African corruption not a problem for tech investment

Corruption is not the most pressing challenge to venture capital investment in the African tech start-up scene, according to an investor.

“I was born in Naples, Italy, and corruption is equal to Lagos,” Maurizio Caio founding partner of TLcom Capital LLP told Fin24.

Caio is on a drive to invest a minimum of $500 000 in tech start-ups in Africa and he has said that developmental challenges are not an impediment to investment in technology companies.

“There are problems: There are traffic problems, corruption problems, which is what you would say if you invest in Naples. We should be aware of the problems, but not take them too seriously,” he said.

TLcom Capital LLP has examined between 600 and 700 tech companies focusing on lower risk areas where government action might present a revenue risk.


“You need to look at hundreds of companies to actually pick the one that has the potential to demonstrate this experiment that we’re all doing here,” said Caio.

The company, which boasts Harvard graduates, rejects 99% of tech firms based on strict criteria that include a detailed examination of business models.

“In this round, for this cycle, we need to be very merciless in focusing on the highest potential entrepreneurs to make a point, to demonstrate that there are high returns that are possible,” Caio said.

“We discard a very high number of entrepreneurs because of many problems and, to tell you the truth, corruption is not the biggest problem.”

Transparency International

Meanwhile, Caio’s views differ to Transparency International, which has said corruption is costing Africa.In a blog post by Transparency International’s Chantal Uwimana in 2014, she said that “illicit financial flows from Africa are quickly draining the continent”.

“The UN Economic Commission for Africa estimates that the annual outflow of illicit finance through trade mis-pricing alone stands at about $60bn, having grown at a real rate of 32.5% in the decade between 2000 and 2009,” wrote Uwimana.

“This estimate stands higher than outflows from other developing regions. Illicit financial flows are a serious threat to Africa’s economic growth and development. This situation needs to stop and it is a global responsibility to stop it,” she wrote.

Source: News24

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African corruption not a problem for tech investment