Wall Street is a tough nut to crack for any aspiring investment banker – let alone an immigrant from Sub Sarharan Africa. But through tenacity, hard work and a brilliant mind, Ghanaian Charles Adu Boahen did just that. Here’s what he thinks are the biggest challenges in pursuing a career on Wall Street – and what he learned as an investment banker.
Charles Adu Boahen was just finishing an undergraduate engineering degree from the University of Southern California when he chose a sharp career change. His interests led him from science to the financial world. He managed to obtain an internship on Wall Street at the brokerage Smith Barney between his junior and senior year. That internship was his first introduction to finance. He then obtained an MBA from the Harvard Business School and gained experience in investment banking and private equity. After running JP Morgan’s Africa operations from Johannesburg he returned home to Ghana in 2007 and set up a boutique investment bank called Blackstar Advisors and then set up a real estate investment business. From there he went into public service in the Ghana Ministry of Finance and eventually became the country’s Finance Minister.
How Charles Adu Boahen broke into investment banking
It’s quite the career. But breaking into investment banking in America wasn’t so easy, Charles Adu Boahen said in a recent interview.
“The biggest challenge would be attention to detail. I think one of the things that you learn quickly is that the differentiation is so minute that you could lose a deal just because you forgot to put a period somewhere, or you forgot to cross some T, or these two numbers, you missed them off by decimal point,” Charles Adu Boahen said of his time in investment banking. “Little stuff at that level, where things are so highly competitive, these little things become so important, and that’s the way somebody assessing your work is going to differentiate between you and the next guy, because there’s nothing else that he can use to differentiate. Because at that level, everybody’s super sharp, everybody’s super competitive, everybody’s super aggressive.”
As a young investment banker, Charles Adu Boahen said you learn to be exacting and comprehensive in the way you approach stuff.
“And then that attitude takes you through life. [You learn to] check and recheck and recheck your work, and make sure that you’ve thought it through properly and carefully,” said Charles Adu Boahen. “And I think that really is a great habit to have. It’s a great approach to life: Measure thrice, cut once, as the saying goes.”
Charles Adu Boahen sees things differently
Looking back, Charles Adu Boahen recalls one of the biggest complaints he saw in government was that the Ministry of Finance had been taken over by investment bankers. But he sees this as an unfair and essentially uninformed criticism.
“It depends on how you look at it. Historically, African governments and African economies relied heavily on grants and foreign aid under the pretext of being low-income countries. And so you have situations where 90% of their budgets were funded from grants and soft loans, concessional loans. Their tax collection was poor or abysmal, because it was a huge informal sector. The formal sector was really small, so they didn’t even have a lot of people filing taxes or even providing receipts. That was how most economies were funded or financed 10 to 15 years ago,” Charles Adu Boahen explained.
Then as African countries grew and GDP grew, all of a sudden by the stroke of a pen, the World Bank decided certain African countries were no longer low-income countries.
“So, what did that mean? It meant they would no longer qualify for concessional funding and loans. Now, all of a sudden, soft money has been cut off and your revenue hasn’t improved. How do you then fill the gap? And then that’s when you get these countries going into a lot of deficit spending, currency starts depreciating, and so forth and so on,” Charles Adu Boahen explained.
At that point people with investment banking experience become incredibly useful to a government.
Charles Adu Boahen approached national finance with a problem-solving mind
“It is important to be able to wean yourself off a dependence on cheap money and concessional funding. But in order to do that, you then have to build quite a robust capital market system and be able to provide a situation where you can tap into the capital markets, both domestically and externally, to be able to fill that gap,” said Charles Adu Boahen. “But then also, you shouldn’t use that money for consumption, because it has to generate a return, because you have to pay it back with interest. So, ideally most of that funding should go into capital projects, into infrastructure projects, into stuff that is sustainable, that can start generating incomes, and then that can pay back these facilities.”
The mistake that happens is that invariably, Charles Adu Boahen said, happens because of a public sector mentality. A lot of funding ends up in social services and in consumption-type activities.
“That then defeats the purpose, because you’re racking up all this debt, but you’re not investing in income-generating businesses or infrastructure-type stuff that will generate the kind of return that you’d pay,” Charles Adu Boahen said.
In his time in government, Ghana did four or five of the most successful euro bond offerings that the country has ever seen. On average the government increased GDP growth from about 2-3% when it came into power, to about 8%, on average between 2017 and 2020 when COVID-19 hit.
The proof was in the pudding in terms of how a former investment banker could approach the task of running a government’s finances.
Attention to detail, diligence, and a methodical approach to problem solving – these are the qualities that both led to Charles Adu Boahen’s success in investment banking and helped him to be a good governor of a nation’s finances.
