A cryptocurrency for entrepreneurial Africa
What innovative funding solutions are needed to mobilise substantially greater
financial resources to help drive economic development in the world’s poorest
countries – especially those in sub-Saharan Africa?
Solutions to this conundrum have become ever more pressing in the decade since
the 2008 financial crisis, which have seen Western overseas development aid fall
year-on-year from its 2010 peak of $128.7 billion as cash-strapped governments
rein-in their spending.
At present, only two countries – Germany and the United Kingdom – have ever
reached the UN target of earmarking the equivalent of 0.7% of their gross
domestic product for international aid flows, and both countries have seen
mounting opposition to the size of their foreign aid budgets. An alternative source
of funding must now be identified.
Rapid rise of cryptocurrencies
The rapid rise of cryptocurrencies make them a compelling source of new funding
for start-ups. More than 200 coins were issued in 2017, raising some $3.9 billion
for start-ups and early stage companies. Those who thought that ICOs had peaked
in 2017 have already been proved wrong.
In the first quarter of 2018, around 150 coins have been floated. Collectively, they
have raised $4.7 billion for start-ups and early stage businesses, making them a
more important source of funding than venture capital. It looks like 2018 is on
target for being the record year for ICOs. Private capital is an enormous source of global wealth but it has not historically played a significant role in addressing the needs of the so-called bottom billion.
Efforts to redress this market failure are now at the centre of an emerging private
sector-led development drive.
Reaching the bottom billion
Robert Pyke, CEO of the Aziza Project, an organisation that is seeking to boost
the success rate of start-ups in African countries, said: “Private capital is always
looking for investment opportunities but only backs those prospects that meet its
appetite for risk and reward.”
But there is a catch. “Investors seek good returns but are extremely wary of the
risks associated with start-ups and small and medium enterprises,” Pyke said,
adding: “There is a paradox here. Start-ups can provide high returns. But investors
are put off by the high risks involved.”
Squaring that circle lies at the heart of the Aziza Project’s attempts to make start-
ups more attractive to private investors. According to Pyke: “Start-ups play a
uniquely critical role in any economy in terms of job creation and wealth
“This is all the more important in circumstances where governments are looking to
make reductions in public expenditure, and big corporates are seeking to improve
their profitability – sometimes at the expense of headcount,” Pyke said.
Rollout of the Aziza digital currency
One prospective solution is the rollout of the Aziza digital currency which is
designed to boost job creation by providing start-ups with a broad range of
business services they need to become viable, thereby making them more attractive
“The Aziza digital currency is aiming to ride the cryptocurrency wave to raise
finance to invest exclusively in start-ups that that will provide investors with
superior returns,” Pyke said. “What makes the Aziza digital currency different is
that it will own an equity share of these start-ups and provide support services to
enable them to grow.”
Pyke added: “Our ambition is to provide support services in finance, banking, tax
and accounting, legal and intellectual property management, human resources, IT
and marketing at a higher quality and a lower cost than a start-up or entrepreneur
could achieve themselves.”
Support for Africa New Energies
The first start-up being supported is Africa New Energies (ANE), which has title
to 22,000 square kilometres of an onshore prospective hydrocarbon concession in
Namibia – an area the size of Wales – along with supportive airborne data and
geochemical evidence of hydrocarbons – both oil & gas.
Pyke said: “ANE has also developed innovative exploration techniques needed to
search for oil and gas across its Namibian concession at a third of the cost of
traditional hydrocarbon exploration techniques, and with ten times the likelihood
In addition, “ANE has also worked hard to create long-term relationships with
central government and local communities. Giving the company access to
infrastructure, vital local geological insight and concessionary fiscal terms,” he said.
“Finance raised from the Aziza digital currency sale will fund the implementation
of a ten-well drilling programme,” Pyke said, “which if successful, will help fund
the construction of a hybrid gas-to-solar power plant that will supply low-cost
electricity to the local grid, that will in turn deliver a massive stimulus to the
Namibian economy, boosting job creation in the process.”
Pyke added: “The ultimate goal is to use Namibia as a proof of concept, then
replicate the achievement in other countries across the continent, and in the
process light up Africa and thereby bring electricity to the 630 million Africans
who currently have no access to the grid.”