Investing in Africa

KEY CONCLUSIONS

African countries are trying to escape the commodity dependency

“We do possess oil deposits, but I believe Ghana should take a different path. We are not betting everything on commodities <…> Added value is indeed extremely important. Minerals that are so abundant in Africa, is it a blessing or a curse? <…> All African countries that are rich in commodities have suffered or have been manipulated,” – Frank Adu Jr, Chief Executive Officer, Managing Director, CalBank Limited.

“Today, Africa is moving away from commodity dependency, much like India or China did recently. The reason is the population growth. Most African countries have an annual population growth of 2–4%. <…> If we look at the GDP per capita <…> if you want to get rich, it has to grow at 3–5%. We want to accomplish that through industrialization,” – Charles Robertson, Global Chief Economist, Renaissance Capital.   

“We are working in the consumer segment of the Internet <…> we started in South Africa and grew into an international organization worth approximately USD 110 billion <…> Russia is one of our top 3 markets,” – Bob van Dijk, Group Chief Executive Officer, Naspers.

Africa is interested in Russian investors

“I encourage our Russian partners to set their sights on Gabon. Gabon is a very stable country,” – Jean-Fidele Otandault, Minister of Investment Promotion, Public and Private Partnership, Responsible for Improving the Business Climate of the Gabonese Republic.

“We have an entire ministry dedicated to private-public partnerships for the projects worth over 200 billion <…> And I would like to invite Russian investors to join,” – Jean-Fidele Otandault, Minister of Investment Promotion, Public and Private Partnership, Responsible for Improving the Business Climate of the Gabonese Republic.

“We need to attract Russian organizations that are yet to take part in such transactions,” – Ahmed Heikal, Founder, Chairman of the Executive Board, Qalaa Holdings.

“Right now, we are looking for international investors,” – Francis Gatare, Chief Executive Officer, Rwanda Mines, Petroleum and Gas Board.

 

PROBLEMS

Investments in Africa are considered very risky

“Africa is still considered to be a very risky place. This needs to change. Africa must be defined as a place of possibility and business <…> Discussing the risks is very important. How do we diminish the risks and guarantee comfort for our investors,” – Monica Juma, Cabinet Secretary, Ministry of Foreign Affairs and International Trade of the Republic of Kenya.

Rapid population growth in Africa

“These countries can not get wealthy because there are too many people <…> For instance, Algeria produces lots of barrels of oil, yet it translates into 9 barrels per 1000 capita, or just USD 1.75 per week. <..> In Gabon it is 93 barrels per 1000 capita. <…> Equatorial Guinea has 200 barrels per 1000 capita,” – Charles Robertson, Global Chief Economist, Renaissance Capital.   

“This year, we received the results of a survey: if there are a lot of children, there is little money in the country. If there are 2–3 children in the family, you can save money, put it in a bank, and then banks can give out credit. <…> In Nigeria, Kongo or Angola families have 5–6 children, so the banking system there is smaller,” – Charles Robertson, Global Chief Economist, Renaissance Capital.  

 

SOLUTIONS

Creating favorable investment conditions

“We have been diversifying the economy since 2009. We were quick to understand that the we needed investments. Thus, we created a special zone to attract foreign investors. Our goal was not just export, for instance, timber, but to create added value and through it attract investors,” – Jean-Fidele Otandault, Minister of Investment Promotion, Public and Private Partnership, Responsible for Improving the Business Climate of the Gabonese Republic.

“One of the key sources that allowed us to build an oil refinery was project financing that attracted USD 4.4 billion for us. Today, we produce petrol that complies with the European regulations. How did we get this kind of money? Through a regime that attracts international financial institutions and welcomes them into the country,” – Ahmed Heikal, Founder, Chairman of the Executive Board, Qalaa Holdings.

“In Ghana, it is far easier for the business sector to attract foreign investment than for the state. Why is that? Because the business sector is far more efficient, primarily in human resources and human capital,” – Frank Adu Jr, Chief Executive Officer, Managing Director, CalBank Limited.

Providing stability and predictability

“During the last 25 years, Rwanda conducted on all sorts of reforms to improve its political governance. We needed an efficient and accountable government <…> Our experience shows that when the residents of Rwanda saw security, when they saw stability, they started investing <…> And it became the foundation for the growth we have been demonstrating recently,” – Francis Gatare, Chief Executive Officer, Rwanda Mines, Petroleum and Gas Board.

“Stability is extremely important, it is a key aspect of developing investment and attracting the capital,” – Bob van Dijk, Group Chief Executive Officer, Naspers.

Making good use of the public-private partnership

“Until the end of the year we are going to pass a new private-public partnership legislature in the parliament. The Seychelles are waiting to start using PPP in building the social structure, as well as in other areas,” – H.E. Danny Faure, President of the Republic of Seychelles.

“PPP is very attractive from the fiscal point of view,” – Monica Juma, Cabinet Secretary, Ministry of Foreign Affairs and International Trade of the Republic of Kenya

 

 

For more information, visit the Roscongress Information and Analytical System at roscongress.org

To participants in the Russia–Africa Economic Forum

Ladies and gentlemen,

It gives me great pleasure to welcome you at the opening of the Russia–Africa Economic Forum.

The rich history of relations between Africa and Russia has never seen an event of a similar scale. Members of government agencies and business community, and experts are meeting at this Forum to substantively discuss the current status and prospects of cooperation and a wide range of topical issues of the world economy.

Today, the countries of Africa are well on their way towards social, economic, scientific and technological development, and are playing a significant role in international affairs. They are strengthening mutually beneficial integration processes within the African Union and other regional and sub regional organizations across the continent.

In recent years, the traditionally friendly ties of partnership between Russia and Africa have gained new momentum, both at a bilateral level and in various multilateral formats. In addition to preserving our past experience of successful cooperation, we have also managed to make significant new steps forward. Trade and investment are growing dynamically, and new joint projects are under way in extractive industries, agriculture, healthcare, and education. Russian companies are ready to offer their scientific and technological developments to their African partners, and share their experience of upgrading energy, transport and communications infrastructures.

I hope that the Forum will help identify new areas and forms of cooperation, put forward promising joint initiatives that will bring the collaboration between Russia and Africa to a qualitatively new level and contribute to the development of our economies and the prosperity of our peoples.

I wish the Forum’s participants fruitful work and all the best.

Vladimir Putin

The Russia–Africa Summit, which is taking place in Sochi on 23–24 October 2019, encapsulates the historically friendly relations between the African continent and the Russian Federation. This Summit carries great significance as it is the first of its kind to emerge during a period of major global and international transformations. In response to the aspirations of the people it is representing, the Summit intends to build a comprehensive framework for expanding Russian–African relations into broader horizons of joint cooperation across different fields.

The African nations and Russia share a common understanding of international relations, based on the principles of respect for the rule of international law, equality, non-interference in the internal affairs of states, and the peaceful resolution of disputes. Both sides affirm their commitment to support multilateral actions to oppose new international threats, be they terrorism and extremism in all their forms, or declining growth rates. The two sides share a firm conviction regarding the importance of developing trade flows and supporting mutual investment in such a way as to ensure security, peace and development for the African and Russian people.

African countries have huge potential and opportunities that will allow them, once efforts to streamline their economies have been achieved, to emerge as real global players. In recent years, the nations of this continent have achieved major successes spanning the political, economic, social and administrative spheres. Africa has flourished in terms of growth over the past decade, reaching a continent-wide growth rate of 3.55% in 2018.

The African Union Summit, which was held in Niger in July 2019, continued the efforts of the African countries and saw the African Continental Free Trade Agreement come into force, along with its operational instruments. The agreement is one of the key objectives of Agenda 2063, an African development strategy that has been created to address the African people’s desire for prosperity and decent living standards.

These successes are opening up wide-ranging prospects for cooperation between African countries and the Russian Federation, and confirm the determination of African governments and their people to cooperate with multiple partners in order to establish mutually beneficial relations.

With this in mind, we express our hopes that the Russia–Africa Summit will help in the establishment of constructive strategic relations, based on partnership between two sides across various fields, and in the service of fulfilling the hopes and aspirations of the African people and their friends in Russia.

President of the Arab Republic of Egypt
Abdelfattah ALSISI