'PE whore' Geldof urges industry to help build Africa

Sir Bob Geldof delivered a keynote address at PEI’s Africa Forum on Wednesday in which he urged the industry to help make Africa 'one of the polar financial centres of the world'.

Sir Bob Geldof, a musician and co-founder of Africa-focused private equity firm 8 Miles – named after the distance between the shores of Southern Europe and North Africa – opened his address at PEI’s third annual Africa Forum held on Wednesday in London, with a sales pitch.

“My name is Bob, I’m a PE whore, and I’m looking for 25 million quid,” he said, with reference to his firm’s current fundraising; it is understood to be targeting more than $750 million.

He defended his shift from charity work into business, saying, “Money is not an evil thing, it’s amoral – it depends what you do with it. I’m rich, I did well. I’m the chair at several companies. I like business, but believe me, there’s nothing more ruthless and focused on the bottom-line than rock ‘n roll,” he added.

His speech soon turned to Africa and why it should demand attention from investors.

Africa is the last continent yet to be built.

Bob Geldof, co-founder of 8 Miles

“I’ve been investing in Africa for 25 years, and I have a decent track record. My focus turned to Africa 26 years ago, thanks to the BBC. The death of 30 million human beings back then was cruelly unnecessary and a blow to the human corpus. Since then, so much has changed. But we’re now at a moment of fundamental historic change – it’s a moment that will be discussed in 500 years’ time. The future doesn’t belong to us, but it will be shaped by our values.”

He passionately argued that there was still a place for charity – “If we lose that impulse to reach out and help another human, we lose that little spark inside us” – but argued investment and trade is now the solution in Africa, rather than aid.

“One of the fundamental aspects of the world economy is asymmetry – two-thirds of the world’s population lives on less than $1.50 a day; it’s impossible to live on less than $2. It’s trade, not aid, that pulls people out of poverty,” he said.

He was critical of China and what he called its “ferociously authoritarian regime”, and the world economy, which he said was “a massive ponzi scheme, with the poor at the base”.

He countered a common argument for avoiding investment in Africa, saying, “People say corruption is the problem. Well there’s about 6-7 percent corruption in Africa, which is 6-7 percent too much, but it doesn’t stop investment, it simply impedes it. In South-east Asia, it’s 11 percent, and 13 percent of China’s GDP comes from corrupt practices.”

“Africa is so huge, talk of ‘sectors’ to invest in there is laughable. The focus should be on inter-continental trade. Inter-continental exports currently only comprise about 10 percent [of Africa’s GDP]. It’s a continent of teenagers. It’s 60 percent rural at the moment, but that will reverse over the next 20 years. The driver will be technology.

“Africa is the last continent yet to be built. What does this nation of teenagers want? Power, homes, jobs, yes. But also iPods and Nike trainers. It’s an entirely modern continent. Within a few years African consumers will be spending more than Brazilian ones do today. Europe’s getting old, and we’re nearly bankrupt. Where will our brain and muscles come from? The answer is eight miles away. But if we don’t get our skates on, we’ll lose this continent to the East, which would be a nightmare geo-politically.”

“For private equity, the question is: what next? The answer is: Africa.”

PEI's third annual Africa Forum continues Thursday at 8 Northumberland Avenue, London.

For details call: +44 (0)20 7566 5445