The Gold pot at the end of the Rainbow
This is the story of how we lost USD 70,000 in West Africa in the Gold industry. I wouldn’t say that we were/are particularly stupid. In fact, in my humble opinion, we took more precautions than some people who haven’t lost as much. In any case, we learned some valuable lessons in the process and hereby share them with you. *Spoiler alert*: There is no quick way to make money. Not in Africa and not anywhere else on the planet.
Let’s set the scene
Before I took the plunge and decided to throw all my eggs in the afropreneurship basket, I got very interested in the world of gold and diamonds (early 2011). I met a lot of colourful characters during this period. This included self-proclaimed (and proud) con-men – more on that here. The reason I got interested, like so many others, was because of the promise of substantial rewards with little to no effort. I thought, being a full-time employee at the time, that I could use my limited leave days to make “quick bucks on the side”. This would ultimately provide me with enough of a nest-egg to be able to quit formal employ and build a business. Naturally, this turned out to be a fallacy for reasons I will set out in this post.
I have subsequently come to learn that there is no such thing as “easy money”. Neither is there a sustainable method to “broker deals” and reap consistent rewards from such transactions.[efn_note]”Deals” do not create future-oriented businesses with repeatable results. While there is a time and a place for them, outside the context of a business venture, they are “the enemy” as I explain here.[/efn_note].
The nature of the “gig”
Exactly how I got started, I don’t quite recall. Someone introduced me to someone else who knew yet another someone who had diamonds for sale… I’m sure it was something like that. In order for it to take, the someone who introduced me must have been someone I know – like I said it’s all a bit fuzzy. Long story short, I expended a considerable amount of energy trying to broker such deals: Finding genuine sellers of a few kilos of gold or a few carats of diamonds and bringing them to buyers looking to buy. The potential rewards (usually between 1% and 3% of the transaction value on a gold and/or diamond deal) seemed worth the effort. Needless to say, the success rate was fairly low. I had only earned money on 1 out of 30 such deals (if that) and NOTHING on repeat business.
School fees
We call this the school-fees-era of our lives. In November of 2011, I caught wind of an opportunity in Côte d’Ivoire (CDI). As a result of the low success rate mentioned earlier, I decided that it was time to take a different approach. I had to somehow “get closer to the source”. Due diligence was conducted through the internet, skype, and emails. However, my [later] business partner and friend (whom I met a year earlier as a result of this “Gold and Diamond rush”)[efn_note]Probably one of the only good things to have come out of this period in my life was this friendship/partnership, as well as establishment in Côte d’Ivoire. More on that here.[/efn_note] was in CDI – fortunately. He undertook to investigate the authenticity of this new seller and transaction. Chief Randolph Karembo (his name was) checked out. 50kg of gold was available and a buyer in Dubai was prepared to commit – ONCE THE PRODUCT ARRIVED AT HIS REFINERY IN DUBAI. The issue was, as so often is in these types of transactions, how to get the product from CDI to Dubai.
The seller was prepared for us to pay for this transport exercise if a purchase price of $24,000/kg USD could be guaranteed by the buyer. The buyer, as it turned out, was prepared to pay $45,000/kg USD CIF Dubai… We calculated quickly: A windfall of $1,050,000 minus expenses was worth risking the $70,000 it would take us to get the product from CDI to Dubai (via Ghana). *Dunn Dunn Dunn* (Dramatic sound)
Cutting a 3-week story (with daily twists and turns) into a few paragraphs, we raised the money it would take to transport the consignment to Dubai and got the product to Ghana. Naturally there additional costs (amongst others):
- Product testing and certification, registration by the relevant authorities at the mineral agency in Ghana
- Taxes
- Hotel, food, and entertainment for the seller’s representative
- Flights and accommodation for the entire delegation to and in Dubai
Lessons Learned
What happened next set us back a few years. The consignment was safely booked into DHL and the tracking number was issued at around 16:00. There were celebrations. We began to spend our money already. We had officially made our first million dollars. The next day, our sellers decided that they wanted to take a different flight and would meet us in Dubai (strange, but no cause for concern, because the consignment had already left – I was tracking it every 5 minutes). On arrival in Dubai, there was 0% gold in the consignment and our sellers were nowhere to be found!!! $70,000 down the tubes. After several expletives, we caught the next flight back to Accra.
Arriving at the DHL office we demanded an explanation. It turned out that at around 16:45 (just before their shipping office closed), one of the seller’s representatives had requested to “recheck” the consignment. In our absence, they had booked the parcel out and switched the consignment with something else with the same weight.
We tracked down the sellers and threw the book at them. Authorities got involved. Court-cases dragged out for more than 6 months before we finally gave up (the escalating cost of lawyers meant that we were starting to throw good money at bad money). Eventually, we had to cut our losses.
