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French investment still strong in Africa despite lower market share – Business France MD

AXEL BAROUX, managing director for Sub-saharan Africa at Business France, the French development agency for enterprise in a chat with invited foreign journalists at the recent Africa-France Summit, spoke about how investments are driven between France and Africa. He highlighted support for African businesses, but noted France is open to more big-ticket investments from Africa also, contrary to the perceived one-way flow. CALEB OJEWALE was there, excerpts:

Can you tell us about Business France and what you do?

We provide contacts and put (business) people in touch with each other. We do market research and surveys, on behalf of French customers who wish to sell in Africa. Our market research is done in Africa, with the potential customers or French businesses. Sometimes, we can trigger investment projects. We can provide initial money. For example, a big DIY chain here in France has entrusted us with an initial market research in South Africa, where they wish to establish themselves.

We worked upstream and found good partners on site. On the basis of our research, they have decided they will send a team and pursue their establishment in South Africa. We do that in all the countries where we are present and in those where we are not necessarily present ourselves, or where we have partners who are established. We don’t just do bespoke work for individual businesses. We also provide services to connect the business community through trade fairs, and, for example, we organize stands in international trade fairs, in different targeted areas.

In 2018, in the wake of President Macron’s speech in Ouagadougou, we decided that we will organize this event here. This was very particular because we were organizing events between a country—France—and the whole continent—Africa. As you know, we have a long history of that relationship. There have been hiccups in that relationship, so we had to organize an event, which to start with, is something of a wager and it worked really well. We were successful right from the first year.

Success in 2018 was followed by even greater success in 2019 with thousands of participants from 40 different countries. Now we have found ourselves with a pan-African event in Paris and we hope we’ll do it soon in Africa.

We are looking at a continent where perhaps the greatest potential lies. Pan-African commerce is perhaps the lowest when compared to other continents. They are creating the biggest free trade area in the world and we are very happy with that.

Also, we are already seeing success stories. A company run by a South African woman developed wind power. She is working in partnership with a French firm, which comes from southern France and she has just developed a wind farm in Nigeria. This is what we are promoting.

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Business France is more focused on SMEs. In 2020, although digital presence in no way deteriorates the quality of exchange, we preferred to have something which was more in the original spirit of these meetings, so we cancelled 2020 because of the Covid pandemic, but we are happy that we have reorganized it this year for 2021. Yesterday, we had 1500 people at the opening from over 30 African countries. It was more than we hoped for.

It is a bit hard to assess the level of success of this meeting, but all the business people I’ve talked to (and I’ve talked to many) seem very satisfied with the event so far, particularly, as this is perhaps a little bit of a return to normal life after recent lockdowns.

What is the volume of African investments in France and which are the sectors involved?

There are relatively few projects. Our record here is for 2019 where we hosted 29 African projects here in France. Most of them were small scale projects. I’m not talking about Aspen here. Aspen is one of the ten biggest pharma labs in the world. They have a factory in Bondeville in Normandy. This employs a thousand people. That was a very significant investment.

What about small scale projects?

I can’t give you exact figures. I don’t have them all in mind, and some of them are confidential, but I can tell you that most of them are around tens of thousands of euros and one or two exceptional cases where they will be in hundreds of thousands of euros. In the last major project we had, which is recent, a South African investor has just invested in the purchasing of commercial supermarkets. It is a business called Lighthouse capital and I can tell you this because this is public. It has just bought two commercial malls. The investment is pretty significant at £300 million.

Traditionally, Business France plays the role of accompanying foreign investors wishing to invest in France, and we accompany some 1000 projects per year. Most of those come from two front-runners in international investments in France— US and Germany. The interest amongst African investors for France is relatively recent and we hope that will increase.

French companies do lots of investments in Africa, and it is one of the markers of our interest on the continent and we hope that there will be more reciprocity there. Our market share has been eroded since the 2000s in the overall African economy and has been halved from 10 percent to between 4 and 5 percent but French investment has been maintained or even grown. France has 3200 subsidiaries in Africa. These subsidiaries employ 650,000 people, and these are direct employments. French private sector investment in Africa is very important to us because we want a win-win situation. We want to generate new markets.

French companies do lots of investments in Africa, and it is one of the markers of our interest on the continent and we hope that there will be more reciprocity there

Considering security and instability in parts of Sub-Saharan Africa, what is being done to support for countries, which are also seeing lack of jobs for young people?

First of all, you’re right, there’s a major challenge. In terms of demographics, one in four of the World’s population will be African in a relatively short term. Half of those two and a half billion Africans will be under 25. This is an incredible resource but it is also a major challenge.

We are going to have to find jobs, create wealth and establish added value in each country. So, you can see the debate in France and other industrial democracies on the subject of migration. The only valid response to that is to create futures for people, on-site, in their own countries. Business France is not a bank. We don’t have any means to provide financing. There are other resources that exist and which are organized by other stakeholders. There is an initiative called Choose Africa. It is run by the AFD—Agence Française de Développement— and its arm, a subsidiary called Proparco.

Proparco, the branch of AFD, currently invests some three and a half billion euros in Africa, for the promotion of African businesses. This is not money that is provided to fund French businesses in Africa. It is money that is provided directly to African businesses. The Germans are also very present. They have the GIZ, which is very effective.

In Business France, we are very modest. We know that we don’t have those kinds of resources. We are essentially facilitators. All we can do in Ambition Africa is to speak out and say to everyone, come, let us show you what can be done.

With SMEs struggling in Africa, what are you hearing and what are your thoughts regarding the cost of doing business in Africa; how much of a concern is this to French investors?

The mortality of businesses is a subject (of concern) for us and not just in Africa. It is a fact of life around the world. We were talking about this in an earlier panel. We were talking about access of African SMEs to financing. We were saying we have about 50,000 SMEs which are well structured in Sub-Saharan Africa, and the informal sector of course but that is very little. So, how can we help businesses scale up?

I believe very strongly in the free trade zone in order to promote trade. This has been on the way for some time, but it is growing in size and figure. There is space for development, which we can encourage for us to see the emergence of much bigger players across the African continent.

COVID has been a disaster around the world. This was mentioned earlier today in one of our meetings. I am thinking of opportunities such as the localization of manufacturing in Africa, possibly the making of vaccines locally, raising awareness on the importance of establishing manufacturing capacities on African soil. This is a debate we have had in France about the localization of certain manufacturing capabilities. We have seen how dependent everyone was on masks from china and how important it was to immediately establish local manufacturing capacity onsite.

How can Africa take charge of its industrialisation and reduce dependence on foreign manufacturing?

We can no longer export foodstuff from Africa and then re-import them in a different form. That’s no longer possible. I visited the Semoa factory recently. Initially, the cocoa paste was exported; sent to France to be transformed into spreadable chocolate, paste and other things, and then it was sent back to Ivory coast to be sold to local consumers. But it is now transformed onsite. They have invested in production levels. They have taken people up. They have invested in machinery. It is finished products that leave the factory gates and which supply large parts of Africa. These models are models that whether we like it or not will have to be established (across Africa to drive industrialisation).

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