Investment

Zambia, a family investment group, and the building of a town

In 2000, Dr Situmbeko Musokotwane was serving as an economic advisor in Zambia’s Ministry of Finance. He had just returned to the country from Swaziland (now Eswatini) where he had been serving as an advisor to the IMF. 

That same year, he purchased some land 36 kilometres east of the Zambian capital, Lusaka, to set up a family cattle ranch. 21 years on, Dr Musokotwane remains at the heart of economic policymaking in Zambia. He is currently serving as the country’s finance minister (his second stint in the role having previously served from 2008-2011). And that cattle ranch? Well, it’s taken on a new, perhaps unexpected, life of its own.

Rapid urbanisation is one of the key megatrends investors talk about when discussing Africa’s future

In 2014, the Musokotwane family decided to partition the 3,100-acre ranch into smaller parcels of land (just under 9,500 plots) and sell them to interested buyers seeking to build homes. They set up Thebe Investment Management, a family-held investment vehicle, as the means through which the selloff would take place. To date, over 1,500 plots have been sold and some residents have started constructing their homes based on a selection of pre-approved designs drawn up by Thebe’s architect.

Mwiya Musokotwane

Nkwashi is a $1.5 billion town, one of the largest real estate developments currently underway anywhere in Africa. Its owners see it as the first of many such towns capturing 21st-century African aspiration. It is designed to function as a fully self-contained and modern town with its own central business district, residential areas, and education district. Residents, the first of whom moved in last year, enjoy green spaces, lake views, paved roads, on-site security, reliable electricity, water and sewerage works along with high-speed internet connectivity. 

Rapid urbanisation is one of the key megatrends investors talk about when discussing Africa’s future. According to the UN, 60% of Africans will live in urban centres by 2050. That’s about 1.34 billion people. In Zambia, a significant housing shortage and the inability of local municipalities to provide adequate amenities mean private players like Thebe are entering the space to counteract some of these challenges. 

“When our local municipalities were created, they served a small population,” says Chilombo Musa, a Zambian PhD researcher at the University of Cambridge. “The growth of Lusaka’s local municipality has not kept up with the growth of the city’s population. The local government system is incapacitated both in terms of finance and human resources.”

Musokotwane’s eldest son, Mwiya, drives the day-to-day operations of Thebe. Now aged 32, the younger Musokotwane is also a member of Forbes Africa’s 2018 Under 30 List. One aspect of the firm’s strategy has been to think seriously about how to create a localised economy at Nkwashi; one that goes beyond making the development just another housing estate. 

Education and technology are core to that strategy. Explorer School, an online school that launched in 2020, now has over 1,200 learners around the world. Little Explorers, a nursery school, and Explorers Academy, a tech hub, also come under the Explorer School umbrella. There are plans to build a university too. The hope is that these institutions will create a talent pool of skilled techies capable of creating, and competing for, tech jobs both locally and internationally. 

Looking to the future, Thebe’s next project is a mixed-use development on Lake Tanganyika in the north of the country. The project is still at the planning stage. But beyond that, the firm wants to diversify into new sectors and hedge away from African political risk. “In time, we want to diversify into real assets, particularly where there might be a real estate play,” Mwiya says. “We’re interested in sectors where the cash flow is generated from a separate activity to real estate such as cattle ranching, dairy farming or forestry.

Also, we’re very long Africa, we believe in Africa, but anyone who’s invested on the continent will know that you have to hedge for monetary cycles which are basically driven by what’s happening in the political economy. Going forward, we want to hold more cash-flowing asset classes in USD to protect ourselves.” 

Mwiya adds that the family is open to co-investments including from foreign investors: “We haven’t had people come and co-invest with us, but we’re open to folks making suggestions. Nkwashi has been our primary focus for the last few years. As the team there matures, we’re starting to look beyond it and as we do that, we remain open to considering co-investment ideas.”

And what advice would he give to foreign investors seeking a slice of the action in Africa? “You want to invest in parties where the on-the-ground operator is involved in capital structure. You want to be as much of an active owner as possible. 

“This market lacks the institutional rails that you have in more developed markets so adopt an engaged posture because it’s not an easy market. Most of the country’s wealth is private and not listed on the local stock exchange therefore you simply can’t sit and wait for the returns to come through.”

He adds: “Ask the right questions and remain engaged.”

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