Meet BCNA Board Member Kwame Marfo
Kwame Marfo, who is one of the newest members of the BCNA Board of Directors, is a Co-Founder and Managing Partner at the Africa Empowerment Fund. He was the founder of Diaspora Capital LLP, a West Africa-focused investmentplatform, worked in strategy and business model analysis at the Bank of England, and was an Executive Producer of the award-winning documentary When Elephants Fight. In addition to his work with BCNA, he is on the Boards of the Microfinance Club of New York and Nuku Inc., an Accra-based health and nutritional company working to create malaria-free zones in Sub-Saharan Africa.
We sat down with Kwame to learn more about his inspiration, his achievements, and his goals.
Where did your family come from and where did they first live when they emigrated to the US?
My family came from Ghana and first settled in the New York area. Over time, many of my relatives moved to the Washington, DC, area and a handful went to Worcester, Massachusetts.
Did they have contacts with other immigrants from their community back home or were they on their own at first?
Most of my family moved to New York because of a strong Ghanaian community here. Others have followed waves of migration to other communities, where they leverage social networks to build businesses together; provide social safety nets; and share experiences on anything from immigration advice to education.
How did your family life affect your expectations about education and your own future?
To be quite honest, I wasn’t given much of a choice when it came to education. I did explore a career in sports but my family and my community’s strong emphasis on higher education meant that something had to give.
What was it like when you left the American environment to study in England and work at the Bank of England and why did you decide to return?
Ghana is a former British colony and has strong trade, education and cultural ties to England – so I have always had an interest in spending some time there. I had visited there a few times and had always been fascinated with its history and quirky ways of life. It also helped that I had a strong network of family and friends there. I wanted to work on businesses with a focus on Africa after graduate school. Most of the firms that I explored, particularly multinationals, run their Africa operations out of London. That influenced my decision to move there although I ended up taking a slightly different career path when had a unique opportunity with the Bank of England. There I worked on post-financial crisis regulatory reform to bolster the defenses of the financial system to make it more resilient so as to forestall future crises. I started Diaspora Capital LLP towards the end of my time at the Bank of England in order to get back to my Africa-focused career track. Diaspora Capital leverages “citizen” capital from the African diaspora community to provide alternative access to finance to small and medium-sized enterprises in Sub-Saharan Africa. I moved back to the United States because the investor base and the regulatory environment was more conducive to that type of business activity.
When was it when you first became interested in microfinance?
My mum was a small business owner when I was growing up so I have a first-hand account of the role microenterprises and small and medium sized businesses play in developing countries. My views were further honed during my time in the UK where small and medium-sized enterprises (SMEs) create two thirds of all jobs and generate half of national turnover despite only accounting for four percent of bank funding. In the developing world, these businesses play an even more vital role, particularly in societies where the state has failed in providing basic functions. Small businesses often step into fray, finding ingenious ways to provide water, electricity, and security for instance – all the while creating the vast majority of jobs, providing agency and dignity, and contributing revenues to the national economy – without which most of these societies will unravel.
You have founded two investment firms that specialize in investing in West Africa: after Diaspora Capital LLC, you founded the Africa Empowerment Fund – a social impact fund to bring equity capital to sub-Saharan Africa. What kind of projects do they fund?
To date Diaspora Capital LLP has invested in oxygen supply, agribusiness and real estate in Ghana, Liberia, and Zambia, while creating a transatlantic network of over 100+ subject matter experts to provide strategic, managerial and operational support to these firms. Africa Empowerment Fund seeks to build on the lessons learned from Diaspora Capital.
Is there a difference between investing in African small businesses and small businesses owned by African immigrants in New York?
I see quite a bit of similarities in entrepreneurs across both spectrums. I believe that most aspiring entrepreneurs tick the same boxes in areas such as strategy, marketing, etc. To my mind, what separates success stories from the also-rans are tenacity, passion, and putting in the work.
How did you first learn about BCNA?
I serve on the Board of the Microfinance Club of New York (MCFNY) and was introduced to BCNA by a former member of the MCFNY Board.
What’s the one policy change you would like to see adopted to make life easier for immigrant entrepreneurs?
A recent study conducted by the National Foundation for American Policy found that about half of unicorns (privately held companies valued at more than $1 billion) in the U.S. owe their existence to immigrants. However, the mainstream approach to evaluating credit risk via FICO scores, for example, was designed for a different era and seems to have staggered past its sell-by date. This system disproportionately “punishes” recently arrived migrants and shuts them out of the financial system. The absurdity of this system was highlighted when, in 2013, Ben Bernanke, the former Chairman of the Federal Reserve, revealed that he had been turned down by lenders for a mortgage refinance. A change in policy by financial intermediaries in looking beyond numbers and focusing on alternative measures of financial stability and income prospects will go a long way to ensure greater access to finance to credit-worthy immigrant entrepreneurs who may lack a “credit history” as determined by FICO scores.