The term “wealth migration” may not be a new term or concept but as globalisation plays an increasingly important role in the direction of international investment, the goalposts are changing with regard to the rules, regulations and expectations that are subsequently enveloped within such decisions.
The responsibility to not only guarantee healthy returns on investment, but to do so in a sustainable, and socially responsible manner now brings into play the possibility of a new business entity acting as a proverbial middle man, in order to formulate a more conscientious value chain for the good of each benefiting nation.
Nowhere is this more prevalent than in Africa, where there are numerous occurrences of international investors from first-world nations angling their copious wealth towards third-world countries on the continent.
The aim is to ensure that this wealth is not only reaching the right places but is maintained internally for the good of the country’s economic future, providing the ideal platform for they, themselves to one day become the ‘first-world’ host of aspiring investors and entrepreneurs.
Offering international client-investors the opportunity to “cross-pollinate their wealth, riches and monies into projects across the world” in a way that is safe and uplifting for the target country of migration is something that business owners, Landon Romano of Steward, LLC and Innocent Chikunya of Kamina Technologies progressively establish ways to achieve.
Romano and Chikunya together earned their Baylor University full-time MBA from year 2006 and graduated from the programme in 2008, and Africa Outlook spoke to the former about how they are both endeavouring to bridge the gap between investor-ambition and the countries pursuing to build their assets.
Africa Outlook (AfO): Can you firstly talk me through the traditional concept of wealth migration and how you are adapting the trend?
Landon Romano (LR): Wealth migration is the movement of client-investors’ monies from their resident or original country into an investment hosting country for the purposes of socially responsible development, preservation and compounding of wealth, riches and monies.
Wealth migration occurs when client-investors seek returns on investments outside their primary residential country and/or place of citizenship and the persons who are interested in diversifying beyond their countries of citizenship and/or residency are seeking high returns on investment to ensure hedging against their own country’s socioeconomic risks including politics and inflation. Most happen to reside in third world and/or emerging economies. However, there are a growing number of first-world client-investors seeking third-world high return on investment opportunities.
For us, the term and concept “wealth migration” is actually about what we can accomplish for client-investors; helping to develop, preserve, hedge and compound assets by mobilising monies into global investment opportunities.
AfO: How is wealth migration specifically being seen in Africa?
LR: For example, due to the decline of the South African Rand, there are many South African persons keen to invest in first-world countries such as the United States. These persons are seeking listed equities, private equity and/or real property investments to safeguard their assets and hedge against the possible collapse of the South African systems.
However, interestingly enough, there are a growing number of persons within the United States who are questioning the collapse of the United States systems and are now therefore investing in countries such as South Africa and Zambia. Australians are seeking investments in places like Zambia as well.
The first-world country investors recognise the wealth and resources of Africa from its minerals to its agriculture with the natural resources of Africa coveted by the rest of the world. It is visible, for instance, that Chinese investors are taking Africa by storm to capitalise on these natural resources. And to a certain extent this happens at the expense of the country in which the investors “migrate”.
AfO: What do you look for with regard to optimising a wealth migration opportunities?
LR: Our ideal investment when taking client-investors’ monies for projects and returns is one that will benefit all stakeholders. When I say “all stakeholders”, I sincerely mean “all stakeholders!”
The client-investors have their rights to the preservation and compounding of their invested principal monies into the chosen asset classes. However, the hosting country must also have returns on investments for the simple fact that they are providing the products and/or services.
An example of this concept where all stakeholders benefit is through our intentions within Zambia. We will be converting “customary tenure” (tribal) lands into title-deed/leasehold bankable lands in Zambia for the use of commercial farming for the benefits of Zambia, Her people, the client-investors who input equity capital, the banks who lend the monies, surrounding communities within Zambia, suppliers, vendors, logistics specialists, wholesalers, retailers, and the end consumer.
An important element to consider is the fact that Africa has the largest untouched arable lands for livestock and crop production. As the world’s population grows, people must have food and Africa can produce it. Although landlocked, Zambia is one of the main countries in Africa that will feed itself, its eight neighbours and perhaps as far as South Africa, India, China, Australia and the United States.
We believe in the upliftment of the persons in the investment-hosting country and in ploughing back into the community for the long-term growth of its people and development of its resources.
AfO: How important is it to the wealth migration trend to monitor these implications?
LR: We realise that it is one thing to go into a country, buy up its assets, resell them, exhaust the resources and keep the riches and monies only for the client-investors. It is another thing to ensure the safety of the country’s wealth, riches and monies for the country’s people first and then the client-investors second.
By providing for the host country’s people first, this ensures goodwill, as well as upliftment. The client-investors will naturally have greater gains, long-term, by ploughing-back into the host country. This is about socially responsible and sustainable investments.
AfO: How do you foresee this trend developing in the future for the good of third-world countries in Africa?
LR: With regard to wealth migration, the persons who are in the first-world countries who have a surplus of riches and monies on hand could find highly attractive returns on investments in third-world countries. And in spite of the high returns on investment, the first-world country persons could apply their minds by way of intellectual properties and resources in further assisting the third-world countries to emerge into first-world nations.
The third-world countries benefiting from investment will then have surplus of their own to reinvest in their own country; invest in a neighbouring third-world country; and/or hedge by investing in a first-world country themselves.
To achieve this cycle of wealth though, we as investors firstly have a fiduciary responsibility to plough into these investment hosting countries.
Should you be interested in investing in either the aforementioned opportunities, or others within the business consulting pipeline, please feel free to contact Landon or Innocent using the following contact information:
Mr. Landon Romano
Mr. Innocent Chikunya
Kamina Technologies, LLC
Read the full article in this month’s Africa Outlook magazine here