Bigger and Better Cities

Here is a promising project: the new $100 million Actis Africa Real Estate Fund.

Financial Times writes

…the CDC fund will target less developed countries in western and southern Africa such as Nigeria, Malawi and Mozambique. It will be managed by Actis, a private equity firm that was spun out of CDC, formerly known as the Commonwealth Development Corporation. Actis is now an independent firm backed by 25 investors.

The team will be headed by Mike Williams, former head of African property at Standard Bank Properties.

The fund will begin life with $50m of properties already owned by Actis, including a “western-style” mall in Lagos, the commercial capital of Nigeria, and another in Ghana. It will also include properties in Nairobi, Kampala and Dar es Salaam and an early-stage retail scheme in Accra.

This is a good project for several reasons.

People are in general more productive and better off in cities than in the country. That’s why they migrate to cities. A project that can make cities work better is good.

People have smaller ecological footprints in cities than in the country. To preserve nature, we need more people in bigger and better cities.

Sustainability is important. When is a project sustainable? When it makes a profit. A project that only depends on grants from aid agencies or NGOs will collapse when the grants dry up.

Actis Africa Real Estate Fund will have a strong incentive to make their investments work. Mike Williams will be held accountable.

If it doesn’t work, it will be written off as a loss, and life will go on. Money will not continue to be poured into something that doesn’t work.

As John Cowperthwaite said,
….in the long run the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government; and, certainly the harm is likely to be counteracted faster.