Africa is unarguably the richest continent thanks to its enormous deposits of natural resources ranging from oil, coal, uranium and gold. As such, Africa has attracted many investors from different parts of the world
Investments though remain a dynamic venture with one constant rule: buy low, sell high. Apart from investing in natural resources, foreign investors as well as the natives have also plunged into other profitable fields. Among the most common ones are growth investments, shares, property investments and cash investments.
On almost daily basis, new real estate companies are mushrooming and the advertisements on betting and other forms of gambling have become increasingly popular. Everyone is looking to invest in the most profitable venture so as to have the widest smile at the bank.
But is investing a form of gambling? Henry Fung, Partner and Managing Director MF & Co. Asset Management thinks so.
“You are speculating on the probability of something happening in the future by studying historical patterns and past events – therefore you are gambling. Investors tend to do research and try to bet on events with a higher than 50% probability. It is however, not the same as say, gambling at the casino, where the odds are fixed so that you will always lose in the long run,” he says.
In 2014, quail business took everyone by storm. Many people in Kenya abandoned white collar jobs to dive into the profitable trade of commercial quail rearing. Needless to say, many bloggers and writers made a killing during this period since their platforms were used to spread information as well as publicize the quail business. To most quail farmers, missing such an opportunity was seen as the greatest downfall.
Poultry product companies reaped almost where they did not sow…no pun intended. Who was not ambitious enough to their check websites or pop into one of their outlets to inquire on the best advice on rearing quails?
The only thing is that people failed to foresee the future of the quail business. After merely a year, the market was flooded and news broke to the ambitious farmers that their efforts were no longer viable. Many dreams were shattered!
In as much as Agriculture remains the main economic driving force in most African countries, it is prudent to be careful and analytical before deciding which sector to dive in.
Ciku is a disappointed quail farmer whose investment in the then popularized lucrative business bore no fruits.
“When I heard of the quail eggs booming business, I gathered a group of youths and we came together to form a group. We later requested for youth fund and bought 40 quails from a supplier at Ksh.200 each. The advantage we had was that the birds needed minimal maintenance and required a small space. We fed them with leftover food and grass and they didn’t need any treatments since they are wild,” she narrated.
Despite the low maintenance, Ciku lamented that egg production was not as anticipated. “We had been told that once we feed the birds well they will lay many eggs and we shall get big profits in return. To our disappointment, only 10 in the 40 birds laid one egg in a day. We could not sell the eggs in bulk as we had initially planned. We opted to collect the eggs weekly so that we could sell them at once in bulk,” she added.
Even with that, the market had already been flooded and an egg that was once sold at Ksh.100 was going at Ksh.50. With the price depreciating by day, Ciku and her peers finally decided to sell off the eggs and the birds at least to pay back the funds.
“It was disappointing; the project was all a lie. The eggs that were said to be curing many diseases weren’t even scientifically tested. I have learnt the greatest lesson that before you decide investing in anything, do more research to ensure viability of your idea,” Ciku concluded urging youths to be very cautious before making any investment decision.
Being a continent with the highest rate of poverty in the world, Africans have become quick to explore any opportunity that presents itself. An example is that of pyramid scheme which has become rampant. Mostly invented by opportunists, this scheme has worked in favour of few but left many in distress.
On social media it is not uncommon to see phrases such as “Like an ad to get money” Many struggling and hustling youth in Kenya, are familiar with these social media gimmicks. In 2017, Kenya was amassed with a social media marketing site, ‘Public Likes Kenya’. This was a pyramid scheme syndicate that millions of Kenyans had subscribed to. It was only after some users experienced transaction difficulties that they were informed that the company’s pay bill number had been deactivated.
Joy is among many people who lost thousands of shillings to scammers. “After being introduced to Public Likes by my friend Alloice, I first doubted their legitimacy. It was not until I saw him being paid Ks.10,000 that I decided to join. At first I subscribed free of charge and after a week I had earned Ksh.5,000. I was so excited and motivated,” she recalled.
After the successful returns, Joy thought she had found a haven and saw herself making millions with a simple click.
“I used to sell cosmetics and beauty products at my small kiosk adjacent to my mum’s grocer but never had I made such a good amount of money within a short period of time. I immediately left my business and fully started working on Public Likes,” she narrated.
After 1 month she opted to upgrade to Premium Business gold where one invests money and earn big interests.
“With a dream of earning Ksh.390,000 per month, there was no need to continue with my tiny business. I later sent all my savings of Ksh. 95,000 to Public Likes. One afternoon I tried to log into my account but in vain. The account was deactivated and I later learnt that many other Kenyans were crying foul. The Ksh.135, 000 I was expecting in profit was lost and so was my capital investment”. Joy decried.
In 2019, Kenyan Bitcoin investors woke up to yet another scandal where a Brazilian pyramid scheme operating in Kenya went down with their millions of shillings. Bitcoin is a cryptocurrency which is a form of electronic cash or digital currency. Velox 10 Global, a little known company, claimed to trade in Bitcoins and lured many business people to try it.
Even after Central Bank of Kenya warned against investing in cryptocurrency, Kenyans could not be deterred from the a million dollar deal venture which was launched in September 2017.
Kibet, (not his real name) is a businessman who fell for the scam. “Hoping the deal would pay off, I invested my 4 million in the scheme. With a membership fee of Ksh.10,000 I was optimistic to make millions in return,” Kibet noted adding that all his dreams remained just that.
Presently, the Bitcoin Company that scammed Kibet and Velox 10 is nonexistent. However; many cases filed against it remain ongoing in court. Even as interest in cryptocurrency, is growing steadily in Africa, Bitcoin still leads the pack. Other big global brands include: Litecoin, XRP, Dash, Lisk and Monero.
Even as the world of investing grows, experts advise that it if your personality is one who can accept losing money for the possibility of getting much more profit on your investment, then choose aggressive investments like growth stocks. Otherwise, not everyone can take risks with their money over certain levels.