The word ‘investments’ and several shades of the word such as invest, returns, holdings, share etc are thrown about in the business community and for good reasons. Investment is an important ritual for the growth of any organisation or institution. Profit-making business, Non-Governmental Organisations (NGOs), countries and even individuals need to invest in themselves to grow and flourish. Good investment in return yields good profits and great returns and benefits for society as a whole.
People can invest in businesses and profit making ventures in several ways, examples include contributing money to the seed funding for the business itself, or coming on board as a dormant/active partner to share risk. Investors also make investments by providing debt relief or buying equity in a company. If the organisation is a public company, investors buy their stocks in effect shoring up the value of the company. As humans who want to be productive members of society, we also invest in ourselves in the form of getting requisite education and skills to compete in today’s competitive labour market. Physically, people also invest in themselves by taking care of their eating and health habits by eating right and exercising frequently. Investment is a positive action and a practise that must be sustained throughout a person’s life due to the key benefits it presents to the individual.
Investments help businesses to get much needed capital for expansion and growth. Bootstrapping can aid businesses to a certain point but then most businesses need investment in the form of long term capital in order to acquire much needed machinery and equipment to for increased productivity in the long run. Access to investment whether debt or equity has always been a challenge in Africa. Banks and finance houses lends to businesses at cutthroat rates therefore many businesses are not able to go in for such loans the banks rather borrow to governments in the form of bonds and treasuries. In Ghana, the bank of Ghana (BOG) has increased their policy rates (the rates at which the central bank borrows to commercial banks and it is used by commercial banks to calculate their base rates) to 26% in a country where inflation is in double digits currently standing at 17%. Africa herself as a continent has a love for debt financing rather than equity due to the high short term gains lenders can make in the short period disregarding the likelihood of greater values in the future. Instant gratification and debt financing go hand in hand.
That is why the growth and development of bitcoin presents an exciting time in the investment landscape on the African continent. The rapid integration of bitcoin into mainstream African finance will mean that startups will be able to receive much needed capital injection for growth and development of their businesses. The often cluttered African financial system is enough cause for most investors to back off. There are promising technological tools and equipment coming out of Africa. African entrepreneurs are just as bright and hardworking when compared to entrepreneurs in Asia, Europe and the United States. But when it comes to creating a fertile ground for startups and small businesses, a well streamlined finance and economic process, African entrepreneurs lag behind. When given the tools and support that entrepreneurs in developed economies have access to, African startups and businesses can do just as well as any fast-growing business in the developed well. That is why bitcoin integration is necessary, because bitcoin integration will help eliminate one of the greatest hurdles for the African entrepreneur that is finding finance and investments and having an efficient cross-border payment system which is not inundated with commissions and fees.
Bitcoin integration will also streamline crowdfunding in Africa, this is because differences in currencies across the continent breed different interpretation on the value we put on products and services. A unified bitcoin crowdfunding site in Africa will bring about a universal acceptance and understanding the financing of products and projects that needs to be funded. Freeing up ourselves from the chains that traditional finance and fiat currencies have imposed on us shall be one of the best decisions we have taken as a continent.
For some time now on the continent of Africa, financing has always been ‘micro’ and has always been centered on food processing companies and organisations without paying much heed to startups in the service sector. There are technology news websites, freelancing websites etc which are in dire need of capital but has largely been ignored by commercial banks, venture capital, donor agencies and NGOs in favour of food processing firms. Bitcoin development will bring about an investment ecosystem for all such brilliant firms. Africa is not only about food security but also about a good quality life which involves having the best in technology and infrastructure.
Angel investing and investment has also been a component of investing African startups have not been able to take advantage of even though it is widely popular in Europe and the States. Wealthy people all over the world have extra finances to contribute to burgeoning startups and businesses. Considering Africa’s complicated and often clustered financial systems, some of these angel investors choose to stay away yet small business concerns and organisations are better off going for angel investing rather than bank loans and venture capital which puts excessive pressure on startups to declare profit. Bitcoin integration can do wonders for business and organisational investments in Africa. African societies and entrepreneurs must accelerate the expansion of this wonderful tool for business development and growth.
Kwaku Abedi is a freelance writer/editor based in Accra-Ghana. He has an interest in bitcoin and writes on bitcoin integration in Africa.