Monthly Letter – April 2023

“The celebrated tome “Capital in the Twenty-First Century”, by Thomas Piketty, a French economist, runs to 204,000 words—longer even than Homer’s “Odyssey”. But the book’s central argument can be distilled to a single, three-character expression: r > g. As long as “r”, the real rate of return to capital, exceeds “g”, the real rate of economic growth—as Mr Piketty calculated it did over the course of the 20th century—then inequality will supposedly widen.”

— The Economist Magazine


The world is watching the developments out of the US with regards to the country’s debt ceiling. Some progress has been made recently with the speaker of the house and the president making a deal to resolve the issue. While there are still some concerns regarding the possibility of lawmakers voting against the agreement it seems likely that the issue will be resolved prior to the treasury being forced into a technical default. Expectations are that the FED is reaching the limits of the hiking cycle and while a further 25 basis point is possible before the end of the year it is probable that that will be the final hike, with rates expected to remain stable till the end of the year and begin falling in 2024.

It is important not to forget about developing economies in these turbulent times. Inflation has had an impact across the board with double digit inflation seen from Latvia to Chile. SMEs were hit particularly hard by the increases in energy costs and shipping costs. For the most part, they have been able to pass these on to their end customers and have shown a great deal of resilience in this environment. This is most likely due to the SMEs we are working with — a lot of them operate within markets that are used to inflation being moderately high in general. We’ve also seen that due to rate increases driven by inflation, banks are continuing to retrench somewhat and our partners are able to pick up more business and better yields for the same risk. In Mexico, GDP growth came in slightly below preliminary estimates for Q1 2023, partly in anticipation of a slowdown in the US economy. Economists, however, remain optimistic on the Mexican economy, as the expectation is that a mild slowdown in growth is likely to make Banco de Mexico’s fight to control inflation easier going forward. We have also seen some political turbulence in Peru and Ecuador over the past few months, although Peru’s economy seems to have broadly shrugged off the political woes befalling the country with the world bank expecting the country’s GDP to grow by 2.4% this year — slightly weaker than during 2022 but still robust. Ecuador on the other hand is painting a somewhat less clear picture — while the economy performed robustly during 2022, lower oil prices combined with natural disasters have put increased fiscal pressure on the government, with the political turbulence making it difficult for the government to take concerted steps to put the economy on a sounder footing going forward.

In impact news, during the first quarter of 2023, our Co-CEO Sudha Bharadia visited Romania to learn how financing is supporting various SMEs across various industries. For example, providing alternatives to cheese and dairy products, Filgud is a brand of vegan alternatives giving people the experience of nutritious vegan cuisine in Romania. With the mission to provide plant-based options to consumers, Filgud offers a tasty alternative to animal products without compromising taste.

Our case study this month focuses on the impactful role of small businesses driving economic development in Botswana. In a recent visit by our Co-CEO Sudha Bharadia, AGC learned how our partner’s financing is empowering businesses in the country. Our financing partner offers innovative and tailored financial solutions, including purchase order financing and invoice discounting, to support the growth of SMEs in Botswana. Guided by the belief that ‘’no business should remain small forever’’, our partner’s client has successfully accessed funding to create a compelling educational program for Botswana Television, the nation’s first ever broadcasting service.

In AGC staff news, we are delighted to welcome Riyaadh Cassim as a Financial Accountant and Dina Dos Santos as an Executive Assistant. Both team members are based at our offices in Cape Town, South Africa.

As always, if you have any comments, suggestions or concerns, please do not hesitate to contact Sudha Bharadia, Co-CEO at

The AGC Team

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