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US-Based FCA Corp Investments In Africa Changing Perceptions

US-Based FCA Corp Investments In Africa Changing Perceptions

U.S. Attorney and Accountant Robert Scharar has taken close to 100 business associates with him to visit Africa over the past decade. As CEO and president of 35-year-old financial planning firm FCA Corp., Scharar is considered a U.S. expert in African investment.

The Houston-based entrepreneur started investing internationally in the late 1970s and by the 90s, invitations to talk and spend were pouring in.

In the early 1990s, Seismic Energy of Houston called Scharar because of his reputation and knowledge of international investing, sparking in Scharar an interest in oil drilling in Africa.

“They invited me to a meeting to discuss opportunities and that was really my first introduction to doing business with the continent of Africa,” he told AFKInsider. “That led me to having an opportunity to take a trip to Senegal, which I found quite intriguing, and from that point on I have since traveled to Africa nearly 50 times.”

Scharer said his company started investing in businesses in Senegal. As people began to hear the company was interested in investing in Africa, invitations for meetings started pouring in.

“I received an invitation to South Africa right after apartheid ended and I went on to Zimbabwe after that to meet with small business owners,” Scharar said.

The entrepreneur also started getting calls from chamber-of-commerce leaders informing him about various visitors from Africa who were interested in learning about American business tactics.

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“They would contact me and that led to an opportunity for us to invest directly – not through any kind of mutual fund or anything – but just in a private transaction, like what you could almost call a micro-lender in Malawi,” Scharar said.

Scharar began attending board meetings and one thing led to another. In the late 1990s FCA Corp bought stock in an established insurance company named National Insurance, which later changed its name to NICO — a publicly listed firm.

Scharer has done business with companies in Africa ranging from healthcare to insurance to construction. In the business meetings, business leaders brainstorm about how to boost tourism by adding attractions such as art museums.

“The government leaders were blown-away by the transparency and the possibilities of growth,” Scharer said. “We really try to show them things that can broaden the population base in the areas in which they work.”

FCA Corp tries to buy companies that are small, and grows consumer-based African businesses. It currently owns the prestigious Protea Hotel Ryalls in Malawi and also created and manages the Commonwealth Africa Fund — an African mutual fund.

“There is a tremendous amount of education taking place and as the middle class grows, people have the same aspirations as they do here (in the U.S.),” Scharar said. “When they move to different cities people bank on their cell phones and access to the Internet.”

Misconceptions about investing in Africa

There are a lot of misconceptions about investing in Africa, he said, but the stereotypes are changing.

“Whatever people’s images are — that’s not what it is,” Scharar said. “When I take people there, it’s not what they expected. When I bring people to visit Cape Town they describe it as a ‘mini San Francisco’ and they are really surprised how technically savvy the area has become.”

Business rules and regulations are somewhat similar to the U.S. except they don’t always get applied the same way, according to Scharar.

“The positive part is that they are nowhere near as litigious as we are here in the U.S. People are much more open to talk to you about the truth with what’s going on in the business because they are not worried about getting sued.”

Mischa Lehner is general manager of Protea Hotel Ryalls in Malawi, an FCA Corp-owned hotel. He has been working there since January 2011. He told AFKInsider that the major benefit of working for the U.S. company is exposure.

“The typical perception of Africa in first-world countries can be distorted at times to what is actually on the ground,” Lehner said. “So having a U.S.-based company assists immensely in changing this perception abroad about Africa.”

Lehner said FCA helps bring confidence to potential investors in Africa. When investors know there is a U.S.-based company that has invested in Malawi and is doing well, it is crucial information and enticing for investors to invest in Africa and Malawi.

“The representatives of these U.S.-based companies also give firsthand feedback of what is actually happening on the ground both politically and economically, and advise accordingly to potential investors abroad,” Lehner said

Lehner said he feels Malawi has a huge untapped potential for investment. The challenge is Malawi is a donor-dependent country, so the stability and consistency of the economy can be volatile.

“With the upcoming elections (held May 20, 2014) and the appointment of the new president that should bring confidence to existing investors and new and potential investors,” Lehner said.

Scharar was the second person in the U.S. to create and develop an Africa fund, ans is now the portfolio manager the Commonwealth Africa Fund (CAFRX). He invests in several companies in Africa and has expertise about the marketplaces and business climate, risks, rewards, myths and misconceptions about business ventures in Africa.

Scharar has also been interviewed as an expert on CNBC, CNN, Bloomberg, Marketwatch and other media organizations.