First, could you tell us more about yourself, your study and your career? I studied at the School of Agriculture, specializing in Agricultural Business. I always pictured myself being a farmer, but I soon I found out that it was not interesting at all. After graduating, I went in the army, and afterwards backpacking for a year. When I returned to the Netherlands, I had to go back to work and I pretty quickly ended up in the financial services industry. I worked at a number of large companies, and from this experience, we eventually started “Geldvoorelkaar”. Before that I was a bank manager at ING Bank. I was responsible for the running of one of the branches. The merger of ING and Postbank in 2009 was the reason for me to think about something new and then we came up with the idea of crowdfunding. We possess knowledge of the financial services industry as well in the conservative market as in the business market. We have actually tried to take the good things from that world with us and leave less good things behind. In 2009 we started with the idea of “Geldvoorelkaar” (Money For Each Other). In 2010 we started to build and in 2011 we went live. Why did you start ”Geldvoorelkaar”? The practical reason was that we did not have any jobs anymore. Martijn, my partner, also ran a private ING branch. I got to know him in the franchise association where we were in. In such a franchise association you get to know each other well. Together we started brainstorming. We had a few ideas on the table, from starting a nursery to clothing imports from China. We saw that crowdfunding in America and England was emerging fast, therefore we thought it was a good idea to bring crowdfunding to the Netherlands. On the one hand it was a coincidence, but on the other hand, it was not entirely misguided. We did have difficulties in 2010, because when we just started nobody knew about crowdfunding. It took a few years before it became popular and widely known. What does “Geldvoorelkaar” exactly do? “Geldvoorelkaar” is a kind of marketplace for money. We are trying to link the supply and demand of money, to each other, without going through a bank. A business owner or individual may submit a credit application to us. We will then assess whether it poses an acceptable risk and whether it is feasible. If it is approved it will be placed online and investors can subscribe to the project and invest their money in an idea of a self-employed person or entrepreneur. The big advantage for entrepreneurs is that they may well get credit from us, when they cannot get it from banks. The entrepreneur can also choose which rate he offers to the investors. You can make very good use of crowdfunding as a marketing tool, because your investors can also become your customers. What you see is that borrowers, other than interest, also give a discount on a product or service, or a tour of the company. They try to involve investors in their businesses. That way you also get a higher amount of ambassadors, or new customers. What does a typical day for you look like? There are not so many typical days as each day is different from the other. I am mainly concerned with the commercial part, I have many agreements with business partners, accountants, SME advisers, but also with umbrella organizations such as the AFM and the Dutch Ministry of Economic Affairs. We also often give presentations for accounting firms or clients of accountants, business clubs, local media and students about what we do. Right now 80% of people still do not know exactly what crowdfunding exactly is. One of the missions we have is to explain crowdfunding to the market. What makes crowdfunding the new and better way of banking? In fact, here, as with the banks, credit is being provided. The difference is that banks are struggling to finance SMEs. Small loans up to about 500,000 euros are no longer interesting for banks. This is due to several things. First, a small credit is relatively expensive for a bank, so if a bank has to make a choice, they choose a larger credit, because they earn more. What you also see is that by regulations such as Basel III, it became more difficult for banks to provide credit. This creates a large gap in lending to SMEs, which we are trying to fill through this alternate way in which you no longer need the bank. We let people invest directly in companies, which actually works extremely well. On the investment side you can see that there is a lot of money that does not produce a high return when invested at banks, so people are looking for alternative ways to invest. We are trying to match two flows. Eventually we ensure that the entrepreneur receives the needed investment, while the investor gets to invest in a different way. People also often want to know what happens to their money. If you invest directly in an SME enterprise, this is more transparent than when you invest in a fund of the bank. This also fits with the trend in society today, people are becoming more socially responsible. What are the risks with regard to money laundering in crowdfunding? The risks are minimal, because we do not take in cash. This can only be transferred through a regular bank. The bank plays a controlling role in preventing money laundering. If an unusual transaction is done, the bank makes a MOT report and afterwards, an investigation starts. What does the future of crowdfunding and “Geldvoorelkaar” look like? You can see that crowdfunding is becoming better known and increasingly seen by employers as an alternative to the bank. More and more entrepreneurs come directly to us and skip the bank. Accountants and advisors realize that it can
The IPO story
The IPO story: it’s all about being prepared In the first quarter of 2015 €34.9bn capital was raised through IPOs (Initial Public Offerings) worldwide, of which €15.3bn was raised in the EMEIA region. Also Euronext Amsterdam stock exchange started strong in 2015 with the IPOs of GrandVision, Lucas Bols, and Refresco Gerber, after a number of years of limited activity. GrandVision raised €1.0bn in capital and ranked in the global top 10 of IPOs. The number of IPOs we see today is no coincidence as an IPO is not a spur of the moment decision. The recent IPO activity reflects the trust Dutch companies currently have in the economic climate but also proves that investors with available funds are looking for returns. Successful IPOs follow an extensive IPO readiness process that transforms privately held investments into listed and scrutinized investment opportunities for both institutional and private investors. Preparations are crucial to be ready when the IPO window opens. 1. Start early with an IPO readiness assessment and make an informed decision In order to be able to act and operate like a public company, companies should begin their IPO readiness process sufficiently early. They should be agile enough to respond to pressure to move swiftly into registration while the window of opportunity is available. As IPO readiness involves accepting and implementing change in every aspect of the business, executive management, organisation, and corporate culture – companies that start early are better prepared. Being IPO ready means among other things, to have your company ready to meet accounting (IFRS, US GAAP), tax (structuring) and legal and financial reporting requirements. Key systems that need to be in place in order to achieve this include internal controls, risk management, compliance, corporate governance and internal audit. 2. Commit substantial resources to building the right team Preparing for an IPO is an intense and demanding process and it is all too easy for management and employees to be distracted from other important issues by the sheer enormity of the task. The company must strike the right balance between managerial focus on the IPO transaction and the day-to-day operations of the company. It is necessary to prepare an experienced management team, robust financial and business infrastructure, and a corporate governance and investor relations strategy.IPO candidates often underestimate the time their IPO journey will take and the level of scrutiny and accountability faced by a public company. This is why successful companies approach their IPO as a transformational process, rather than a final destination or just a financing event. 3. Have a plan B alongside the IPO as part of a multitrack process Evaluate alternative exit strategies and keep the options open. Before opting for the IPO route to growth capital, most IPO candidates explore alternative strategies. Taking a multi-track approach increases a company’s strategic options, improves negotiating leverage and reduces execution risk. The mergers and acquisitions market, private equity-backed deals and dual-track approaches (such as a concurrent pursuit of both an IPO and an M&A transaction) are viable alternatives for raising capital and offer their own unique strategic advantages. 4. Be aware of investor requirements in a buyer’s market in all parts of the issue concept A recent survey of institutional investors conducted by EY shows that the combination of the right team, right story and right price is key to success. Being prepared – in other words, having achieved IPO-ready status – is a prerequisite for this. The infrastructure-building process should include development of a strategic investor relations program for marketing the company prior to the IPO. This ensures that key investor-relations professionals are on hand to guide the planning for and performance during the IPO road show. Investors are clear about what they look for in a successful IPO. Good quality companies priced right, run by the right team and with a good story to tell will command the attention of the market, even when market windows are opening and closing fast. Investors rank the top five success factors for IPOs as attractive pricing (the leader by a considerable margin) followed by a compelling equity story, confidence in management, the right timing and, last but not least, IPO readiness. 5. Pricing: Use multiple methods, gain knowledge of indicators and agree on threshold values Being able to articulate a compelling equity story backed up by a strong track record of growth sets the company apart from its peers while increasing value for owners. 60% of investors base their IPO investment decisions on financial performance measures – in particular, growth in EPS, EBITDA and profitability – and attribute an average of 40% of their IPO investment decisions to nonfinancial measures, giving most weight to management credibility, corporate strategy and brand strength. A compelling equity story covering all these aspects is therefore key to marketing an IPO. Moreover, size is a decisive factor when it comes to entering selection indices and gaining broader access to investors. A high free float will facilitate the necessary post-IPO liquidity. 6. Timing: Create flexibility and the ability to get off to a rapid start, especially when entering the hot phase before the IPO roadshow When the market timing is right, it’s the companies that are fully prepared which are best able to leverage windows of opportunity. Companies that are flexible when it comes to kick-starting their IPO execution phase will benefit from the visibility of the fastest and first company that present the IPO with high attention and market awareness when IPO windows are open. Companies around the world continue to ready themselves to go public. Whether a company is owned by its founders, a family business, conglomerates, government, private equity or venture capital, building confidence and trust among investors in the public spotlight of capital markets is vital. Being IPO ready in all areas is the ideal foundation for achieving this. 7. Living up to the expectations During the IPO process, in the prospectus, and during the roadshow, companies set expectations about their future performance. Immediately after the IPO
Opportunity driven cyber security
In this article Martijn Sprengers, information security advisor at KPMG IT Advisory, talks about the developments of cyber crime. He enlightens us with his view on the risk of cyber crime and furthermore he explains different cyber security methods. Managing cyber risk through the eyes of an attacker Open the newspaper or your favorite online blog and you see examples of identity theft, cybercrime, hacking and digital espionage every day. Should organizations worry? Should you worry? Yes you should, but not more than with any other risk. Security, and especially digital security, is often approached from the perspective of Fear, Uncertainty and Doubt (FUD). Because of its digital and intangible nature it can be hard to grasp, let alone understand, all the threats and possibilities of threat actors. Therefore, it has become a key theme in today’s business reality. Now that the success of many organizations has proven to be dependent on digital assets, they should start looking at cyber security as an opportunity that will add extra value to a company’s products and services. In this article, I will mainly focus on the aspect of learning from your opponent: become more resilient to digital threats by looking through the eyes of an attacker. Looking through the eyes of an attacker To ensure that the company’s most important (digital) assets are safe, it is important to know who wants to attack our organization, and why? In other words: what are the most relevant threat actors and what are their motivations to target you or your organization? Is it digital vandalism? Hacktivists who pursue idealistic goals? Organized crime or stage sponsored espionage? The threat landscape is changing: first the aforementioned groups operate independently, whereas currently they are more and more connected. For example, a hacker can work alone on one day, join an activist campaign the other, and get hired by the government to develop state sponsored malware later. Given their fear, companies want to protect all their assets, but that’s unfeasible. It’s not a matter if attackers will breach their security, but when. Therefore, companies should focus on implementing preventive, detective and responsive measures while assuming the attacker has already compromised their first layer of security. For example: It is not only about focusing to keep viruses and malware out of your employees laptops, but also about detecting any malicious behavior or misuse, as I usually see that five to eight percent of the laptops is infected with malware. During my penetration testing activities, I don’t have to attack the structured data sources (e.g. databases or the ERP applications) anymore. Infecting one end-user who has access to Sharepoint or shared folders is usually enough to steal the ‘crown jewels’ of organizations. You will also see this new approach in the cybercrime underground. The last year, an emerging group of hackers called FIN4 also uses these methods. They don’t penetrate deeply into the network of their victim company, they only obtain access to e-mail inboxes of specific, targeted, employees (such as finance departments). They then use the information obtained, such as upcoming mergers and acquisition deals and trading information, to gain advantage on stock exchanges or sell this data on online marketplaces. From system to data oriented security Since systems are more and more connected, organizations are continuously exposed to all kinds of digital threats. Some companies get attacked even thousands of times a day. However, this does not mean that these attacks are successful and the hackers are able to modify or steal your most important data. Earlier, these ‘crown jewels’ were tangible and easily protected by putting them in a (digital) vault, for example in structured sources such as databases. As a result of this tangibility and simplicity, companies organized their IT security on system level. This means that on a technical or operational level, the individual systems are usually reasonably well protected. However, the focus of IT security should actually be on a data level: where in your (digital) organization are these crown jewels stored? They can be virtually anywhere, especially in unstructured data sources: in e-mail boxes of employees, cloud services (like Dropbox) or smartphones. An attacker doesn’t look at the security of the individual safety, he is looking for the weakest link in the complex IT environment. During my recent penetration tests, in which I test the security of companies by trying to hack my way in, I don’t have to attack structured data sources anymore. Infecting one end-user’s laptop which has access to sensitive data is usually enough to steal the company’s crown jewels. This is also a pattern that is identified in the dark side of the Internet. For example, one of the prevalent threats is the group of hackers called FIN4. Without penetrating deeply into their target’s network they copy the e-mails of employees, usually by carefully selecting their targets. This group is especially interested in information regarding mergers and acquisitions for large multinationals and financial institutions. The information is then sold on the black market or used to their own advantages in stock trading. Another upcoming threat is the theft of intellectual property, usually performed by nation states such as China. A recent example of this is the breach of ASML’s security. The problem with these attacks is that nothing gets ‘stolen’, only ‘copied’: the data is not modified and still residing on the organization’s systems. To mitigate such attacks, the focus of companies should be on protecting their data, not only their systems. Encryption provides less security than expected Another preventive measure that organizations use to protect their data is encryption: using a secret key to ensure that only authorized personnel with knowledge of this key can access the crown jewels. However, encryption can give a false sense of security, as it is often not correctly implemented or insecurely configured. As a professional hacker, encryption never held me back (for a long time) from stealing the ‘crown jewels’ of organizations while testing their security. With just simple attacks (like an SQL-injection or
Accounting fraud
In this article Inez Verwey1 talks about the differences between public auditors and forensic accountants in their ability to identify fraud risks and to plan effective procedures to mitigate fraud risks. According to her, especially in fraud detection an out of the box mentality is crucial as successful fraudsters are ‘top of the bill” in being creative thinking. The ‘Thinking-out-of-the-box’ ability? Fraud and public auditors; not really a happy marriage. And that is an understatement. Improving the fraud detection ability of public auditors is a hot topic for regulators in the auditing field. But most of the research on this topic is only focused on the implementation of assumed aids to improve fraud detection without knowing why public auditors have so many difficulties in fraud detection. To be able to implement effective aids it is necessary to address this issue. Regulators (PCAOB, ISA, NV COS, SAS) are more and more interested in a more forensic view during the audit. The expectation that a more forensic view will be effective is based on several assumptions. The first assumption is that forensic accountants are more able to detect fraud during an audit engagement. The second assumption is that a so-called forensic view exists. Regulators tend to describe a forensic view as being skeptical and ethical. Also having a lot of fraud experience and fraud training is considered as being of great importance. These assumptions are quite obvious, but have not been subject of academic research yet. My background as public auditor and forensic accountant made me curious: Is it that simple? I started PhD-research on the subject. In my dissertation[2] I describe a study between forensic accountants and public auditors. The aim of this research is to compare the abilities of public auditors and forensic accountants to identify and assess fraud risks and to plan effective audit procedures to mitigate those risks (hereafter this will be referred to as “fraud detection” for brevity). To address this issue I designed an experiment. In a between-subjects experiment 48 Dutch forensic accountants and 131 Dutch public auditors were asked to identify fraud risks, assess the fraud risk and plan audit procedures to detect the identified risks. The case used in this study is based on a SEC enforcement fraud action and adopted from Asare & Wright (2004). In this experiment I manipulated the time budget pressure for planning audit procedures. Public auditors are prone to time budget pressure during an audit engagement. I combined the scores of the participants on bot fraud detection tasks with data about the level of ethics, the level of professional skepticism, and the amount of fraud experience and training of the participants. I collected these data with a post-experimental questionnaire. The data-analyses showed that forensic accountants are better able to identify fraud risks as well to plan effective audit procedures to mitigate these fraud risks. Under time budget pressure public auditors planned even less effective audit procures. Forensic accountants proved not to be sensible for time budget pressure. Another interesting finding is that although forensic accountants tend to be more skeptical, more ethical and have more fraud experience and received more fraud training than public auditors these higher scores do not explain the differences in both detection tasks between both groups of participants. The relationships between the different research variables differ between both groups. Furthermore, for public auditors fraud experience is negatively related to the ability to plan audit procedures. This finding can be explained by the relatively low amount of fraud case experience by public auditors. As fraud cases are rare during the career of public auditors, a single fraud experience may lead to the situation that the auditor unjustly thinks he recognizes the same fraud case. The auditor then projects his specific experience on a new situation and focuses on procedures to detect this fraud as used in the earlier experience. So the risk of misrecognition of fraud risks may lead to a loss of audit quality instead of improvement. Another interesting finding is that for both groups of participants there is no relation between the ability to identify fraud risks and the ability to plan effective audit plan procedures. So what can be concluded from this study? First of all, forensic accountants indeed can ad value during an audit engagement. Is this a surprise? Not really, but finally it has been proved now. But unfortunately, the assumption that this expertise is a result of a higher score on the levels of professional skepticism, ethics, fraud experience and fraud training than public auditors is not right. So we have to concentrate on other factors to improve the fraud detection abilities of public auditors. And the big question is: what are those factors that make forensic accountants successful in fraud detection??? The unexpected findings that fraud experience has a negative influence on the fraud detection ability of public auditors as well as the missing relation between the tasks of identifying fraud risks and planning audit procedures may give us a clue. And personally, I think that the direction of interesting future research on this topic can be described as: “The Thinking out of the box – ability” I don’t think this is an existing word yet, but let me explain what I mean with this description. The negative relation between fraud experience and the ability to plan effective audit procedures is an example of a cognitive bias. Cognitive biases are tendencies to think in certain ways that can lead to systematic deviations from a standard of rationality or good judgment, and are often studied in psychology and behavorial economics. In this case, a single fraud experience may lead to the situation that the auditor unjustly thinks he recognizes the same fraud case. The absence of a relation between the ability to identify fraud risks and the ability to plan effective audit plan procedures is also an example of a cognitive bias: thinking in separate tasks instead of overlooking the whole audit engagement. Probably strengthened by internal procedures within an audit
The social security system
In this Face2Face the social security system in the Netherlands is discussed by Celina Mlodzick and Paul Ulenbelt. Is it a solution to problems or is it still squandering taxpayers’ money? In Favor: Celina Mlodzick, Master Finance student at Tilburg University Social security system in the Netherlands: still squandering taxpayers’ money The introduction of the Personalized Budget (Persoonsgebonden budget/PGB) has now led to more than two milliard being paid out yearly to PGB-holders. A lot of this, while originally intended for hiring professional help, disappears in the family’s moneybox or in the pockets of dishonest intermediaries and self-employed persons that rent themselves out to patients at high prices. Up until the first of May 2015, PGB holders will be reimbursed €30 an hour for help given. This is the case even if the assistance is coming from the holders’ partner or child, simply put, ‘unqualified’ workers. From the first of May onwards this will change to €20 an hour. To put this in context, the minimum wage in the Netherlands is €8.50 an hour. PGB’s of €30.000 up to more than €100.000 are being paid out to partners or children of the PGB holder. These amounts can only be dreamt by academics. To me it seems that so long as the partner is able to assist in the caring of their spouse, a PGB is unnecessary. Furthermore, based on the Childcare Law (wet kinderopvang), amounts of €30.000 or more are being paid out to child-carers that frequently turn out to be grandfathers, grandmothers or dishonest organisations that are wrongly filling their pockets with taxpayers’ money. This wrongdoing is at the expense of official childcare organisations. Due to the dishonesty in the system, these organisations have to close their doors or have to lay off staff leading to further unemployment and thus a negative effect on the economy. If, afterwards, it turns out that certain applications were turned in wrongly and the government has already paid them out, then reclamation is often not possible because these people do not have the money anymore or have already gone with the wind. A good solution would be to eliminate this law and include it fully under the primary education. Another area where the social security system has gone out of control is the Care Allowance Law (zorgtoeslag). Based on this act tens of millions are being paid out unlawfully. Think of the Bulgarian fraud, where hundreds of Bulgarians came to the Netherlands and subscribed here to subsequently receive care as well as rent allowance without paying rent or health insurance. This was possible through a loophole in our social security system, where the organisations paying the allowance (the tax authorities) do not coordinate properly with the organisations that are assumed to receive the health insurance. This problem could be solved easily by nationalizing health care and allowing the tax authority to both collect this money and supply health care. This would also save lots of administration costs and advertisement costs of health insurance organisations. In this way the pumping around of money would be limited to a minimum, preventing some fraud opportunities. Another way in which a lot of taxpayers’ money is being wasted is through the urge of chairmen of hospitals, healthcare facilities, schools etc. to become ever so larger and luxurious. Buildings of only forty years old are demolished under the pretext of not meeting the requirements of the present day. These buildings then are replaced with new, modern buildings, often on a lease base. In our surrounding countries (Germany and Belgium) these kinds of rules do not exist and as a result they offer cheaper health care. What would I want as a patient: decent, affordable health care, or staying in a luxurious environment with little money left? Against: Paul Ulenbelt, SP Member of Parliament Social security: A solution to problems The welfare state is a historical compromise, the outcome of a struggle between the political mainstreams within our country. Liberals as well as socialists and confessional parties have built up the social security system. According to the liberal thought, income, health and welfare are a persons’ own responsibility in the first place. The government should help those who are left out, however should not take away their own responsibility. Socialists see it as a shared responsibility: social services allow people to keep control over their own lives. According to confessional parties, besides the government, there is a crucial role that can be played by social relationships, such as family, society and the church. Again and again, the difficult situations experienced by people were a motive to find solutions. For example, shortly after the Second World War an emergency fund was set up to halt the extreme poverty amongst the elderly. Public services within professional groups were affected, and paid a portion of their salary in the event of illness or disability. Ecclesiastical institutions received financial resources to support those in poverty. Later, the emergency fund for the elderly (the AOW, as we know it today), the sectorial provisions for sickness (Ziektewet) and incapacitated people (WAO and WIA) were all put in place and welfare was introduced for the poor (bijstand). These are all facilities created as a solution to welfare problems. Particularly in times of economic uncertainty, it is clear that social security is indispensable. What would have happened to the hundreds of thousands of workers who lost their jobs in recent years without the Unemployment Insurance Act (WW)? The lack of income would have led to the inability to pay (off) residence, the need to sell their car and the plummeting of consumer spending. Such a scenario would be a disaster for society as a whole and for the individuals it affects. Furthermore, it also disrupts economic recovery. The current breakdown of social security is presented as a necessary modernization of the welfare state. Thereby less emphasis is placed on ‘social protection’ as people become unemployed, sick or old. Rather, it focuses on ‘social investment’, by providing citizens with
Emerging West Africa
In this article Marco Rensma, director of MEYS Emerging Markets Research, enlightens us about emerging West Africa. According to Mr. Rensma the countries in West Africa are in a good position to continue their strong economic growth path. Introduction With approximately 80 percent of world merchandise trade carried by ships, maritime transport remains by far the most common mode of international freight transport. It is the backbone to facilitating international trade, offering the most economical and reliable way to move goods over long distances. Ships can carry large volumes of merchandise and use free highways in the seas, which only require infrastructure investments at the seaports. For all countries, how ports perform is an essential element of overall trade costs. This is especially the case for Africa, as fifteen of its countries are landlocked and face severe infrastructural and trade facilitation problems. For the landlocked nations, ports — together with the inland waterway and land infrastructures (railroads and highways) — constitute a crucial link to the outside world and to the global marketplace. Consequently, high transport-related costs represent a fundamental constraint to these emerging markets global competitiveness and their sustained economic growth (African Development Report 2010, African Development Bank). Faced with sustained growth in volumes of cargo in recent years, African governments and international donors have invested strongly in expanding and modernizing ports, improving the regulatory framework and privatised port services making African ports more efficient. At the same time, transport links between ports and the hinterland are still relatively weak in many African countries. Intra-regional trade is therefore almost non-existent. Over the period from 2007 to 2011, the average share of intra-African exports in total merchandise exports in Africa was 11 per cent compared with 50 per cent in developing Asia, 21 per cent in Latin America and the Caribbean and 70 per cent in Europe. This relatively low share of Africa’s intra-regional trade is causing GDP growth to be lower compared to countries trading within common economic blocks like for example the European Union. Emerging West Africa With a total population of more than 330 million people, of which Nigeria has approximately 170 million people, and a combined GDP of 400 billion US dollars (20 per cent of total Africa), the West African countries form a strong economic powerhouse on the African continent. During the past decade the annual average economic growth rate for West Africa was six per cent, making it one of the fastest growing regions in the world. The strong economic growth rates with rising incomes in West Africa lead to a fivefold increase in total foreign trade over the past ten years to 250 billion US dollars in 2013. Source: UNCTAD Although these economic figures are spectacular, not everything has changed favourably for these countries. Life expectancy in many West African countries is still on average below 60 years, poverty is widespread – especially in rural areas – youth employment is mounting, corruption and fraud is deep rooted in many societies, and the majority of local enterprises are operating in the informal sector with almost no legal protection for company owners and employees. In addition, governments are often weak, a judicial system which in majority is non-transparent thereby creating a very challenging investment climate for foreign companies to operate in. Rising Foreign Direct Investments Although there are many obstacles, total Foreign Direct Investments (FDI) in West Africa have increased from 38 billion US dollars in 2002 to 145 billion US dollars in 2013. A threefold increase in just ten years. A remarkable achievement at first sight, but the majority of these investments went to the oil exporting countries in the region of which Nigeria was the main beneficiary (57 per cent) followed by Ghana (13 per cent). Also cash crop exporting country Cote d’Ivoire received a relatively large part (6 per cent) of FDI pouring into West Africa during the past decade. Source: UNCTAD Although FDI in West Africa increased in absolute terms significantly over the past ten years, the level of per capita FDI is still very low. The combined per capita FDI in West Africa is only one-eighth of that of South Africa. The already mentioned unstable political climate, and especially the lack of an independent judicial system protecting property rights in large parts of West Africa, are making many foreign investors hesitant to enter these emerging markets. Furthermore, the limited number of local financially strong private enterprises and stock and capital markets still in an infant state, are all adding up to the explanation of the relatively low levels of per capita FDI in West Africa. Ports crucial to economic growth For the countries in West Africa sea trade is of upmost importance to the development of their economies. No less than 95 per cent of total foreign trade is done by maritime transport, thus making an efficient functioning of ports crucial to the economic survival of the region. Measured by cargo port throughput Nigerian ports are by far the largest ports in West Africa followed by Cote d’Ivoire. This strong position of Nigeria is caused by the fact that the national economy depends heavily on the imports of construction materials, consumer goods and processed foods and drinks. Also the large oil and gas industry must import most of the necessary materials and equipment. The second position of Cote d’Ivoire is the result of large volumes in export of cacao. Cote d’Ivoire is the largest producer of cacao in the world which is exported through the local port of San Pedro. Source: various port authorities; compiled by MEYS Source: UNCTAD Although container throughput in West African ports increased eightfold during the past five years, volumes are still relatively low compared to the ports in South Africa and North Africa. But times are changing rapidly. Supported by large privatisation programs, national and foreign terminal operators active in West African ports are investing millions of US dollars in expanding terminal capacity to meet the growing volumes in