The Business Herald’s markets and banking reporter.

Kiwi multi-millionaire says Africa holds big opportunities for NZ

Stephen Jennings sees many opportunities for New Zealand companies in Africa, especially in agriculture. Photo / Doug Sherring
Stephen Jennings sees many opportunities for New Zealand companies in Africa, especially in agriculture. Photo / Doug Sherring

Stephen Jennings says he isn't one for gloating. But given the sad state of the Russian economy, the result of sanctions linked to the war in Ukraine and the oil price slump, the Taranaki-born Rich Lister is happy to have severed ties with the country in which he made his fortune.

"I don't want to gloat because I have a lot of affection for Russia, but yes, I'm lucky I'm not doing business there at the moment," he said.

Jennings, 55, rebuilt Renaissance Capital - the Moscow-based investment bank he co-founded in 1995 - after the 1998 Russian financial crisis.

He had to pick up the pieces again after the Global Financial Crisis.

"It would be very hard to build that kind of business in Russia today."

In 2012 he sold his remaining 50 per cent stake in Renaissance, 20 years after he arrived in Russia on a mission to carry out its first privatisation (of a biscuit factory) following the collapse of the Soviet Union.

Before leaving NZ, he was heavily involved in the Rogernomics-era economic liberalisation through roles in the Treasury and private sector.

UK-based Jennings is a regular in the international business press but keeps a remarkably low profile in NZ.

That's illustrated by the fact he can usually walk along the beach at Oakura, on the coast near New Plymouth, without being recognised as a pioneer of emerging markets finance and one of NZ's richest people.

But he has been known, over the years, to break cover when he wants to get a point across.

Jennings was in Auckland this week giving speeches at AUT and to the NZ Initiative think tank that covered issues ranging from the economic challenges facing NZ to the business opportunities presented by Africa, which he thinks many Kiwi firms are overlooking.

He was due in the High Court next week for the defamation case he filed against Fairfax Media over an article last year about his business activities in Kenya and Russia, but settled the matter out of court last week.

More on all of that later, but for now, back to Moscow, circa 1992.

Jennings told the Business Herald Russia was "extremely unfashionable" in investment banking circles when he first ventured there amid the financial anarchy following the Soviet Union's demise.

"No one wanted to go there," he said. "Private ownership was illegal when I first went there ... entrepreneurship was illegal.

"You had to be quite crazy and incredibly determined because every little thing you wanted to do was 100 times harder than in a normal environment."

Veteran investment banker Rob Cameron, who worked with Jennings briefly in Treasury and at sharebroker Jarden & Co, said he wasn't surprised by what his former colleague went on to achieve.

"He had enormous energy and focus - focus some people would almost regard as frightening," Cameron said, adding that Jennings was "quite comfortable" when it came to risk-taking.

"He had the confidence that with a combination of focus and intelligence, he would navigate his way through. You just couldn't miss his intensity, in particular the intense eyes."

Jennings was a Russia bull, telling a conference in 2006 that pressure from a new generation of "often internationally trained business people and entrepreneurs will ultimately become irresistible".

"People and business will prevail over today's bloated and inefficient [Russian] Government," he was quoted as saying by the Financial Times.

Things didn't turn out that way, though. Russian President Vladimir Putin has consolidated power and the economy is in a mess.

"Until around 2005/2006 I thought that civil society and business would be too strong and the powers of autocracy and centralisation would be overwhelmed," Jennings said. "That's the big mistake I made in Russia."

About 2006, he said, he started shifting his focus towards Africa.

Jennings said he wasn't concerned about people judging him over the money he made in Russia.

"Not the people who know what they're talking about and whose views I respect," he said.

"It's very easy to say afterwards, 'These guys were cowboys, they got cheap assets', but they weren't cheap assets at the time."

Last year's National Business Review Rich List estimated his wealth at $980 million.

But for a time, before the GFC took a heavy toll on Renaissance, he was thought to be worth more than $5b.

These days, his business activities are focused on Africa, where his land development firm, Rendeavour, is building large-scale satellite cities in Kenya, Ghana, Nigeria, Zambia and the Democratic Republic of Congo.

Jennings has been a key proponent of the "Africa rising" narrative around the continent's economic growth.

That narrative has been questioned since the slump in commodity prices - which has hit many African nations hard - and amid fears that projections of middle-class growth had been overstated and economic expansion was often benefiting only a small elite.

Jennings, however, remains bullish on Africa's prospects.

"There's no doubt that the Africa rising narrative was right and there's no doubt in my mind that it's going to continue for a very long time."

Stephen Jennings' firm Rendeavour is building satellite cities in Ghana and other African nations.
Stephen Jennings' firm Rendeavour is building satellite cities in Ghana and other African nations.

Jennings said there were many opportunities for NZ companies in Africa, particularly in agriculture.

"Africa's markets are big and will become huge," he said.

"They are fast-growing, the opportunities are often poorly understood and the competitive landscape is usually weak. In other words, the prize is massive and the competitive barriers to entry are low."

Still, Africa can be an extremely challenging place to do business. That fact is highlighted by the difficulties Rendeavour has faced with its Tatu City project, near the Kenyan capital of Nairobi.

It has been held up by years of bitter legal wrangling between the international investors in Tatu and their powerful Kenyan business partners.

"There are valid reasons to be cautious," Jennings said. "There's no red carpet - no one's going be standing there clapping as you get off the plane and making it easy for you. You have to be very determined."

While governance has improved across Africa in recent decades, he said Rendeavour was still cautious when it came to dealing with governments with poor track records around democracy and human rights.

A case in point is Ethiopia, which the company is eyeing up for a possible project.

The Horn of Africa nation has made huge strides in recent decades, shaking off its history of famine and conflict to become one of the world's fastest-growing economies.

But human rights groups say the Ethiopian Government has a dismal record in areas such as freedom of expression and political opposition.

"Economically they have achieved a lot, but it has come at a price," Jennings said. "What we'd never do in Ethiopia is go into a situation where the Government forcibly removed people from the land ... that's happened in a number of cases and we'd never go into a situation like that."

Closer to home, Jennings used his NZ Initiative speech to highlight what he views as the key challenges facing this country's economy.

He said our tax rules "favour the old and rich" and rising house prices and immigration-fuelled economic growth were masking an "iceberg that lies ahead".

"As weaknesses compound each other, economic or social crises will become increasingly likely.

"We are sleepwalking into an economically ugly place."

He also said low productivity growth, weak global linkages and rising inequality, particularly in the education system, were major issues facing this country.

Social divisions would only worsen if such issues were not addressed, he said.

So is the arch-capitalist Jennings, the free-market economist, turning into a socialist, of sorts?

"I think I'm just focusing on outcomes," he says. "I think we have to put ideological, left/right differences behind us."

Jennings conceded that he owned property in this country, and he wasn't young.

"But what about our children and grandchildren and people on low incomes who have no hope of buying a house? What I'd say to those [older, wealthier] people is we're storing up social and political problems that are going to come home and bite us."

He said social inequality could start manifesting itself in NZ politics in a similar manner to the upheaval taking place in Britain following last month's Brexit vote and the rise of United States presidential hopeful Donald Trump.

"We could have the Trump, UK and European-type situation," he said. "That could be us next year."

Jennings has little contact with the Government here and said he had met Prime Minister John Key only the once.

He said he didn't have any political ambitions and planned to stay in business long-term with Rendeavour.

Jennings wouldn't reveal a figure on the Fairfax settlement, meanwhile, saying only that it was a "substantial sum".

He said he decided to settle when he received an "acceptable" offer from Fairfax.

"I achieved what I wanted to achieve without going to court," he said. "It was a bit of an unfortunate situation but it's been good to put it to bed and move on."

Jennings said the proceeds of the settlement would be donated to charities in Africa and Taranaki.

Stephen Jennings

Age: 55

Position: Founder and chief executive of African land development firm Rendeavour

Grew up in: Taranaki

Lives: In the Cotswolds, Britain, with his wife Yulia and youngest daughter, Katya.

Net worth: $980m, according to the 2015 NBR Rich List.

- NZ Herald

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