Who said anything about land ??

On Phenomenology, Impact Investing, IRR’s and other stuff nje (an isiZulu term meaning basically)…

 

There’s a strange outcome if you go on Dollar Street and search image results of Agricultural land.

Yep, the Poor and the middle class have them. The Rich class? No Results. Strange right? Not so if you’ll digress with me a little.

There is a research philosophy known as Phenomenology. In short, a method of doing research that seeks to describe the quality of an experience. Unlike numbers and other quantifiable data, phenomenology (besides being a long word that feels awkward to say in your head) is concerned with giving the researcher the responsibility of speaking on behalf of his research subjects. Whether he is an insider to the group being represented or an outsider, one thing is clear, he has to ultimately give a thesis that ultimately captures the essence of the study subject. Therefore be patient and read to the end as this methodology implies that things make sense on conscious reflection.

And so I have the unenviable task today of telling a [financial] story that you won’t find in many if any finance textbooks (I’ve included an Excel Sheet for those still numbers swayed), without using numbers. The [financial] story of our obsession with land and everything that it apparently represents.

“If the world were to end tomorrow I’m investing in pumpkin seeds and bullets” Simon Brown. An interesting quotation by one of the most underrated finance guru’s I know. “Where there’s land there’s war” Kenneth Cranham [I think] randomly in the movie A Good Year.

Very random quotations from two totally unrelated actors in our story (although I do remember Simon mentioning that he had a job as a video guy recorder or something to that effect). You see, investing is a very terrifying sport for most of us learned folk, let alone to those living hand to mouth. Dive a little deeper into our poor communities and an interesting observation occurs (inside the already strange Dollar Street search result). The wealthiest in these communities are the ones with cows, others just have well-kept subsistence farms that rely on the cows rented for ploughing [in the most extreme situations]. Do a little research and you find a little further that the first Kings (as accounted for in the biography of Maqoma, most renowned Xhosa King of the 19th century) were followed based on their ability to have enough cows to be lent to their subjects to carve out a dignified existence. Wars consisted of killing lifestock and destroying plantations.

The King would normally have a herd of cows that would stretch beyond where the eye could see and he would divide them amongst the number of households in his kingdom. Over time the household could keep the calf’s that arose from the custody and return the cow with interest (normally a second cow). In times of war the enemy would be after the cows as a form of a flag but also as a carrot that could be used to attract the finest fighters of the now conquered King. Maqoma was born in 1798, only 220 years ago (his great grandkids continue his pioneering legacy today).

Fast forward to today and a review of a recent book continues to illustrate the strong bond the poor have with agriculture and all its inputs:

Many successful development efforts at ‘the margins’ often remain hidden, informal, sometimes illegal; and rarely in line with standard development prescriptions. If we shift our gaze from the capital cities to the regional centres and their hinterlands, then a very different perspective emerges. These are the places where pastoralists live. They have for centuries struggled with drought, conflict and famine. They are resourceful, entrepreneurial and innovative peoples. Yet they have been ignored and marginalised by the states that control their territory and the development agencies who are supposed to help them. This book argues that, while we should not ignore the profound difficulties of creating secure livelihoods in the Greater Horn of Africa, there is much to be learned from development successes, large and small.”

(21. Catley A, Lind J, Scoones I. (eds). 2013. Pastoralism and development in Africa: dynamic change at the margins. London, UK: Routledge and Earthscan)

A walk through my own rural area in Limpopo (Cannon Camera in hand and my best version of an indigenous language) revealed a very glaring observation. Most of the households all still have a Kraal in the corner of the yard. Even my cow (with its calf, yey dividends) is still kicking strong lol. Even more than the ones with cattle kraal’s, are the ones with mealies and maraka (indigenous pumpkins). Glaringly, the houses with graduates tend to have kraal’s with cattle (even if it’s just a desperate portfolio of two cows and a calf each). The yard is generally well kept and their clang names ring around social circles at common meeting spots. There’s a belonging feeling about the situation that even my FNB notification reminding me that my Simply Save has dropped below R100 is not enough to make me feel any poorer. I want more of this feeling.

In the hurly burly of everyday engaging with the news it is very easy to forget that 20 years ago is not a very long time ago. It is also very easy to think that someone born 220 years ago is very old. Ancient almost. But to put it in better perspective, the author still has interacted with 5 of his great grandparents (3 of whom are still alive and very coherent in human functions). One from each mom and dad and three sisters from dad’s side. Moral of the story, on a long enough timeline a vast majority of the population is invested in an ending world, or at least the idea of it.

So what went wrong? As this is a finance website, fill in the socio political history of any country of your choosing. Finance has failed to keep up. Yes we have ETF’s, share ownership and various instruments that can symbolise a cow and its dividends, or a tree and its fruits if you prefer. But the poor have not been touched by that enlightenment and for the first time seem able to make a giant leap in time (I mean look at what cashless China did with its rural population and technology in the last 25 years). Finance has failed to get to the bottom of the barrel like education and so called civilization have and as a result the poor and middle class are still anchored in basic economics.

Enter impact investing. As can be seen from the IRR’s promised in the attached Excel sheet, my money is better off in a long term government bond or even an ETF. There however is an elusive feeling to this method of wealth creation. Someone always knows better, knows more or happens to be making money in products that only the ‘wise’ saw coming. Impact investing finally attempts to modernise finance and make it speak to the securities we already have or identify with. Now selling a cow to settle university registration fees is not a nightmare (let alone all the other burdens that come with caring for livestock in the poorest corner of the world). Now a certain crypto buzzword means something, inclusivity.

With the option to buy a whole cow, percentage holdings of a cow, pay for a cow over time and many of the financial gymnastics available on www.livestockwealth.com or the ability to own *Berry trees and solar panels on Fedgroup, it is no wonder it feels like now we can participate. As my dad often says: “people are poor, not stupid.” There is a certain truth to owning life stock and farming that people still relate to. That truth may better be presented in the financial systems we have today but it does not not exist at a micro level.

So what is it all about.

People want access and a sense of control (our motto “Here’s Control”) when it comes to their finances and the quality of life they are able to enjoy as a result. The political noises around land are directed at the middle class because they can see land on both sides of their wealth journey. They either can relate with family members that have tracts of communal land but no access to the tools that make it useable or they have an envy towards those who have “made it” and preach the message of self-sustenance. Either way it makes land with all its fruits to seem to be the key to solving their problems. Is this a valid path? The numbers don’t necessarily agree but the phenomenology method of interrogation shows that there is still an unquantifiable return that people can associate with. An essence so to speak.

Is it legit?

As with everything investing the final assurance lies with you and your methods. In South Africa so far only two avenues are available for accessing these types of investments. Livestock Wealth and FedGroups impact investing. As a safeguard, Livestock Wealth is audited by SNG and boast clients as meticulous as Woolworths and is a registered FSCA member and national credit provider. Fedgroup is actually a financial services provider, an investment and insurance company offering employee benefits products and investment plans.

In conlusion I think there is no case to be made for seeking a return through land the world over. Don’t mistaken me for saying there is none whatsoever. On the contrary what I am saying is that the essence of a total return from impact investing is far more than a positive NPV calculation or a high IRR. It’s not simply a positive scientific test. Sometimes (and evidently predominantly in the developing world), total return is a journey that you embark on. Through a lens of a people. Through time and a story. And when you finally understand what the excitement is about, you will realise that the barrel isn’t so empty. That there’s a cent to be made.

*I own two blueberry trees myself and am very entertaining of the idea of owning cows and more relatable investments. But I do it in a diversified portfolio that has a 5% allocation to unconventional investments.

PhotoCred for Featured Image to @LindoMyeni

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