US entrepreneur shares why he chose Tanzania

QUESTION: You began your entrepreneurial ventures at just 14 by creating a business and later selling it for an undisclosed sum. Tell us how you managed to start that business and how it defined your next move.ANSWER: I think fundamentally, I understood things differently than most. I always saw the conventional route as something that was exactly that—conventional. I always thought that I wanted to operate a few deviations above the conventional route, in which case a lot of that comes down to knowledge acquisition and realizing that your capacity is so much more than you’ve been led to believe. That internal growth, progression, and questioning led me down the path of entrepreneurship.After selling your first business, you went on to invest in various sectors, such as digital media and real estate. Why did you choose to diversify your business interests early on?When I look at a particular sector, I look for an opportunity that maybe other people don’t see. A lot of my business investments and activities come down to data and market opportunity. I look at the possibility for us to penetrate a particular market, but do so on such a scale that we are able to capture a sizeable market share. So anything that we do, we look to do it at scale.In Tanzania, you have invested in agriculture via Tova Farms, which is a venture capital-backed agriculture company. First of all, unpack this for us: what does it mean to be venture capital-backed? How does it operate?When I first got interested in coming to the Tanzanian market, many investors asked me why I would come here. They looked at it as an emerging economy in East Africa; maybe the regulatory landscape is not so solidified, and there’s a potential for loss of investment. But you can look at a number of different countries, and there will always be a risk. So the first thing that investors do is analyze risk.When I was pitching my idea to investors, I said I wanted to go to Tanzania specifically, not Kenya or South Africa. I want to put millions of dollars into the country to build. What I fancy very much is to build and develop on a large commercial scale.When it comes to venture capital-backed ventures, what it means is that we have 16 venture capital firms that came along on this journey to invest with us, to give us the opportunity and more finance to enter and penetrate the market. Some had their doubts, but I think we’ve demonstrated time and again that the investment was correct.Tell us a bit more about your business operations in the country and what made you decide to invest here.We own a fairly substantial commercial production site for avocado. We produce and export avocados. We chose Tanzania in particular because it has great fertile land and an incredible workforce. GDP activities are heavily reliant on agriculture, which means areas of the economy are specialized and tailored to agriculture. So we felt that the infrastructural support for agricultural activities was here. The next step for us as a business is to increase processing capacity.What is your view on Tanzania’s investment landscape?Tanzania has tremendous opportunities, especially given the current administration that has a specific focus on attracting foreign investments into the country, a situation that was different in the past when it wasn’t an attractive destination for foreign investors to come. What we are seeing now is a change in the regulatory environment for the better. Reforms are being made at an unprecedented pace. There appears to be a willingness from the government to listen to investors and look at the areas that need improvement. It is a very rare occurrence to see a government so willing to attract foreign investment but also maintain the security of that investment in many places in Africa. I have been to many parts of the continent, I have done the negotiations, I have talked to government officials, and I have looked at the regulatory landscape and the potential for risk of loss of investment. So, in my opinion, Tanzania is on a rising trajectory, which is just like purchasing stock at a low price; you know that in the future things will only get better.How much in total have you invested in Tanzania?Venture capital put up just $1.5 million in the Series-A round, which closed in under 30 days in the very early stages of our project. This is all we would accept, as we had to give up equity. I financed the remainder via my investment group. I’ve invested about $3.5 million personally.We are also in discussion with the government about a new planned $25 million investment in a mega-processing center.All in all, we will put in a total of just shy of $30 million of foreign direct capital into the country, inclusive of this new project.What are some of the challenges you’ve had to overcome since you started your operations in the country?Tanzania is growing, and as an emerging economy, there is an opportunity to grow more. But I think that there are some limitations in capacity, like processing, and some logistical issues, like infrastructure and roads, which might be slightly problematic for us when exporting. We have solved a lot of these challenges in the private sector. In my opinion, the private sector has an opportunity to build if the government allows it. When we ask the government if we want to build a 30-kilometer road from the farm through the village and show them our architectural plans, there has never been a time when they say no.How do you suggest the government solve the logistical issues?Let me approach this from a government standpoint. The way that I see it is that road building requires a lot of capital investment, which can be challenging for fundraising and execution. So maybe something the government might consider doing is issuing bonds or potentially raising investment and recouping through road levies. There are investors who might be willing to finance that so long as they can recoup or even generate a return on investment. So the government should look more into the private sector for the financing of the infrastructure. I’m certain that they are doing that already, but there is a potential for creativity that may sometimes be overlooked. A very substantial issue with exports, especially with fresh produce, is that you need access to tarmac to bring refrigerated trucks into the facilities or sites. Right now, some businesses are limited by the infrastructural capacity in their areas; they cannot scale their investments.Another solution would be the decongestion of mines in some areas.You have established your headquarters in the UAE. Why the Middle East?The Middle East is continuously progressing as potential capital for global economic policy; the business environment is conducive, access to capital is available, and the infrastructure in terms of banking, financial services, and technology is very good. Everything is happening in the Middle East, and I think it’s particularly happening in the UAE. The leadership in Dubai is so dedicated to continuously improving their processes and environment that it was too attractive to pass up the opportunity to engage there. We saw Dubai as the best place to put our headquarters, as we intend to globally expand across many verticals.Beyond agriculture, what other sector do you think provides great growth potential and is ideal for investment?Financial technology (Fintech). When you present to the public an opportunity, especially in the emerging economy, it needs to be something that is very convenient. Once you offer them a solution, they will never go back to something inconvenient.When you look at the banking industry in Tanzania, some of the processes can be substantially reformed, but they are out of date. If you look at some of the other countries, their financial technology, access to accounts, quick payments of remittances, and everything thereafter is on point, quick, and convenient. I can see that as lacking in Tanzania in some capacity. So I think fintech is a great investment. I also think mobile app development can be big in Tanzania. You have some access to international players such as Uber and Bolt, but it is very preliminary, so I think there is substantial opportunity for digital growth in the country. Provided by SyndiGate Media Inc. (Syndigate.info).