Vital Capital Fund has been investing in Africa with a particular emphasis on Angola, focusing on the sectors of urban community housing, agriculture, healthcare, and renewable energy. The company has just recently created an investment fund in Macau in collaboration with businessman and lawmaker Dominic Sio. In an interview with the Times, Vital Capital’s founding partner, Eytan Stibbe, said that they seek to help Chinese small and medium-sized enterprises reach the African market, especially Portuguese-speaking countries in the region.
Macau Daily Times – What led Vital Capital to set up an investment fund in Macau?
Eytan Stibbe (ES) – We intend to establish a fund here to work as a bridge between Africa and the African Portuguese-
speaking countries. We see a lot of Chinese work in Africa but we think much more can be done. With a common language, culture and [similar] legal systems, Macau can be a wonderful facilitator. Here, they speak both languages (Portuguese and Chinese) and Africans feel more at home here than in China or Hong Kong. So it’s not to replace but to enhance Africans’ access to Chinese companies, mostly small and medium-sized enterprises, because huge Chinese companies are all present in Africa already, whereas SMEs have more difficulties accessing Africa and its vast economic potential. That’s the concept behind setting up a fund here, to raise money here to invest in projects related to China and Africa.
MDT – Which Portuguese-speaking countries are you targeting?
ES – We just had a meeting with the Minister of Public Works from Guinea Bissau. But we haven’t been there yet. Our biggest investments are in Angola. Now we are preparing a big urban community development in Mozambique [of 30,000 houses to be located in different villages]. In Cape Verde, we tried to develop a wing energy project with the World Bank and we are still discussing it.
In Angola, we have invested in urban development (USD90 million), in a hospital, in a medical center (USD30 million), and in the agro-industry (USD10 million). We also do financing and investment in water purification, in sewage treatment, and clean energy. We have a different concept of investing in agriculture as a fund, because our fund is an impact investment fund, so we invest only when we can make a profit and when the project has a positive impact for the local community. It’s different from other investors who would buy a farm, develop it, and employ locals, to make a profit. Our concept is to assist the small local farmers to become more productive, so instead of buying the farm, we buy a place near the farms and develop the whole support system for the farmers.
MDT – The Mozambique project, in particular, is being developed through the Macau fund…
ES – Yes. The need for investment in Africa is huge, so the main activity of the fund is to select which investments to make and that are doing enough good for the population. On both sides, it must be profitable to justify the risk of investing in Africa and must be beneficial to the population. In Mozambique, it’s a project for affordable housing, and it should have priority over other projects, as it comprises not only houses, but also other public facilities and recreational areas.
MDT – Are you aiming at a certain profit?
ES – Yes. We’re looking at between 15 to 20 percent IRR (internal rate of return), which is a reasonable demand for investors willing to take the risk in investing in Africa.
MDT – Why did you choose to partner with local businessman Dominic Sio to create the fund here?
ES – We have been in contact with him for about four years now, trying to find the right structure to facilitate this arrangement. He seems to be a very reliable, honorable and straightforward businessman and we think he can help us very much here. He knows the country very well, he’s very well respected here and in China, so we feel very comfortable doing business with him and his team.
MDT – As you mentioned, big Chinese companies have already been investing in Angola. This has also triggered criticism, with some speaking of a new form of “colonialism.” Is China truly helping African development?
ES – Yes. And why should it be considered different from colonization? China has its interests and it presents them to the government and the government accepts. So it’s a bilateral cooperation. It’s not about taking over or controlling. The huge advantage that China offers to Africa is the speed and capability to get things done fast. We see what’s been happening in China for the past 20 years, and the first phase of development in these countries is to solve urgent problems. People in these countries need water, they need healthcare, and they need housing and work. So the biggest priority in developing countries today in Africa is to get things done and to implement infrastructure, so that places like Mozambique don’t suffer from floods. There’s a need to get infrastructures in place quickly in order to allow development, and in parallel, to improve democracy, transparency, and the overall legal system of the country.
The main criticism I find in Africa is that Chinese companies tend to employ more Chinese than locals. But I think this will change. Slowly there will be more local capacity to perform the work. We are employing 20,000 people in Africa, and about 78 percent are locals. The others are mainly expats.
MDT – What are the main challenges for businessmen wanting to invest in Africa?
ES – The first thing is to understand that Africa is not a country, it’s 54 countries. These countries are completely different. Each country must be handled independently and one should choose the country according to the area of activity. You need to understand the local, cultural and business environment to be able to select the right partners locally. The next obstacle is logistics; you have to be prepared to arrange all the logistics to enable you to have the operation fully supported and equipped. When you have problems, you need to be self-sufficient.
MDT – What could be done to truly develop countries such as Angola and Mozambique?
ES – Angola is developing very fast. Investing in highways, airports, seaports, that’s the basic infrastructure to allow people to come and go deeper into the country. China railway is doing huge projects in Mozambique and Angola. Enabling access to the rural areas is important, as it enables people to move back to other regions. During wars, people moved out to the cities. So opening channels to the rural areas is a big contribution to development.