Rock star, political activist and private equity investor Bob Geldof has condemned the global funds industry for being “criminally non innovative” in its failure to invest in Africa, according to a report in The Financial Times.
“(Fund managers) are actually paid to invest money according to their principles, so how can they justify ignoring one billion people in the world’s fastest-growing markets?” Geldof said in the report.
Geldof urged fund managers attending a recent Fund Forum conference in Monaco to invest in what he sees as a forgotten continent.
The same managers who ignore Africa go “through endless hardship to get to Asia,” Geldof said in the report. Investors who look to China rather than Africa are missing out on “massive returns,” he added.
Geldof backed 8 Miles, a fund named for the distance between the Africa and the southernmost tip of Europe that raised $200 million in 2012 to invest throughout Africa. The fund was also backed by Kofi Annan, former U.N. secretary general, and sponsored by investment bank CLSA. The U.K. development institution, CDC invested $50 million in the fund, according to The Financial Times.
An Irish born singer-songwriter, Geldof has been backing Africa for decades. In 1985 he helped organize “We Are The World,” a single recorded by 45 top U.S. artists forming the supergroup USA for Africa. Written by Michael Jackson and Lionel Richie, the single sold 20 million-plus copies.
Geldof also co-founded Band Aid in 1984, a charity supergroup led by British and Irish musicians to raise money to fight poverty in Ethiopia. The song, “Do They Know It’s Christmas” surpassed expectations and continues to be one of the most popular songs of the season.
For his efforts, Geldof received an honorary knighthood and was elevated to a spokesman for African development, according to a report in The Guardian.
Asset managers defended their actions against Geldof’s condemnations.
It’s a lot easier doing business with one country (China) than 54 countries (Africa), said Joe McDevitt, London head of U.S. fund house Pimco, in the The Financial Times report.
There are only 10 investable countries in Africa, just six of which are sufficiently liquid, said Adrian Harris, head of distribution at Renaissance Asset Management, an emerging market specialist which recently closed an African fund at $200 million, according to The Financial Times report. He described Nigeria, Kenya and Ghana as “very exciting markets.”
The industry would need to see “some stability” before investing in Africa, said Peter De Proft, director-general of the European Fund and Asset Management Association, according to the report.
“It is a whole continent with an important future,” he said. “We have a moral obligation as a fund industry to look at this.”