Pacific Business Ventures

Opportunity in flight capital

China, Russia, and Nigeria are the largest sources of illicit flight capital in Asia, Europe, and Africa respectively. Trillions of US dollar equivalents are being transferred and held offshore. The money sources from bribes, trade mispricing, FDI diversion, and a wide variety of creative tactics.

See for example:
Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009
Joint Report by the African Development Bank and
Global Financial Integrity, May 2013

Enforcement attention is focused on stopping such transfers and eliminating the havens that accept them. This is appropriate.

But what if we could also convince those that control the funds to anonymously reinvest them in projects that aid the developing world while offering rates of return that are much higher than bonds or mainline equity? That money represents a gigantic pool that could radically alter the value chains in which poor farmers participate. And much of the money comes from citizens of those same countries who are in the best position to assess frontier market risk. Who knows until we ask?

The "bottom billion" of the world's people live disproportionally in countries which are resource constrained or trapped by ineffective government. The people have no access to capital for community-level investment because they have no collateral. They have no advocacy apart from endless donor aid.

We believe that every community has something to offer, and that each has the potential to meet its own needs. The key to enduring community development is a favorable balance of trade - selling something that the world needs, at a price that affords a good contribution margin. Sometimes this requires moving further down the supply chain to capture more of the value of a retail sale. It may require different farming or extraction methods to improve product quality. In every case it requires outside intervention.

There are a constellation of non-governmental organizations that provide technical assistance to developing communities, usually funded by specific government aid grants. We are one of those, although we are working toward a more holistic solution based on combining revolving aid funds with value chain upgrading. This site provides additional detail on our approach.

PBV has created, grown, and sold companies since 1988. More recently, we have begun applying this experience in lesser developed countries and frontier markets where so many commercial opportunities remain unchallenged. We are both investing for our own account through targeted country funds, and collaborating with donor organizations to better direct development aid to regions of socio-economic disadvantage.