The concept of communal investment called many things in many African local parlances, is a workable system that should be encouraged in African socio commercial set-ups. I will run through this in a simplified manner devoid of complex economic complexities, in a layman’s explanation that will make sense to anyone. A Communal Investment Initiative (CII) is a system where a group of people, with the same interest, can come together and set out a contributory scheme for themselves for the sole purpose of investing their contribution in a specific asset of any kind with the sole aim of making profits for the betterment of their wellbeing. This is simply what I mean by Communal Investment Initiative. So many small and large groups of various strengths and exposures, have adopted this initiative to advance their trade and commerce. In Nigeria for instance, the ISUSU (the name CII is known by) is a scheme originally predominant among petty traders whereby someone comes to their shops daily to collect a small amount of money, called DailyContribution) into a joint purse from which each contributor receives a lump sum at an agreed interval. The recipient, when receiving the lump amount, has the privilege of reinvesting the same in his or her trade. Though he deducts from his trading amount daily to the joint purse, the fact is that it would have been very difficult for him to raise such an amount once as the lump he receives when it is his turn to receive it. Big market unions, private persons, public workers, and all manner of groups have adopted this initiative and managed the same in any way that seems suitable to them. The same concept has recently become pronounced amongst young Nigerian people, especially students who make weekly or monthly contributions from their pocket money into a joint purse he or they may have set up as in the ISUSU concept. In their case, it’s commonly called Ajὁ. Truly the Ajὁ scheme has assisted many serious students in Nigeria, not just in saving money but in the concept of financial prudence and management. This concept can easily be applied on any scale in the funding of public goods in African nations. Governments can adopt it in the form of Sovereign Wealth, Public Investment Fund, Public Trust Fund etc depending on the nomenclature acceptable to the people. The goal can still be the same. The result can still be the same.
THE CHALLENGE IN AFRICA
Now, looking at the concept further for African nations, it seems that the world’s formal and acceptable system of financing public goods and common challenges isn’t working for the African continent. Corruption of different types and incompetent leadership has wedged several efforts in making meaningful headway in many nations of the continent. From climate change to vaccine inequity, African countries bear the brunt of a global system that they are unable to influence to respond to their own needs and preferences. This is even though African needs and priorities are well defined and known. Though Steven Chacha, Anton Ofield-Kerr, and Hanna Ryder, in their paper discussion titled Global Public Investment and Africa: A better approach to financing the SDGs, opined that “a new approach, known as Global Public Investment (GPI), offers a promise. With the Covid-19 crisis spurring the desire for a significant transformation in how global objectives are funded, and with the climate crisis in full swing, it is time for African governments, businesses, and citizens to insist on better partnerships to leverage our own significant domestic and regional efforts. Instead of ‘us and them’, GPI calls for a system based on ‘All Contribute, All Decide, All Benefit” Yes, to a great extent, I agree with them on this. The challenge will still be the challenge that has bedeviled several Sovereign Wealth Initiatives in Africa, whereby a new government comes on board, instead of building on the good things they meet on the ground and will end up siphoning the funds and leaving nothing behind when leaving. It’s a wicked vicious cycle enthroned by incompetent leaders whose agenda is just to steal and rob their people. In so far as government is concerned, funds like this always fail. The good news is that funds like this founded and managed by private persons always outlive them. This part is what my discussion here is emphasizing. Private Driven Communal Investment Initiatives.
HOPE FOR AFRICA
However, there is still hope. South Africa is the only country in Africa that has a successful and thriving public investment initiative called Public Investment Corporation SOC Limited. The Public Investment Corporation SOC Limited (PIC) is an asset management firm wholly owned by the government of the Republic of South Africa, represented by the Minister of Finance. Established in 1911 as the Public Debt Commissioners, the PIC was corporatized on 1 April 2005 following the Public Investment Corporation Act, 2004. The PIC ranks among the best and most successful asset management firms in the world and is by far the largest in Africa. PIC’s clients are mostly public sector entities, which focus on the provision of social security. Amongst these are the Government Employees Pension Fund (GEPF), Unemployment Insurance Fund (UIF), Compensation Commissioner Fund (CC), Compensation Commissioner Pension Fund (CP), and Associated Institutions Pension Fund (AIPF). It is evident from this client list that the real owners of the PIC are the South African public who are contributors to the various pension funds here listed. It simply means that even at retirement they still reap dividends from the investment they made in the PIC through their pension funds.
This is the ISUSU I talk about in real terms
Through listed investments, the PIC controls over 10% of the Johannesburg Stock Exchange (JSE) and has direct and indirect exposure to almost all sectors of the South African economy. The Corporation has the mandate to invest in the rest of the African continent and beyond. Over and above generating financial returns for clients, through its impact-investing program, the PIC seeks to generate social returns by investing in projects that ensure inclusive growth. It is interesting to note that it has an investment interest in MTN Nigeria. What this means is that in every consumption of MTN services in Nigeria, a retiree somewhere in South Africa smiles to the bank. Interesting and cherishing. This can be done and achieved in Nigeria and every other African country.
WHAT NIGERIA CAN DO
Nigeria with a massive population of close to 200 million and over 20 million working-class persons can leverage this strength and set up a similar thing. However, corruption must be checked. It is on record that Ngozi Okonji Iwuala when she was the Finance Minister in Nigeria, was able to establish a Sovereign Wealth Fund with close to $2b, whereby the State Governments and the Federal Government-owned the fund. It became so regrettable that at a point, due to politics and corruption a large number of the States approached the Supreme Court which allowed them to pull off their shares of the funds. The question is, if a state shareholder, because of political differences, could pull off from the fund, how safe is the fund? It is important to mention though, that the rascality of any rogue state government in Nigeria is simply because the Nigerian SWF is made from excess crude revenues which the states would have saved but decided to save in the SWF. There is still hope for Nigeria in the Communal Investment Initiative (CII). A reviewed SWF capitalised by the Nigeria’s Pension Funds of N324tr ($27.93) can give it ($27.93b) can give it the needed strength to boldly invest in any chosen area of investment in Nigeria and Africa. A functional SWF or CII worth $27.93b, Nigeria, just like South Africa does with PCI, can revamp her entire infrastructure profitably without approaching China for loans. Courtesy Reference: https://devinit.org/resources/global-public-investment-africa-sdgs/
