Questions Batch 3

It’s been a while since last time, but I used to collect unanswered questions that have come up in past blogposts. Here is a new batch:

(1) This one is from drogbascountry:

Many people in the large middle class area of Cocody, as elsewhere, own homes that are worth a lot of money, and the roads are filled with large expensive saloon cars and 4×4. […] you often see finer cars than you see in Paris, clubs where champagne is drunk like orange juice and vast mansions in Cocody?

So where does the money come from?

I tried to answer in the comments, but I think there’s more to say on this one.

(2) In the post about Customs I found a graph of US government spending from 1870. One of the expenditure categories was “Indians”.  I have a feeling this spending didn’t do the Indians much good, probably quite the opposite, but what was it?

Silly Walks was only in the planning stage in 1870

(3) Why are there so few apartments for sale in Abidjan, and instead whole buildings are for sale?  Mentioned in the Abidjan Real Estate post.

(4) How is the GDP for the Ivory Coast put together?  What are the various components? / what assumptions are made? / how is the informal sector treated?    I have no idea, but I’d really like to know, and it should be possible to figure out.

(5) How would the Ivory Coast be affected by a break-up of the Eurozone?  This one might be impossible to know for sure, but it’s a good topic for speculations.

Letting Entrepreneurs Create Wealth

Hackers and Painters

I’m currently immersed in a book I got for Christmas, Hackers and Painters – Big Ideas from the Computer Age by Paul Graham. It’s in parts absolutely brilliant and, even better, I think I can connect it to the Ivory Coast without too much of a stretch.

From the chapter “How to make Wealth”:

Making wealth is not the only way to get rich. For most of human history it has not even been the most common. Until a few centuries ago, the main sources of wealth were mines, slaves and serfs, land and cattle, and the only ways to acquire these rapidly were by inheritance, marriage, conquest, or confiscation. Naturally wealth had a bad reputation.

Two things changed. The first was the rule of law. For most of the world’s history, if you did somehow accumulate a fortune, the ruler or his henchmen would find a way to steal it. But in medieval Europe something new happened. A new class of merchants and manufacturers began to collect in towns. Together they were able to withstand the feudal lord. So for the first time in history, the bullies stopped stealing the nerds’ lunch money. This was naturally a great incentive, and possibly indeed the main cause of the second big change, industrialization.

A great deal has been written about the causes of the industrial revolution. But surely a necessary, if not sufficient, condition was that people who made fortunes be able to enjoy them in peace. One piece of evidence is what happened to countries that tried to return to the old model, like the Soviet Union, and to a lesser extent Britain under the labour governments of the 1960s and early 1970s. Take away the incentive to wealth, and technical innovation grinds to a halt.

Encouraging signs and trends for Africa and the Ivory Coast

Both in pre- and postcolonial times, as an African, if you set up a successful enterprise of any kind, you would be likely to run into the ruler or his henchmen (colonial ruler / homegrown dictator depending on the era) sooner or later.  For a very long time incentives to create wealth in most of Africa have been quite lousy – warriors and politicians regularly squashed entrepreneurs. However, looking at Freedom House scores, the World Bank’s Doing Business survey and other places, it seems that there has been a positive trend since the early 90s that has also resulted in higher growth figures.

In the Ivory Coast, it’s still early days for the Ouattara government, but there are plenty of encouraging signs that the government and the public administration in general, are strengthening the rule of law, and to a lesser extent than before use their power to put wealth created by ordinary Ivorians into their own pockets.

As to risks of things getting worse, I do not think the main problem is Gbagbo’s supporters coming back to power. That would indeed be bad, but I don’t think they can. They don’t have enough support to win a democratic election, even if they were united which they are not.  I think Gbagbo’s figures in the 2010 elections were augmented by his party controlling the state, but even then it wasn’t enough.

As to taking power through a military coup, many exiled Gbagbo supporters certainly would like to, but I don’t think they have the necessary resources or a neighbouring country prepared to offer military support.

Instead my main worry is that Ouattara’s government is behaving itself not because of a strong and independent media (Ivorian media isn’t), not because of strong institutions, civil society, or pressure from the Ivorian people, but because the person of Alassane Ouattara.   Ouattara is turning 70 years soon, and is not going to be there forever.  Hopefully when Ouattara eventually steps down,  institutions and checks and balances have strengthened so that things will work out even if the next guy isn’t as great.  Wealth created by entrepreneurs should contribute to increasing the size of the middle class which in turn is great for strengthening the civil society and democratic institutions. It’s tough being a dictator in a country with a large middle class.

Letting the nerds keep their lunch money

Back to Paul Graham, here’s the follow up on the text above:

Startups are not just something that happened in Silicon Valley in the last couple decades. Since it became possible to get rich by creating wealth, everyone who has done it has used essentially the same recipe: measurement and leverage, where measurement comes from working with a small group, and leverage from developing new techniques. The recipe was the same in Florence in 1200 as it is in Santa Clara today.

Understanding this may help to answer an important question: why Europe grew so powerful. Was it something about the geography of Europe? Was it that Europeans are somehow superior? Was it their religion? The answer (or at least the proximate cause) may be that the Europeans rode on the crest of a powerful new idea: allowing those who made a lot of money keep it.

Once you are allowed to do that, people who want to get rich can do it by generating wealth instead of stealing it. The resulting technological growth translates not only into wealth but into military power. The theory that led to the stealth plane was developed by a Soviet mathematician. But because the Soviet Union didn’t have a computer industry, it remained for them a theory; they didn’t have hardware capable of executing the calculations fast enough to design an actual airplane.

In that respect the Cold War teaches the same lesson as World War II, and for that matter, most wars in recent history. Don’t let a ruling class of warriors and politicians squash the entrepreneurs. The same recipe that makes individuals rich makes countries powerful. Let the nerds keep their lunch money, and you rule the world.

Click to get to a chapter of the book in pdf

Ivory Coast online – New Sweep

Popular sites

Time for a new sweep on what’s happening online in the Ivory Coast. Here are the most viewed sites by internet users in the Ivory Coast according to Alexa:

1. Facebook.com (+2) [Global rank: 2]

2. Google.ci (-) [Global rank: 4,010]

3. Yahoo.com (-2) [Global rank: 4]

4. Abidjan.net (+2) [Global rank: 6,556]

5. Youtube.com (+3) [Global rank: 3]

6. Google.com (+3) [Global rank: 1]

7. Google.fr (+2) [Global rank: 25]

8. Live.com (-4) [Global rank: 8]

9. Msn.com (-2) [Global rank: 12]

10. Wikipedia.org (new) [Global rank: 6]

Numbers in parenthesis are changes compared to my last Ivory Coast online check in March 2010. No dramatic changes in other words, with Abidjan.net keeping its position as the by far most viewed Ivory Coast-specific site. It makes sense, it’s a great site, and I check it out daily to get my Ivory Coast fix.

Here’s Abidjan.net traffic rank over the last two years clearly showing an increased interest during the Ivorian crisis:

Beyond the top 10

Beyond the top 10 I find the following interesting/locally produced sites:

12. afrik11.com [Global rank: 35,395] – A site about African football seemingly based in the Ivory Coast as 90% of its traffic comes from the Ivory Coast.

14. Atoo.ci [Global rank: 46,419]  – A portal for all things Ivory Coast just like Abidjan.net just not as popular

15. educarriere.ci [Global rank: 51,883] – A relatively new Ivorian site for jobs and education, that also has an active dating section (which might be the secret behind its prominent ranking)

20. Gbich.com [Global rank: 51,883] – The site of the Ivorian humoristic newspaper Gbich!

24. GoMagazine.ci [Global rank: 88,463] – The site of Go Magazine, Ivory Coast’s response to Cosmopolitan

25. rfi.fr [Global rank: 5,205] – Radio France Internationale

26. cnseci.com [Global rank: 206,752] –  Support site for the Ivorian national football team

27. twitter.com [Global rank: 9]

29. JeuneAfrique.com [Global rank: 16,700]

38. Deco.ci [Global rank: 164,185] – The Ivorian Ministry of Education’s site for exams

47. leBanco.net [Global rank: 169,215] – Ivorian news and politics site

49. youporn.com [Global rank: 86] – Would have thought porn sites would have higher ranking internationally than in the Ivory Coast, not because of ivorians being more puritan than elsewhere but because of the use of internet cafes – but apparently not.

51. gouv.ci – The official portal of the Ivorian government

60. ivoire-blog.com – Blogsite, Ivory Coast’s blogspot

61. Ivoirbusiness.com – Yet another Ivorian news/politics site, this time with a pro-Gbagbo bias

62. Ivoirmixdj.com – A site for DJ:s and music lovers

76 Abidjanshow.com – Promoting concerts and show business events in Abidjan

87. Onuci.org – United Nations Operations in the ivory Coast

96. ChelseaFC.com – Chelsea Football Club

109. thepiratebay.org – The Pirate Bay, and the first Swedish-built site on this list

145. FratMat.info – The highest ranked mainstream Ivorian newspaper

What are Ivorians interested in?

Something has clearly happened since I last checked Alexa rankings. Tech sites are less prominent, sites created in the Ivory Coast (or rather Abidjan) for the Ivory Coast are more prominent, and one can actually start using Alexa rankings to get an idea of what Ivorians are interested in.  And that would be social networking, news, celebrity gossip, football, dating, music, porn, exam results, more football, humour, education and jobs. Pretty much like in the rest of the world.

I checked Swedish Alexa rakings and we got the same thing, but with a little less football and more e-commerce sites and online banking (and more porn). And with tabloid Aftonbladet.se replacing Abidjan.net as the only local site among the top 10, which is quite a trade-down.

As for e-commerce, the whole buying stuff online and getting it shipped model is practically non-existent in the Ivory Coast (for multiple mainly non-tech related reasons).  Online ads for all sorts of stuff exist though, and it’s handled by the portal sites, so it’s a bit like the 1999 vision of the internet coming true.  Abidjan.net is among other things the craigslist of the Ivory Coast, but I doubt it will also be the ebay, amazon and match.com of the Ivory Coast, so there should be a business opportunity for these services sooner or later.

Being real about setbacks

Lessons from James Altucher

One of my favourite blogs is James Altucher’s. In a recent post he writes about what he has learned from poker. Now, I don’t care much about poker, but  Altucher practically always has something interesting to say:

D) Poker is a skill game pretending to be a chance game. Many things in life are like that: sales, negotiating, entrepreneurship, etc. All of these things have the element of chance in them but the ones who are skillful will take all the money from the ones who aren’t. The problem is: most people think they are good because it’s hard to rank yourself and many people go into denial when they lose money. They tell people, “oh, I broke even” when they lost money most of the night. How do you get better at any skill game:

• – study and think about your mistakes. Don’t regret your mistakes. You’ll always make mistakes. The better you are, the less mistakes you make. The only way to get better is to thoroughly analyze your mistakes. So the more mistakes you have, the more opportunities you have to get better. Of course, this applies to everything you do in life.
• – talk to people smarter than you. Try to learn from them anything you can.

Acknowledging mistakes

Looking at my investments in the Ivory Coast I have indeed made lots of mistakes and had setbacks. I quite agree with Altucher’s approach of not regretting, but acknowledging and analyzing mistakes, and being real about setbacks as opposed to pretending to break even.

So, here are mistakes I’ve made in the last year:

• Not checking the equipment (like triangle and stuff) of the car before sending it to Abidjan to become a taxi.
• Getting the wrong person to manage the works on the Cocody house.  He was perfectly honest, but somewhat out of his depth managing the project. Guess I focused too much on integrity and not enough on competence. The real estate agency that’s in charge of letting the house took over the managers role and finished the works without hiccups.
• Not insisting enough on keeping advances small and not giving last chances to the carpenter who took money and never finished his work. A combination not being there in person, having the wrong manager, and following a law firm’s advice instead of my gut feeling, is to blame here I believe.
• Not acting early enough when rents go unpaid.  I haven’t written about the Yopougon apartments in a while, but after the crisis I’ve had a few problems with non-paying tenants and am in the process of replacing them.

None of the above has caused any material monetary setback.  The one material setback I have had since starting investing in the Ivory Coast, was when the two shops I had in connection with the Cocody house were looted and destroyed in a fire.  I learned about it at the same time as Gbagbo’s fall, so the bad news were overshadowed by much greater good news reducing the psychological impact.

Still, the shops always paid their rent on time with no hassle, so it  sucks to have lost them. The rents I collected during the 10 months or so the shops were in operation do not cover the building costs, so it’s a definite loss, no other way around it.  Here’s what’s left of one of the shops:

Quotes

And since I’m a sucker for insightful/inspirational quotes from dead (or sometimes alive, but mostly dead) people, here are a few of those:

“Don’t fear failure so much that you refuse to try new things. The saddest summary of a life contains three descriptions: could have, might have, and should have.”
— Louis E. Boone

“I don’t know the key to success, but the key to failure is trying to please everybody.”
— Bill Cosby

“The majority of people meet with failure because they lack the persistence to create new plans to take the place of failed plans.”
— Mark Victor Hansen

“A man can fail many times, but he isn’t a failure until he begins to blame somebody else.”
— John Burroughs

“Ninety-nine percent of all failures come from people who have a habit of making excuses.”
— George Washington Carver (American Botanist and Chemist 1864 – 1943)

“Ever tried? Ever failed? No matter. Try Again. Fail again. Fail better.”
— Samuel Beckett, playwright and novelist

“Many are stubborn in pursuit of the path they have chosen, few in pursuit of the goal.”
— Friedrich Nietzsche

“Our greatest glory is not in never failing, but in rising up every time we fail.”
— Ralph Waldo Emerson

“Take the risk of thinking for yourself, much more happiness, truth, beauty, and wisdom will come to you that way.”
— Christopher Hitchens (sadly among the dead ones)

“If at first you don’t succeed, try, try again. Then quit. No use being a damn fool about it.”
— W.C. Fields

Under Construction

The chicken farm is now in full construction. Here are a few photos:

[And, yes, I am aware there are parliamentary elections under way in the Ivory Coast. There’s not at all of the same nerve or importance  as the presidential elections last year, but it will be interesting to see what the final turnout amounts to (might well be higher than the 33.1% of 2000)  and the split between RDR, PDCI and others. ]

 

Naysayers tentatively proven wrong

Still failing to find the catch

When starting out with the taxi project I thought the budgeted numbers looked too good to be true and wondered where the catch was.

Now I have three month of data and it looks like naysayers are (tentatively) proven wrong, as I’ve not encountered any show-stopping catch.  The only major surprise to the downside was custom costs at Abidjan port to bring in the car turning out to be more than twice the budgeted figure. Even with that, the projected internal rate of return for the taxi investment, with a conservative estimate of the taxi running for only two years, and having no residual value at the two year point, is still a fantastic 65%.

Having naysayers (or dream killers as Ismael Coulibaly calls them) can actually be pretty good for one’s motivation. It jolts you out of complacency, makes you take a careful look at the downside, and spurs you to put in extra effort to prove them wrong. For the chicken farming project I have so far only gotten positive response. I’m almost wishing someone comes along and says it’s never going to work / it can’t be done / they have never seen anyone make any money out of a chicken breeding /that I’m going to lose all the invested money.

How long will it last?

With the taxi I have actually had a surprise to the upside as well; the repair and service costs have been much lower than expected. The car bought originally for 450€ was in pretty bad shape, and it’s been patched up progressively during its first months of running in Abidjan without any significant impact on the profits.  The thing is, everybody in the taxi business are using Toyotas and especially Toyota Corollas, so spare parts can be found in abundance keeping costs low.  And as always in the Ivory Coast labour costs are low.

Given that the taxi is continuously serviced and repaired, I’m starting to hope/think that it can last more than two years. Beside avoiding accidents, I guess it’s up to the Toyota engine and well, here I trust that the Japanese know what they are doing.  If it lasts three years the internal rate of return jumps up to 90%, and for four years, it’s above 100%.

Ok, sometimes the Japanese don't know what they are doing

Gbagbo at the ICC

Bloody Marvellous

A few days ago Ivory Coast’s former president/dictator Laurent Gbagbo was sent from his house arrest in the northern ivorian city of Korhogo to the International Criminal Court in the Hague.

For a very long time – almost a decade – having Gbagbo  tried at the ICC for crimes against humanity seemed a distant and unlikely best-case scenario. Kind of have to pinch myself to be sure that this is really happening. Anyhow, it is – to use a great british expression – bloody marvellous, and it’s going to be interesting to follow the trial.

Non-stop Korhogo - The Hague

This is personal

I’ve never met Gbagbo myself, but I’ve had a less pleasant encounter with elements of his army and a quasi encounter with his death squads, so unlike – well, all other criminal trials – I have some sort of personal connection to this one.

Back in 2003 I went to a remembrance ceremony for the Yopougon massacre in 2000 at the Williamsville cemetary in Abidjan. And yes, I did some crazy stuff back then – I hope I haven’t stopped!  Here’s the story of the Yopougon massacre told by Belgian sociologist Benoit Scheuer:

[…] The result was a general climate of discrimination against people who were not “pure Ivorians”. Half the country was stripped of its moral dignity. Policemen would take the identity cards of citizens who were not “sufficiently Ivorian” and tear them up in front of them, in the middle of the street. Then they would tell them, “So you think you’re an Ivorian? Now try and prove it!”

This verbal and moral onslaught inevitably turned to physical violence. The first act of the tragedy came in October 2000, when the police at Yopougon in the suburbs of Abidjan rounded up 59 ethnic Dioulas. Two of them escaped; the rest were shot dead in cold blood.

The Yopougon massacre was not an isolated incident, a mistake, a moment of collective madness: it was part of a deliberate strategy of terror orchestrated by the state. The murderers could easily have hidden the bodies. But instead, just as the Serbian militias did in ex-Yugoslavia, they left them on display, turning their deaths into theatre. The aim was to instil fear into people. The corpses were meant as a message to all northerners: “You should get out of here, because if you don’t, this is what will happen to you!”

In October 2003 it was a group of about 200 persons, mainly northerners, who gathered at the cemetery where those killed  in the Yopougon massacre rested. The event was a combination of a religious ceremony with both muslim and christian imams/priests present as well as a political statement by Ouattara’s RDR party who had sent quite a few people.

At the start of the ceremony 30 or so soldiers from the regular army loyal to Gbagbo showed up and positioned themselves 150 meters away from us.  Then 20 minutes into the ceremony we heard loud gunshots. It turned out it was the soldiers firing in the air above us as intimidation.  The ceremony kept going as if nothing happened. The ivorians next to me said not to worry, that it  was always like this, but also indicated in which direction to run if the soldiers started to aim lower. Fortunately nothing happened, the ceremony ended, and we all went home.