American library books ยป Biography & Autobiography ยป From Silicon Valley to Swaziland by Rick & Wendy Walleigh (psychology books to read .TXT) ๐Ÿ“•

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be used as the required equity portion of the necessary financing. Presumably, with this equity, businesses could qualify for additional loan financing so that the impact of the equity funds would be leveraged. However, if funds were to be used in this way, TechnoServe had to address a lot of issues and make several critical decisions. Since I was the only person in the office with experience in financial analysis, Leslie asked me to develop a discussion document on the potential for TechnoServe Swaziland to provide a small amount of funding directly to some of our clients who could not access financing in any other way. She asked me to identify and describe the issues, develop an initial proposal, and then circulate the document for comments and discussion.

The first issue was the one I always addressed first during my management consulting career, โ€œWhat is our objective?โ€ Specifically, TechnoServeโ€™s overall objective was to overcome the obstacle of the inadequate supply of equity capital for businesses that could provide jobs or other economic opportunities for the poor. In more detail, we wanted TechnoServeโ€™s clients to be using this equity to allow them to access (not replace) other sources of funding, which would allow them to grow their businesses, hire more people, and generally put more money into the economy.

Getting the strategic objectives defined was a good first step, but my next step was to specifically define the financial objectives for our pool of funds. In commercial financing, this is easy. The main objective is obvious: to earn a high return on the investments (with appropriate consideration of risk). In economic development finance, the strategic objectives take precedence and influence the financial ones. This leads to some very nontraditional thinking and challenges in balancing competing objectives.

The range of potential financial objectives in development finance extends from purely commercial returns to giving direct grants, i.e., from getting a high return on investment to getting no return and giving away (losing) all the money. A purely commercial approach to a pool of development projects would require high projected returns (including taking a high percentage of ownership and a large amount of collateral) to offset the expected losses from the high risks. Direct grants are at the other end of the spectrum and would have no expectation of recovering any of the money invested. Although both of these approaches are widely used, from my perspective, they both seemed extreme for the proposed TechnoServe direct funding. The commercial approach provided nothing new to the market and was unreasonable given the nature of the companies that TechnoServe would be supporting. The direct grant approach is simple and straightforward but would have been much less productive in terms of social return on investment since there was no potential for investment funds to be recycled. In addition, grants (giving away money) always set a bad precedent because they destroy the proper market incentives and can encourage dependency.

The approach I proposed was to provide subordinated investment funds at very low rates, recognizing that, over time, the yields on these funds would probably not offset the losses associated with the high risks of these investments. In other words, the pool of funds available for investment would probably disappear over time, but hopefully, it would be a slow process; and the investment funds could be recycled several times before they were completely gone. Although the expectation was that from a portfolio perspective, some investments would fail and that over time a below-market return would not compensate for high risk, every individual investment would be made with a reasonable prospect that it would be repaid. Expecting to lose all of your invested capital, albeit slowly, is a very nontraditional way of thinking about investing. I preferred to call it innovative. I even suggested we start a major marketing campaign calling the concept, โ€œLose Money Slowly,โ€ but it didnโ€™t catch on. I was better at finance than marketing.

The thinking got even more interesting as I contemplated the form of investments to make. Since the objective of the TechnoServe financing was to allow businesses to access bank loans, the banks had to perceive the TechnoServe investment as common equity or something very similar so there would be no question as to who got the assets if a business went bankrupt. In a commercial environment, TechnoServeโ€™s high risk would be compensated for by the possibility of a high return. A similarly situated private investor would demand ownership of a large percentage of the business in the hopes that it would be successful and generate large returns. However, TechnoServe didnโ€™t want the responsibility of owning any of the business. In other words, TechnoServe wanted to take on a high risk with the probability of a low return. Strange as this sounds, it was probably the only way to accomplish the strategic objective without just giving the money away. Where was Alice in Wonderland when I needed her to explain things?

More Exploring and Cultural Immersion

An Aborted Trip, a Braai, a Wedding, the Reed Dance, and South Africa


At the end of the week we were going to Maputo, Mozambique, a city known for its crime (seemingly less violent than Johannesburg). Evidently, robberies of individuals on the street were somewhat common, so we were told that it was advisable to carry two wallets, one of which you could give up readily. Although robbery could happen, the most pervasive crime was the theft of headlights, side mirrors, and windshields from parked cars. We heard that this was so common that people went to extreme measures to prevent it. Perhaps it was an urban legend, but it was rumored that some people had been known to crack their own headlights, mirrors, or windshields just to make them unattractive to thieves. People also had metal strips welded across their headlights to prevent theft. Evidently, this was quite effective against theft but made it really difficult to replace a defective headlight.

Other than the minor issue of crime, Maputo was supposed to be a very interesting city with beautiful beaches. The weather wasnโ€™t suitable for sunbathing, but we were looking forward to staring at the ocean and walking on the beaches. Then on Monday, weโ€™d visit the TechnoServe office in Maputo to get some insight into the programs in Mozambique.

We didnโ€™t make it to Maputo. We did try, really hard. We got up at 7:00 a.m., very early for us on a Saturday, and left the cottage before 8:30. We had packed carefully to make sure we had all the right clothes and everything else we would need for crossing the border and staying in Maputo. I had heard the border crossing was more challenging than going into South Africa, but I didnโ€™t know how challenging it was going to be. People had told me that you had to have your blue book (car registration) with you and you had to fill out extra paperwork relating to your car (designed to reduce smuggling of stolen cars) on both sides of the border. Since we had a rental car, we didnโ€™t have our registration, but I made sure to take our contract and the form that showed we had switched cars since we first signed the contract.

The drive up to the border was less than two hours and very pleasant as we went through the Lowveldt for the first time and saw the endless sugarcane fields. We also enjoyed the sign warning pedestrians and cyclists against lions and elephants as the road passed through the Hlane (Schl-ah-nee) game reserve.

At the border, we parked our car and went inside the immigration and customs building. We filled out two immigration forms, handed them to the officer, and she stamped our passports, all without any written instructions or speaking. When we drove to the actual border gate, we discovered that we also needed a 654 customs form, so we went back inside. The 654 form required a lot of detail on the car: make, model, year, registration number, engine number, etc. I filled it out to the best of my ability. As the customs officer reviewed the form and was about to sign it, she remarked that I hadnโ€™t included the engine number for the car. I said it was a rental, and I didnโ€™t know the number. I didnโ€™t want to crawl around the engine compartment and assumed that this would get me off. Boy was I wrong! The customs officer had a concerned look on her face and went to speak to someone else in the glass-enclosed area behind the counter. She came back and asked us to follow her as she came out from behind the counter. She said she was going to try and get someone to help us. I didnโ€™t know why we needed help. Wendy and I walked over to the area near the border gate, and she spoke to a middle-aged gentleman who seemed to be the manager. He asked for our rental contract. He showed me, at the bottom of the contract, the section that says the car is prohibited from going to Kenya, Angola, Mozambique, and several other countries. He said we would need a written waiver from the rental car company, and he offered to call them for us. I gave him the number, and he went back inside.

A short while later, he came back out and said that Avis wanted to speak with us. I assumed that they just wanted to verify that the car was really in our possession before faxing the waiver. Wrong again! The woman I talked to in Swaziland said that waivers could only be granted by their main office in South Africa, and it was closed until Monday. I asked to speak to her supervisor. She said the supervisor would not be in until Monday, and even if she were available, she could not grant the waiver. She said she was sorry but pointed out that my contract did say that I couldnโ€™t take the car into Mozambique. I agreed that the contract indicated that, but that nobody had pointed it out to me when I rented the car. (Okay, I should have read the whole thing, but does anyone who has rented hundreds of cars over the years read the whole contract? I did pay very close attention to the rates, which had been incorrect and needed fixing, when I first got the car. Maybe that can be my excuse for not looking more carefully at the rest of the contract.) There was no alternative but to turn around and head back to Mbabane, which we did.

I was incredibly frustrated. Usually in the United States, when Iโ€™d encountered similar situations, I was able to speak to a supervisor or a manager who understood my problem, wanted to help solve it, and had the authority to work something out, even if it involved me paying an extra fee, etc. Not here. There was no way out, and no one to speak to. I felt helpless, and I was also angry at myself for not having looked at the contract thus having to share the blame. I just wanted to leave and hurried Wendy into the car. As we were leaving, she asked if we had to do anything about immigration. I didnโ€™t want to be bothered with one more thing, and I said I didnโ€™t think so. So we left. However, as I was driving back and continued to stew, I remembered that the immigration officer did slide our passports through the computer. I wondered if that would show that we had left the country and never returned. Would it give us a problem the next time we wanted to leave the country? Would they think we slipped back into the country illegally? I grumbled to myself about

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