans. In 2015, he was the recipient of the International Rescue Committee’s Freedom Award and was presented with a UN Foundation Global Leadership Award for the work of the Africa Against Ebola Solidarity Trust, which he chairs and helped establish to fund the deployment of African healthcare workers to combat the outbreak in West Africa.

20 thoughts on “Growth or control? (Part 6)

  1. Strive Masiyiwa Post author

    Afterthought 1.

    The Johannesburg Stock Exchange (JSE) where this photo was taken, was established in 1887 and is the oldest bourse (exchange) in sub-Saharan Africa. Zimbabwe’s is the second oldest! (Right now the JSE is the 19th largest in the world.) There are lots of courses online to help you get a better understanding of financial (capital) markets like these, and why they’re important for entrepreneurs with growing companies!

    Here’s a link to a course that starts next week: https://www.coursera.org/learn/financial-markets-intro. I’m not endorsing this one, but just look it over to see what’s on offer. If you decide to take it (or any others), share your feedback with the platform. Remember, with your Smartphone, you can now take courses from top universities across the world. Some are free and many offer financial aid.

    Reply
  2. Strive Masiyiwa Post author

    Afterthought 2.

    If you are a professional living and working outside your own country and you want to invest back home, one way you can do so easily and without fuss is to buy shares in companies on the stock exchange. You can even try buying shares in companies in other African countries. It’s just not recommended that you use all your savings in this way, but have a more balanced approach. Always always do your homework and work with credible and trusted professionals.

    Reply
  3. Strive Masiyiwa Post author

    Afterthought 3.

    There are three ways I can invest in your country: 1) I can start or buy an existing business; 2) I can buy shares in an existing (private) company; and/or 3) I can buy shares in companies on your country’s stock exchange.

    For most investors #3 is actually the easiest and safest method of investment. It allows you to get your toe into the water and test the temperature of the environment. It never ceases to surprise me how many policymakers responsible for investment into a country pay very little attention to the importance of a stock exchange that operates on international standards.

    Reply
  4. Strive Masiyiwa Post author

    Thando writes,

    I truly believe that as more people buy shares on their local exchanges – the entire economy is lifted. Your investment funds existing companies and encourages other entrepreneurs to start their own companies and create jobs in the process.

    One important thing to consider when buying shares on the Stock Exchange are the fees of doing so. Buying and selling too often can erode returns due to the fees incurred. As a long term investor, you want to buy and hold for long term growth.

    To get an idea of the costs involved in buying shares on the Johannesburg Stock Exchange see the article link below. The Exchange in your country may have different fees so it’s important to do local research.

    https://zonotho.co.za/what-it-costs-you-to-buy-or-sell-shares/

    Article by Zonotho – a platform I co-founded to improve knowledge of finance and investment markets on the continent.

    My reply,
    Excellent comment!
    We need more people like you to share knowledge like this.

    Reply
  5. Strive Masiyiwa Post author

    Basketball (NBA) and entrepreneurship:
    I never played basketball at school. I barely knew it existed. My exposure in Sport was limited to soccer, cricket, and rugby.
    When I met my wife she was a national basket ball player, which meant I had to learn everything about the game ..very quickly…guys you know what I mean!
    I taught myself everything I could, and hung around the game! She was impressed!
    I know a lot about basketball, because it was important to me!
    I taught myself to love the game, and stopped going to soccer, because my girlfriend hated it!

    So what has this got to do with entrepreneurship, you might ask?
    Everything!
    If it is important to you to one day get to the top of the game, any game (including top level entrepreneurship) you must invest time and effort in it.

    I did not always know what I know about raising money through various methods like Bank loans, supplier credit, Venture Capital, stock markets, bond markets etc.,
    I was not born with this knowledge and even now I’m still learning.
    These are the mechanisms by which Capital is raised.
    Imagine if you spent as much time in a week following channels on Kwese like Kwese Inc, Bloomberg, CNBC Africa, as you would on watching EPL…in a year you will be on your way to something special!

    Reply
  6. Strive Masiyiwa Post author

    Kwese Inc:
    In my SA office I always have the tv on Kwese Inc.
    My new favorite show is Hatched!
    It is in shows like this that you realize how giant American corporations are born or “hatched”!
    Let me know if you have seen it.

    Reply
  7. Strive Masiyiwa Post author

    Afterthought:
    In September 1998 we raised $10m USD from our investors who included thousands of ordinary Zimbabweans who could buy 100 shares for just $10. The value of the company (almost 20 years later) has increased from $10m to over $2,5bn.
    A Pastor’s family that sold their car to buy shares, told me that they had managed to buy a family home by selling some shares over the years. They are still millionaires even today and still hold most of their shares.

    Reply
  8. Strive Masiyiwa Post author

    Afterthought:
    During Zimbabwe’s hyper inflation which reached over 500bn %, many people noticed that the Econet share price always increased above the rate of inflation!
    It became the quickest way to protect the value of money, people would even buy goods and services using our shares.
    Pension Funds bought our shares to ensure that the value of pensions did not collapse.
    There are many people who will receive a proper pension when they retire, if their pension fund held our shares, because they did not suffer loss

    Reply
  9. Strive Masiyiwa Post author

    Quiz of the week:

    I will give a Kwesé TV decoder to the first person who can give me all the following information from their own country’s stock exchange:

    #1. Give the names of the five largest companies by market value (including the value in USD).
    #2. How many companies did an IPO or rights issues last year on your country’s exchange? Please give the total amount raised.
    #3. What is the total amount in USD raised from foreign investors last year through your country’s stock exchange?
    #4. How much in total was traded on the NYSE last year?

    Reply
  10. Strive Masiyiwa Post author

    Emeka writes,

    I have lost trust in the NSE. All the shares I bought about 8yrs ago with my savings (as a student) have diminished over the years. From mergers, to acquisitions and failed companies. It’s very sad. I have watched good multinational being run down by careless and criminal minided CEOs. They still go unpunished, travel overseas and return years later and still get into another blue-chip. From various annual reports, I have also discovered that a few people seem to sit on some of the lucrative boards in Nigeria. This has made the stock exchange less interesting. I hope the authorities can really see the need to harmonize and regulate it.

    My reply,
    I’m sorry about your experience with the Nigerian Stock Exchange. This is an extremely important exchange for the future of Africa, and not just Nigeria. Nevertheless there is much that can and should be done to make it more accessible to ordinary people as yours is not the only complaint on this platform.
    In your own case, I would also like to suggest the following:
    #1. It was a little reckless to invest all your savings on stocks when you knew so little about investing.
    #2. You need to study some of the things I have said now and in the past to guide you when you go back in again, which you no doubt will.
    #3. You should be actively involved in any company where you buy shares. For instance you should attend meetings called for things like mergers etc, and cast your vote. This is how you gain deeper understanding of what is happening.
    Don’t allow others to determine the future of your investments. Learn to have your say.

    Reply
  11. Strive Masiyiwa Post author

    Imagine if you received a letter from the CEO of an investor who manages $5.7Tn!

    Almost twice the size of the entire African economy. Yes there is such a company, and it is Called Blackrock. The CEO is called Larry Fink.

    Here is what Wikipedia says, about his organization:

    “Founded in 1988, initially as a risk management and fixed income institutional asset manager, BlackRock is the world’s largest asset manager with $5.7 trillion in assets under management as of July 2017. BlackRock operates globally with 70 offices in 30 countries and clients in 100 countries.”

    The other day he circulated this letter to CEO’s of the companies that he has shares in. When a guy who has over $1.7 Tn in cash to invest speaks you listen!
    These are the type of guys Aliko Dangote, and Sheryl Sandberg are listening to!
    If you watched Bloomberg and CNBC on Kwese you would know guys like him already!

    For sure this letter is long, but by now you know the importance of reading serious things even if it takes you a few days.
    Enjoy!

    https://www.blackrock.com/corporate/en-us/investor-relations/larry-fink-ceo-letter

    Reply
  12. Strive Masiyiwa Post author

    Somolu writes,

    Dr. Strive, Nigeria should be a case study. Over one billion USD in fdi in 2017 and at least 3 exchange rates. I hazard a guess that certain investors look beyond the treble exchange rates because they see something else.

    My reply,
    I’m very much aware that Nigeria drew in $1bn in FDI through its Stock Exchange, which was an impressive increase in percentage terms.
    The question you have to ask is how does it compare to the total amount (not percentage increase) drawn by markets like South Africa, China, India?
    Not to mention the likes of New York which did $11Tn!
    Nigeria needs to be drawing in over $100bn a year to draw in sufficient capital for massive development in industries, and infrastructure for a population expected to reach 1bn at the end of this century.
    Check the absolute numbers on those other countries, so we can have a healthy debate on this.
    Nigeria is the engine room of Africa, and we must get that engine pumping to full capacity.

    Reply
  13. Strive Masiyiwa Post author

    Emmanuel writes,

    Sir.when you said 60% shares was owned by Others investors.Although. the Company is publicly owned,but you are still invariably in control because the percentages of shareholding are smaller in units when compared with yours.

    The probability of them voting will be in thousands of shareholders compare with a single or few larger percentage(e) of shareholdings.

    That is the pyramid and beauty of company stock market.

    My reply,
    When we have a major decision to make we invite the shareholders to participate, and whilst they all don’t turn up at meetings, they vote by post using “proxy forms”. You will be amazed how many participate. There are also professional analysts and brokers who are quick to mobilize shareholders to take a position. It is actually very exciting to see.
    Warren Buffet actually hires a sports stadium at which his small shareholders come in their thousands, and many millions more participate online.
    It would be my own dream to hold a shareholders meeting this way for African investors. Next game!

    Reply
  14. Strive Masiyiwa Post author

    Ssimbwa writes,

    Investing is sowing imagine how many kilograms you do after after planting 10kg of maize when using modern practices

    My reply,
    Go back to the first ever post I wrote, and all the comments I have done over these five years.
    These are my “cook books” with all the recipes and sweet sources my boy. I left nothing out.
    I love you!
    Enjoy!

    Reply
  15. Strive Masiyiwa Post author

    Masimba writes,

    Im intrested in knowing the tactics you employed in multiplying $10m to over 2.5bn.

    My reply,
    If you go back to the first post I wrote, and from there carefully read each one since, including my comments, they are my “cook books” on how I did it. I have been giving you the recipes and sweet sources, my boy!

    In real life there is no “silver bullet”, (or magic code) unless you take the short cut by stealing from public coffers, or engage in corruption.
    There is no big lottery win out there, in which you don’t have to learn anything or sweat.
    So if you really want to learn how I personally did it, then go back to the beginning, go through it, over and over again. “Study to do”: put things into practice.

    Reply
  16. Strive Masiyiwa Post author

    Faji writes,
    Sir can you recommend at least three companies into which I can invest.

    My answer,
    Absolutely No!
    The reason is simply; I would do you an extraordinary disservice as an entrepreneur or potential entrepreneur. It’s like asking your teacher to sit your exam for you!
    At this stage I’m not even trying to teach you about the importance of investing through a Stock Exchange. I did that long ago, and you can revisit it whenever you like.
    Here I have one clear objective which is to show entrepreneurs, who have perhaps been operating for a few years, that they should set their sights on raising capital through a Stock Exchange rather than bank loans or even venture capitalists.
    And to do that you start by understanding how Exchanges are used to raise capital for businesses.

    Reply
  17. Strive Masiyiwa Post author

    Prinz writes,

    It may not be as easy as ABC over here in Nigeria, because, before you can be listed on the NSE, you must be incorporated as a Public Company. The implication of this is that you must meet certain share capital requirements and other very capital intensive requirements of raising IPOs in the Capital market.
    The long and short is that this is not for small start ups, but for the Big players who are highly capitalized.
    But, i completely understand the whole essence of your post, and i will always appreciate you Dr strive.

    My reply,
    When I’m in a major city I like to go the Theatre, and one of my favorite shows is s musical in which people gather together, and discuss how impossible it is based on traditions, but there is always a guy who whistles:
    “It ain’t necessarily so, just because they said it’s so!”

    If ever I told my mother that something could be NOT done, she would look at me critically and ask:
    “Who told you?”
    And then add:
    “Did you check it for yourself?!
    And finally she would push me and say in my native tongue:
    “Don’t fear from a distance!”

    If you follow everything I have said over the years, I insist on finding a solution what they say cannot be done, because “it ain’t necessarily so, just because some other guy said it’s so”!

    Finally a Nigerian friend was in my office the other day, and we discussed listings on the exchange there. He did it with a very small company!

    Reply
  18. Strive Masiyiwa Post author

    Haberghard writes,

    Am missing all this because am in S. Sudan. Is their anybody will to record and send me search shows. Imagine I havent watched The Profit, Peer to peers on Blomberg Tv

    My reply,
    We have not yet been able to establish an operation in South Sudan, because of the instability. Like a lot of investors we are anxious about the war situation.
    The Kwese signal does reach South Sudan, and it will be very easy to sell decoders there. We just need a proper license and local partners (eDealers) to sell them and collect money for us. I’m sure it will happen this year.

    Reply
  19. Stephen Kamugasa

    Your advice to would be investors on the African continent is pure common sense. Few would dare to disagree with you. But you make an assumption that many African countries are functioning as democracies based on the rule of law. It is not true. On the contrary, many African countries do not value the right to property. You will find that those who get run businesses in these African countries tend to be close relatives or friends of those in power. It is my sincere hope that the revolution you have stated in Zimbabwe spreads to other African countries by way of example. We need to persuade African rulers that the culture of entrepreneurship is good for them and their countries. It is the quickest way to lift poor people out of poverty, and that people may come to love them for giving them the opportunity to make a little meaningful money – the kind of money that will not be taken away from them either through theft or corruption.

    Reply

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