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Africa Transformations and Opportunities: Dr. Komi Klu of EMIGROUP

Part 1: Overlooked Advantages. Online registrations. Refuting requests for bribes.

Dr. Komi Klu

Where can foreign investors earn 10x the ROI than in the US and have immediate access to 400 million people in one part alone? A. Africa, the “virgin territory,” is ripe for all kinds of investments. Dr. Komi Klu, President of EMIGROUP [Emerging Markets Invest Group] which operates in 30 markets, presents little-known opportunities in a young and vibrant continent and explodes many common business myths. For example, online registrations in 24 hours are replacing bureaucratic hurdles in many countries, and corruption is reducing due to the US Foreign Corrupt Practices Act and the risk of audits. He also explores positive perceptions of the US vs. China, ways for power-generation companies to prosper, cultural etiquette across the continent, Francophone / Anglophone differences, product packaging to reach the mass market, and lots more.

Highlights:

The background of Dr. Komi S. Klu

The most receptive countries for American investment or foreign investment

Advantages Africa offers that most Americans overlook

The challenges of entering the African market

The Foreign Corrupt Practices Act.

How can American and European companies compete against the Chinese

Dr. Komi Klu Bio:

Dr. Komi S. Klu is currently the Chairman and Chief Risk Officer of EMIGROUP [Emerging Markets Invest Group] which works in 30 African markets. He is a well-respected Financial Services Executive and investment facilitator with over 20 years of proven success in promoting financial and operational efficiency for large global financial institutions. These include Capital One Finance and HSBC Bank where he has held management positions overseeing Corporate Due Diligence, Risk Management, and Claims Processing Operations. Concurrently, as Chief Investment & Risk Officer of EMIGROUP, Komi is providing leadership and consulting services, assisting African companies in building solutions for large-scale, complex business challenges to mitigate risks and drive investment and growth opportunities.

Komi has earned a reputation for the innovative and strategic leadership he brings to the financial services industry, as well as to global humanitarian initiatives. He is currently the board chairman of WAFI CAPITAL, SA a private Equity firm operating in West Africa, raising funds from investors in North America and Europe.
Komi is based in Dover, Delaware, and makes frequent trips to his native Ghana. He is also an active member of the Global Chamber®, both in Anglophone and Francophone countries.

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Full Transcript

Hello everyone, and welcome.  This is your host, Philip Auerbach of Auerbach International (www.auerbach-intl.com). 

Since today’s guest comes from Africa, I’d like to reprise a blooper that I gave in the early part of our podcast series, which is an article that appeared in a Nairobi newspaper, and it said, very simply, “A new swimming pool is rapidly taking shape since the contractors have thrown in the bulk of their workers.” 

With that and as illustrating the misuse of words there, I’d like to introduce today’s guest who is Dr. Komi S. Klu.

Dr. Komi S. Klu is currently the Chairman and Chief Risk Officer of EMIGROUP [Emerging Markets Invest Group] which works in 30 African markets. He is a well-respected Financial Services Executive and investment facilitator with over 20 years of proven success in promoting financial and operational efficiency for large global financial institutions. These include Capital One Finance and HSBC Bank where he has held management positions overseeing Corporate Due Diligence, Risk Management, and Claims Processing Operations. Concurrently, as Chief Investment & Risk Officer of EMIGROUP, Komi is providing leadership and consulting services, assisting African companies in building solutions for large-scale, complex business challenges to mitigate risks and drive investment and growth opportunities. 

Komi has earned a reputation for the innovative and strategic leadership he brings to the financial services industry, as well as to global humanitarian initiatives.

He is currently the board chairman of WAFI CAPITAL, SA a Private Equity firm operating in West Africa, raising funds from investors in North America and Europe. 

Welcome Komi.  I’m delighted that you can join us.   

A pleasure to join you today. 

Thank you so much. I ask each guest when we start, if you could please give me a bit of your background of how you got to the position where you are, as well as your education and your experience to get you to the exalted positions that you currently hold. 

OK, that’s a great question. Maybe before we dive into presenting and introducing myself, let me preface that by saying that this is a unique and special time for Africa and African business. Because this week President Biden is hosting 50-plus African presidents and heads of state in Washington, DC. It started last night and is going to end this Friday, so this is the right time to talk about doing business with Africa from the US where we are based currently. 

Now let me talk about myself. My name is Komi, and I’m African. I was born in Africa. And I went to school, I started my education in Africa. Then I moved to Europe. I went to law school in France at a very prestigious university called Bordeaux Law School. It’s in the South of France in the wine country.

So, after that, I came to the US. Where I did another graduate study.  And soon after graduation in the US, I did my formal education at Widener University in Chester, PA. which is on Route 95 south of Philadelphia in a town called Chester. So, I did another grad graduate study there. In ‘98 after my graduation, I started working. I started working in corporate banking then moved to global banking. And I have had the privilege and the honor to work in multiple countries on multiple continents, and that’s what gave me exposure and knowledge about global business. That’s what gave me the taste to venture into a global business. 

That’s fascinating and thank you for telling our audience about the wonderful summit President Biden is hosting this week, and this is December 2022, by the way, for those of you who are listening. That’s excellent. 

President Bush started a major initiative for American companies to invest in Africa, and I believe lowering the trade barriers for African companies to export to the United States. And it’s wonderful that President Biden is continuing that initiative as well, in his way. 

Tell me about, perhaps the most receptive countries for American investment or foreign investment, whether it’s American or European in Africa.  

That’s a tricky question. 

All African countries have appetites for what we call FDI, Foreign Direct Investment. So, because we are now building the African continent, we need investment infrastructure in everything from food processing and production to mining and infrastructure. 

So, all African countries have high, insatiable appetites for foreign investment for American dollars investment. They are not all good. They are not all created equal, just to put it so simply, some countries offer better investment and business climates. Then other countries like Rwanda. Everybody is aware of it, and they have built a very attractive business climate in countries like Ghana are still attractive because of their political stability. And the business climate. Even though Ghana is undergoing some financial challenges today which are related to the currency and the head and the heavy debts that the country is carrying, foreign debts. But overall, Ghana is also a very good investment destination. 

By the way, we are getting ready to publish our top ten investment destinations in Africa for 2023. Once it is ready, Philip, you will be the first person we can share it with. 

Very good, so we can’t release that yet. We can’t release that wonderful information yet. We’ll keep our audience waiting.   

  1.  

With that, that’s excellent. What advantages does Africa offer that most Americans overlook? 

Oh yeah, the advantage that Africa offers that most Americans overlook is Opportunities, with a big O. There are a lot of opportunities. The growth opportunities are there. So, Africa, excuse my French, but Africa when it comes to investment, Africa is still considered a virgin land. There’s a lot that we need to do there. So, your potential for growth is much higher. You can multiply your ROI and your Return on Investment by 10…10 times which you cannot get here in the US.

In the US, most US investors, when they look at Africa, look through the media lens … what the big media houses CNN and Fox News have shown about Africa. That’s what they keep in mind. So, they don’t know that Africa has a lot of business opportunities and can offer them a very healthy return on their investment. That’s what our Americans overlook. 

And that’s excellent. So that’s the primary criterion. 

Yes

Now, similarly, the challenges for entering the African market are perhaps 10 times more difficult as well. I’m thinking primarily of the most common barriers which most people are aware of, which are both the lack of infrastructure as well as corruption. 

And I’d like you to please address those two issues too. Persuade people that those are not challenges. Those are challenges that can be overcome.  

It’s not more difficult to do business in Africa than it is to do in the US. 

A few points. For instance, today in Rwanda you can create your company within 24 hours online, we don’t visit any of it. Where I’m based you can do the same thing within 24 hours. Do you see the ease of doing business? It is the same level, you can do the same thing in Togo. You can do the same thing in Ghana. So, the bureaucracy is coming down the bureaucratic borders. all over Africa.

Now what you say, yes what you say was true? I think 15 or 10 years ago, but not anymore. A lot of African countries have put their business registration process online thanks to the power of technology. So, things are changing in Africa.

However, there are still challenges. As a risk professional, I would be decent at dealing with it if I do not say that there are still challenges in Africa. Number one. Poor infrastructure, yes. We are still building the continent. We are still building our economy. So, they affect our infrastructures which are poor and are not up to par yet. So, we are still working on them. African governments and leaders have to do a better job of building sustainability and reliable infrastructure. Now you will see a lot of roads and a lot of new buildings popping up across Africa. But sometimes those are not built to last. And this is due to corruption. 

OK, let me address the corruption problem. Africa has the perception of being a highly corrupt continent, meaning African countries show a perception of being corrupt. Yes, there are a lot of business dealings that are not legal or moral. For instance, if you give a contract to a road builder to build the roads in any ABC African country, if that road builder were a local, he or she may be pressured by the government authorities that give them these contracts to do some kickback. I’m not sure if that is still the practice of the day, but that has been how business has been done in Africa.

So, you will see some new infrastructure, some new roads that are built. Which are now built with the strongest material or the better material due to corruption. I do understand that with the help of the World Bank and the International Monetary Fund, Africans are putting some better structure, and some governance around the way they assign public markets and public contracts if that project comes to fruition, then I will say that the corruption in government projects, assignments, and administration will be reduced. I think that’s the biggest area where people refer to Africa as a corrupt country. 

And it’s very, very interesting. 

Please discuss the role of the Foreign Corrupt Practices Act which Congress passed years ago in this country, in the United States, to prevent American companies from, basically, bribery … from giving bribes to officials to attract business. I believe the European Union has done something similar.

Now, speaking to American investors. Anybody who is an American citizen or investor who wants to do business anywhere in the world needs to know about the Foreign Corrupt Practices Act. And sometimes we refer to it simply as the anti-Bribery Act. The Anti-Bribery Act prevents any American or American companies or American citizens from engaging in Illegal quid pro quo: Giving something to get a contract or to win a market. That is illegal. 

So, what we advise our clients to do is first to be aware of the requirements of the Act and to be aware of the fact that no matter where their action is taking place – being they are in Ghana, they are in Nigeria, are in South Africa – as long as they are U.S. citizens or they’re representing the U.S., if they engage in any illegal activity, they will have to answer to the law in court, so the US, the US government will come after them. It is illegal. 

It doesn’t matter what you do because people are under the impression that all these acts just apply to anything that happened on the US continent on US territory. That’s not true. As a U.S. citizen, you are bound by that.

Now, the way you manage it is when you meet your partners, or you will meet your business contacts in Africa. It is important that they do understand your business ethics. It doesn’t have anything to do with you personally. This is the way we do business. You have to present it to them so that everything that we do with you has to be transparent. Meaning, if you ask me to give you 10% before or after you ask, give me a contract or ask me to pay some money to your Swiss bank accounts, I’m not going to do it because we do not believe in that. Then we don’t do business. 

And more and more African governments and especially the African private sector business leaders do respect those investors who abide by the law and who want to be transparent in their business dealings. Nobody respects any criminal. Let me put it this way. Nobody has failed criminals, so if you go and you sell the high standard and tell them you are the standard by which my company will operate in your country, people do respect you in the end.

 You may lose. Let me be frank…you might lose one or two markets. You may lose one or two contracts, but in the end, you come out as a winner.  

That’s fascinating. You mentioned that, of course, Americans should take the High Road, in essence, that that’s not the way we do business, and we’re legally bound not to give bribes and so forth. The Chinese, however, are not bound by these rules. They do business with any autocrat, any dictator, anyone, anywhere, regardless of the human rights violations or anything; they don’t care about any of that. 

How can American and European companies compete against the Chinese, for example, and officials who would very much welcome a kickback?

That’s a good question. And I touch on it briefly. 

My question to my contacts and my partners is, “Are you engaged in the race to the bottom, or are you running the race to the top?” And the answer is clear, you cannot be competing with somebody who is doing something illegal, and you know that the thing that they’re doing is illegal and you want to compete with them. You and we should not be… We as Americans should not be engaged in a race to the bottom.

So, when you go to a country as I said, you need to tell them they need to know your moral standards. And you need to tell them that you are always going to take the high road. Now, like I said you can, you can lose one or two contracts to a Chinese, or another competitor from Turkey. 

Yeah, I mean Turkey is big now in Africa too. People only talk about China, but Turkey is doing big things also in Africa.

You can lose one or two contracts with them. But in the end, it’s because we have the rule of law. It’s because we have anti-bribery acts in America. You can ask anybody across the globe when it comes to business, people still respect the Americans. The American brand is still there. The Chinese brand people know they can get good money from them, but I don’t think that they have the same brand value. They have a broken brand. 

This is a testament to the way we do business. So, anybody who wants to be successful in Africa, who is there in the long run, who wants to build a sustainable business in Africa, is advised, highly advised, I might add, to play by the rules, in order to be successful.  

In the end, it’s very encouraging, and I very much like that expression, the race to the bottom. I would call it the race to the bottom of the sewer. It certainly happens here, in this country, as well in certain cases.

This has been a wonderful talk with Dr. Komi Klu, and his contact information can be found on his episode on our Global Gurus website (www.auerbach-intl.com/podcasts/) . Thank you so much, Komi. It’s been great speaking with you.   This is Philip Auerbach of Auerbach International (www.auerbach-intl.com). Please join us again for a continuation of my conversation with Dr. Klu and about other advantages of doing business in Africa.

Thank you, friend.

 

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