Empty houses

Effects of the absence of mortgages

Not so far away from my house in the Cocody municipality of Abidjan, there is this:

 

This is a house that was built in 2007, and has stood empty since then.  What’s happened is that someone signed a contract with the building society to pay the full value of the house bit by bit in tranches. Since mortgages are uncommon and very difficult to obtain, houses are usually bought this way, and the buyer doesn’t get access to the house until the full amount is paid.  In this case for some reason or another, the buyer has run out of money and has not yet been able to make the full payment. No one else can take it over either, since the buyer’s partial payment and claim on the house is still valid.

This is quite a common sight in newly built areas in Abidjan, and fortunately it doesn’t have the effect of depressing prices in the entire neighbourhood, like for example foreclosures in the US.

Too easy money

Interestingly, the opposite financial condition, ie when it’s very easy to obtain mortgages and real estate related debt, can have exactly the same effect. Here’s a so called ghost estate in Ireland:

Easy credit, a housing boom and a belief that house prices always go up, caused otherwise non-viable developments to be built. When the boom ended, developers ran out of money, and abandoned half-finished houses.  Unlike the empty houses in Abidjan though, some of the Irish ones could be razed without ever being inhabited.

 

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Persistence

Persistence in blogging

I have been blogging for almost two years now, admittedly with a few gaps here and there (like the last two weeks), but in comparison to the average blog it seems I’m doing ok persistence-wise.  Apparently most blogs are abandoned after a couple of months:

Several studies indicate that most blogs are abandoned soon after creation (with 60% to 80% abandoned within one month, depending on whose figures you choose to believe) and that few are regularly updated.

Source: Caslon Analytics

According to a 2008 survey by Technorati, which runs a search engine for blogs, only 7.4 million out of the 133 million blogs the company tracks had been updated in the past 120 days. That translates to 95 percent of blogs being essentially abandoned, left to lie fallow on the Web, where they become public remnants of a dream — or at least an ambition — unfulfilled.

Source: Blogs Falling in an Empty Forest, NY Times

Persistence in business

I’m thinking – or maybe hoping – that persistance in blogging is a good proxy for persistence in setting up a business.

Few people know better what it takes to set up a business than Paul Graham, partner at Silicon Valley-based seed fund firm Y Combinator. Graham asked start-up founders what surprised them about starting a startup, and a common theme among the answers that came back was the importance of persistence, determination, character and commitment:

1. Be Careful with Cofounders

This was the surprise mentioned by the most founders. There were two types of responses: that you have to be careful who you pick as a cofounder, and that you have to work hard to maintain your relationship.

What people wished they’d paid more attention to when choosing cofounders was character and commitment, not ability. This was particularly true with startups that failed. The lesson: don’t pick cofounders who will flake.

Here’s a typical reponse:

You haven’t seen someone’s true colors unless you’ve worked with them on a startup. 

5. Persistence Is the Key

A lot of founders were surprised how important persistence was in startups. It was both a negative and a positive surprise: they were surprised both by the degree of persistence required

 Everyone said how determined and resilient you must be, but going through it made me realize that the determination required was still understated.

and also by the degree to which persistence alone was able to dissolve obstacles:

If you are persistent, even problems that seem out of your control (i.e. immigration) seem to work themselves out.

Several founders mentioned specifically how much more important persistence was than intelligence.

I’ve been surprised again and again by just how much more important persistence is than raw intelligence.

This applies not just to intelligence but to ability in general, and that’s why so many people said character was more important in choosing cofounders. Continue reading “Persistence”

Update on everything else

Time for an update on all the rest beside the land purchase:

Keeping on blogging
Got a new job which means more money to invest in the Ivory Coast, but less time to blog.   Posts will probably be less frequent and mostly on weekends going forward, but I have no intention of abandoning blogging.

Tax
The tax officer got back to me via his yahoo.fr email, but only to confirm reception.  Not sure what happens next.

Taxi
I have asked the taxi manager to provide bi-weekly updates by email, and I got the first one, but only after calling him about it four times. Calls to the Ivory Coast are very expensive so I’m hoping he will start doing it by routine from now on.  The manager says he  had a skype account but that he cant get it to work. Unfortunately,  I never had time to help him with that.

Technology
Anyhow it’s amazing how modern IT-technology helps in running a business in West Africa from Europe.  20 years ago much of what I’m doing would have been inconceivable – for example, there were no cellphones 20 years ago, and very few people had landlines so you couldnt reach people.    And both faxing and calling to landlines was very expensive and marred by poor quality and unreliability.    Actually, even 10 years ago things would have been difficult. The SAT-3/WASC fibre optic submarine cable wasn’t yet operational meaning there was no cheap broadband and little internet penetration. At that time  the taxi manager probably wouldn’t have had an email address, and the Ivorian bank I’m using didn’t have internet banking.  The latter is really handy by the way – the taxi manager has a bank office close to where he works so he puts the taxi cash there, and I can see it coming in straight away and access it via a visa card.

Very nifty

House
There are news from the house in Cocody too.  The tenants moved out and took everything they had added to the house with them, leaving it in a quite bare state.  So I had to undertake some work to put it in order, like re-painting it, installing lamps, mirrors, a kitchen sink, a water heater and a few other things.  I had to go back to Europe in the middle of these works, but it turns out it is possible to keep the works going from a distance.  The land surveyor is overseeing the works, and then the real estate agency checks in from time to time and sends photos of the progress. And that’s without me asking about it – they are really great.

The water heater - more of a luxury feature than a default one
The garden - walls are unfortunately a neccessity

The works on the water heater arent actually done yet, even with the walls and being in a good neighbourhood, the heater needs to be in a steel cage for protection against theft. The theft risk became quite real when I noticed that somebody had hacked away on the concrete on the outside of the wall to steel the interphone.

Buying land in Abidjan

Still in all-in mode

I’m still in all-in mode. Last time in Ivory Coast (two weeks ago) I bought a new plot in Cocody next to the one previously purchased.  It’s in an empty area surrounded by urban sprawl.  It works like this, that the village that originally held the rights to the land has decided to give up those rights and sell most of it using a contractor. I’m dealing with a subcontractor that sells plots in a part of the area and who is quite a character.  He is really an army guy but since he is of dioula ethnicity he was sidestepped during the Gbagbo years, so he went into other businesses including land deals with much optimism but maybe less expertise.

On his desk he has a computer monitor, but it’s not connected to anything – no cables at all. Before I noticed that the monitor was for show (isomorphic mimicry I guess), I naively asked if I could use the internet. Oh well. He is also pointing out that he’ll use the profits he makes on land deals to get a third wife. Now polygamy is not uncommon in the Ivory Coast, but it’s a bit old school. It goes from being the norm among older generations in the countryside to less usual among younger people in Abidjan.

The biggest scare in the buying land process came when it became clear that the plot layout and numbering plan had changed and it was unclear where my purchased plot was on the new plan.   The subcontractor set a meeting for 7am to sort it out, but turned up at 9:30am. Waiting, the notary that works with me and I joked that we always get a new surprise every time we meet the subcontractor.

Anyhow, we went to the area in question and found a well-suited plot. The subcontractor said it was reserved and suggested other plots. I and the surveyor walked around one of those other plots to estimate their size and found them to be too small. Confronted with this the subcontractor said the well-suited plot was actually reserved for himself but that I could have it.

At the end I bought the plot next to it as well. The thing is, the purchase process is a bit messy, but by keeping veryfying things, using a notary, a surveyor and a law firm to check out the plots and the paperwork, I feel I’ve done what I can to reduce the risk of getting ripped off or getting in any sort of legal issues.

No snags we hope

And if there are no snags with the land purchases, it looks quite like a slam dunk as it looks highly likely that land values will increase – and that’s without counting on expected demographic and economic growth.  The whole area is planned and set to become quite attractive. There is water and electricity access, and roads are traced in the dirt.  The government is expected to give the go ahead for construction in December –  though, in my experience everything usually takes longer time than expected  – so it might be later, but it’s going to happen and then the land prices will go up. And then I hope to be starting the construction of an apartment hotel.   Also the dirt roads will be paved sooner or later which increases the value, as will turning the purchase certificate into  a title document.

So having cash upfront, patience and not getting ripped off, should be what it takes to make a good land deal.

Doug Casey on Africa

Rewards are more than commensurate

I was listening to an interview with famous investor Doug Casey, and not at all looking for, or expecting anything Africa-related. But in the middle of it, there’s the following exchange:

Casey: If I was going to advice somebody getting out of high school right now. I would say take the money and the time you would spend going to college which is what everybody else is doing. It’s usually a mistake to do what everyone else is doing.  And figure out what you should really do. Perhaps it would be to travel around the world with a backpack for a year looking for oppurtunities to start with. I can think of  lots of things but not go to college and take liberal arts.

Interviewer: Fair enough. You mention in one of your blogs that you are long and buying in Cairo right now. You said that Africa was the best place  in the world. Do you recommend that a young kid buys a suit and heads to Africa or what are you doing there, what do you see for that continent?

Casey: Well, there is about 50 countries in Africa. They are all very different. Most of them are quite backward, quite isolated, and I think that is the place to go. In Egypt right now everybody knows [inaudible] buy when blood runs in the streets. It’s harder to do in fact than it is in theory because it’s scary, but I’m involved with several friends buying apartments in downtown Cairo right now. Beautiful belle epoque apartments with 14 foot ceilings in classic buildings that are falling apart, because they have been rent controlled for the last 40 years. So we are buying the apartments, we are paying people key money to move out, we are renovating them, and the economics are such that I think we should be able to double our money in a couple of years on a cash basis.

So you look for things like that, but in every country in Africa you go to… I suggest Africa because it has the most anomalies, because it gets the least traffic from outsiders. And if you go to a country like Cameroon or Gabon or the Congo for instance. If I was landed in one of these places naked and penniless, I’d like to believe within a few weeks I could be sitting down with the president. Part of it is the more than 50 mile away phenomenon. Anyone that’s an outsider, they don’t really know who you are, they can’t find out, but if you are sharp, keep your eyes open, have something to say, something to contribute, you can do things there, because you are special you are different in those countries. Here, you are just one of millions other people just like yourself. So that’s why I go to Africa, it’s still kind of a last frontier.

Interviewer: Still probably one of the riskiest places to be.

Casey: Yeah, but the rewards are more than commensurate.

Another recent interesting optimistic piece about investing in Africa is an article in Wall Street Journal entitled Spelling Out Growth.

At a second thought I’m investing in Africa and then I focus on positive stories on investing in Africa – that’s quite a set up for confirmation bias.  So to counter that I’ll include some of the zerohedge comments to the Casey interview:

he lost me at “buy apartments in cairo”…  seriously, cairo has got to be one of the most dangerous places to be right now, ground zero for the beginning of the third world war.. i would rather take my chances in the bond market.

yes i agree !    i’d rather invest in a daycare center run by Casey Anthony, than buy Cairo apartments right now…geez

Hard to believe that Cairo would be a good place to invest at this time but Doug sure as hell won’t have much competition there or other parts of Africa, except of course, from the Chinese and the “good” Al Qaeda, as usual, funded by the west and currently dropping humanitarian bombs on Libya,

Feels much better now.  Time to re-quote Oscar Wilde: “Whenever people agree with me I always feel I must be wrong.”  and Casey’s “It’s usually a mistake to do what everyone else is doing.” is pretty good too.

Pros and cons of living in Africa

Given that the longest I have stayed continuously in Africa was a 4 month stint in Senegal in 2002, this is a somewhat tough post to make.  Nevertheless,  I’d like to outline what I think are the advantages and disadvantages of living in Africa (focusing on the Ivory Coast), from the perspective of someone who has lived most of his/her life in Europe or North America:

Cons:

High costs. If you want to have access to the same type of goods as in Europe, it’s possible but it gets expensive.  With the exeption of stuff produced in the Ivory Coast, most things cost more here than in Europe.  Consumer electronics for instance are so expensive that I’m bringing two laptops to the Ivory Coast that I’ve bought for ivorian friends (and the laptops could be sold at around 60% above what I paid)

Malaria. Every expat in Africa seem to have a malaria story.  Living permanently in Africa it isnt feasible to take profylactics, so sooner or later one is likely to have a bout of malaria. What people seem to be doing is to always have anti-malarial drugs (which are cheap and accessible at every pharmacy in Abidjan) ready at home.   Some say that a real danger is getting malaria while on a trip back to Europe, where doctors are less familiar with the disease and risk misdiagnosing it.

Slow internet connection. It’s a pain trying to watch youtube videos here.

Unreliable postal service. I didn’t think it was possible to order books from amazon to Abidjan, but apparently you can – you just don’t get them to your house but to a pick-up point.  Anyway, with ebooks and kindle it’s not really an issue.

Traffic Jams.  Abidjan is a 4 million city with a limited bus service as only public mass transport system. Even though there are much less cars than in a 4 million city in Europe, the traffic situation is pretty bad.  And despite the Ouattara government’s progress in building and patching up paved roads, things are likely to get worse in the future as increased population and increased wealth means more cars.  No road-building program can keep up, and Abidjan isn’t likely to afford a commuter train/subway/skytrain construction programme in the foreseeable future.

Death. Or well, increased risk of it. Looking at statistics of deaths by non-natural causes of US citizens in Africa, it seems that road accidents is by far the no. 1 cause, then we have crime at no. 2 and somewhat surprisingly drownings at no. 3.  Not sure if  its adventure tourists drowning or swimming pool accidents.  For Ghana from 2002 to now the US State department reports 9 deaths by vehichle accidents, 2 homicides, 2 “drug-related” and 3 drownings.

In the African version, Death has the option to distract his adversary with lightly dressed women dancing coupe decale in the background

According to Travmed.com “Motor vehicle accidents and drownings are the most important cause of deaths in travelers younger than age 55; there is an increased incidence of injury-related death and drownings in Africa (2.7x) and SE Asia (1.6x) compared to the U.S.”

Pros:

The Weather. Growing up in Sweden one sometimes (typically when bicycling to university at -20C) wonders if our ancestors maybe would have been wise to reconsider their decision to settle in the sub-arctic parts of the world. Some say that the climate in West Africa is too hot and humid, and well I’m not one of them!  I think it’s been shown that cold weather and darkness affects people’s mood negatively, and Abidjan’s +30C all year round feels pretty good (maybe Dakar has the perfect weather though).

Been there. Done that. Got pneumonia.

Business opportunities.  It’s a young and fast changing continent less set in its ways than the developed world, and opportunities abound. More on this in the The Macro case for the Ivory Coast and Bureaucracy posts.

Joie de Vivre. I find that there is something about the people in West Africa, that makes almost any activity involving human interaction enjoyable.  Things that normally should be boring work/businessy affairs usually aren’t boring at all in West Africa.

Solidarity and the eradication of loneliness. People just care about each other on a whole different level than in the West.  There are downsides to it, like the expectation that your belongings are to be shared, consequently making it difficult to save money, and lack of one’s own private space.  As a foreigner it’s easy to kind of “cheat” by getting the upside (which is pretty darn great) and avoiding the downside by people accepting that you are a foreigner have your own strange rules, and by being able to afford your own place.

As for loneliness I have met many Ivorians in the diaspora who say that they truly didn’t know what loneliness was until they moved to the West.   As Africa gets wealthier these things are likely to change, but hopefully and probably they’ll not completely disappear.

Support system.  With low labour costs, the middle class can afford services (like maids) which they couldnt dream about in the West, making life less stressful.  Also, Africa seems to be a great place to raise children.  It’s a task everybody helps out with, thus creating a natural support system that seems to be superior to even the most child-friendly western welfare states.

Social gradient (one’s place on it)  There is this British study of civil servants called the Whitehall Study that’s been going on for decades and shows that people’s hierarchical position affect their health. Nobody really knows why though.  From wikipedia:

The first Whitehall Study compared mortality of people in the highly stratified environment of the British Civil Service. It showed that among British civil servants, mortality was higher among those in the lower grade when compared to the higher grade. The more senior one was in the employment hierarchy, the longer one might expect to live compared to people in lower employment grades.

The initial Whitehall study found lower grades, and thus status, were clearly associated with higher prevalence of significant risk factors. These risk factors include obesity, smoking, reduced leisure time, lower levels of physical activity, higher prevalence of underlying illness, higher blood pressure, and shorter height. Controlling for these risk factors accounted for no more than forty percent of differences between civil service grades in cardiovascular disease mortality. After controlling for these risk factors, the lowest grade still had a relative risk of  for cardiovascular disease mortality compared to the highest grade.

Given how the Ivorian/African society is structured with a poor majority and a few super-rich, moving from a middle class life in the West (regardless of one’s ethnicity) to Africa means a jump upward on the social gradient. If the Whitehall Studies apply more generally outside the British public sector (which they seem to), this jump on the social gradient could have a lot of positive effects. I think health is just one side of it by the way, chosen because it’s easy to measure objectively. Getting to know interesting influential people or having a greater pool of high calibre potential life partners would be harder to measure for example.