OZY on Africa’s Economic Upswing
WHY YOU SHOULD CARE
Because the winds of financial change are blowing through Africa. The evidence? Gourmet cupcakes and bitcoin in Nairobi, expats in Kigali, and Sharia-law banks all over the continent.
There can be hope in cupcakes. Nairobi’s first cupcake shop demonstrates the power of a rising consumer class — and teaches a lesson about labor in emerging economies, too. In a way, Sugarpie Cupcakes is where the desires of the working class and consumer class collide — because the staff has consumerist aspirations, too. “People believe they can hustle, and if they work like five jobs, maybe they’ll be able to live the way they see other people living. There’s something inspiring about it,” says Sugarpie founder Sandra Zhao.
Most visitors are surprised by the new face of Rwanda, which just commemorated the 20th anniversary of the genocide that claimed 800,000 lives in 100 days. Much of the recent coverage about that horrific event focused on the solemn memorials, but there’s another story to tell as well. Having lost 10 percent of its population, the country was left impoverished and traumatized, and with a severe shortage of skilled labor. But the government’s continued efforts to upgrade infrastructure, improve cleanliness and ensure safety have turned Kigali into one of the fastest-developing cities on the continent. And in turn, it’s attracting an unprecedented number of foreigners.
The digital currency bitcoin might be a great solution to the problems of 326 million Africans who lack access to basic banking services. Especially if you’re a member of the large and expanding African diaspora, and you want to send money home to grandma or the hubby left behind. The problem: You can’t count on mobile payments for that money sent home, known as foreign remittances. The most common vehicle for such payments, Western Union, tends to charge onerous fees. Which makes bitcoin very appealing, if you can get past the expensive exchange rate.
Even for those familiar with international finance, Islamic banking — also known as Sharia-compliant banking — isn’t well-known, much less understood. If you’re picturing small-scale bartering at a Middle Eastern street bazaar, stop. This is a sophisticated capital market, much like any traditional banking sector, where companies, governments and individuals borrow from investors who — make no mistake — intend to earn a return.