Africa and its great attractiveness for investment

Madrid hosted the Africa-Spain Cooperation Summit to highlight the great economic and financial potential that Africa can offer in terms of human and material resources for anyone interested in investing and to show how Spain and Europe can play a major role in this new African stage of development. 

Atalayar spoke with Dhafer Saidanee, Professor of Finance at SKEMA, Business School (France), and with Aldo Olcese, Director General of FINCORP (Spain), to analyse the most relevant issues addressed at the Africa-Spain Cooperation Summit held in Madrid and to explain the great relevance of financing for the progress and development of the African continent.

How can we improve collaboration between Spain and Africa? Mr Olcese, what are your main ideas, your conclusions about this event?

We had a very interesting debate on the financial side, in which we discussed at length the issues, the solutions, the great challenges that African financing has to develop. I would like to highlight one of the most important conclusions, which is how to facilitate the link between Spanish and European financing and African financing. 

Because there will surely be a great Africa plan from the European Commission, which will be presented, I believe, in the coming months, in the year 2024, which will include a significant amount of European funds that will be destined for Africa. But we will encounter implementation problems.  

How does the European financial system understand the African financial system in order to channel these funds appropriately?  

The problems are of compliance, of governance, of execution, of risk. And if we apply European standards to African banks and financial intermediaries, it will not work, because it is impossible. European financial institutions find it difficult to comply with all the compliance and governance requirements that the European Union, I would say, rightly applies to European operators, but which are not easy to apply to African operators. And so there will be a willingness to implement, but it will be very difficult to do so. And one of the conclusions we have, I believe, from this debate, is to recommend to the European authorities, when the Africa Plan was approved, that they take these circumstances into account, that they become more flexible in their requirements. On the contrary, African countries and African financial institutions must compete to improve their standards of governance and compliance. We have to find a common ground, but we cannot impose on Africans the requirements that we are trying to meet and that they will never be able to meet, because it is a ten-year process. We have not reached our standard of governance, we have had difficult periods, we have had periods of deficiencies, we have had a development that has allowed us to reach it in a safe way, but with certain digits. So we have to take that into account so that it can work. And I think this is a message that we must pass on very strongly, it is a political message, because, for the moment, what the European financial institutions receive from the leaders of the European Commission and the financial leaders of the European Central Bank are enormous demands in the field of governance and compliance and risk, and risk management. And I have to say that with these standards it will be impossible to execute in Africa.

Professor Saidanee, what is your main conclusion from the event? 

I fully share Aldo's point of view, and I thank him as a European and as a professional in the world of finance in Europe, for taking this position in favour of the relevance of European regulation in terms of activity in Africa. It is true that the African continent is a continent that is moving very, very fast, and the European Union will probably find it difficult to keep up with its directives. And I would like to respond to what Aldo said, and I fully share his point of view, and it is one of our conclusions of this day, of our meetings, that is, basically, if we take for example the CRDS, the CRDS 6 Directive, which is going to come into force in June 2025, it is going to have, in fact, a very important impact on the flow of capital of immigrant workers in their country of origin, let's take the case of Morocco. And so, if CRDS 6 comes to close, in a way, to give a closing blow to these flows of income of migrant workers, of the Moroccan diaspora, this may entail the risk of having consequences on the return of imports from Morocco, necessarily, vis a vis from the European Union. So, taking into account a little bit more of what is happening over time, we should not simply be sheltered in our European rules. On the other hand, I am a bit concerned, beyond the financial aspects, regarding the extra-financial aspects, and I will end here, you know that today the European Union is putting in place directives on what is called green finance, sustainable finance. And, of course, Africa is going to be impacted by these directives. For example, the way in which cocoa is produced, the deforestation that, in fact, is a consequence of this type of cocoa production process, is also going to have an impact on producers. In other words, there will be production that will be destined for Europe, because it does not correspond to the directives and rules of green financing imposed by the European Union. So we need time, we need to allow a little more time, and we should certainly reflect with the Africans on how to implement these new laws, these new regulations.  

And I will end with an example. I always remember the example of this Tunisian industrial exporter who told us during a meeting that his floor of products to be sent to Europe was blocked at the port of Rades, and that his containers could not go to Europe. Why? Because they did not respect it, or, in any case, they are not in the new European standards, they are ecological standards that surprise Africa and that are not yet in our ways of producing. So let's try to put an agenda in place. 

That is what we have tried to think about during this meeting with One Africa Forums, and I think it is in everyone's interest, because we are all on the same planet.

Mr Saidanee, do you think Europe can adapt to African conditions, and does Africa now offer many opportunities for Europe? 

I think this is an issue where our interests as Europeans are very clear. The problem is that if we want to impose the rules of how to do trade with us and only with our rules, it will be impossible and it will leave the field open, on the other hand. That is the case with the Chinese, who are present throughout the continent because they are less demanding on that side, and that is why we have to be demanding, but we cannot ask of the Africans exactly the same level of demand that we have for ourselves in our internal market, because otherwise we would not be able to trade with them for years to come, and we need their natural resources, and that is why we are asking for a relaxation of positions on both sides. In a contact with Lionel Zinsou, former Prime Minister of Benin, in an exchange with the Prime Minister, Lionel Zinsou, he clearly expressed the idea that we cannot talk about cooperation as before. And I remember that cooperation is not compassion. Some years ago, I personally discussed this concept of cooperation. The concept of cooperation based on a form of condescension is in the past, and I think Africa has realised that it is not so likely to be seen again. And that is why it is important to revisit this concept of cooperation. And, as Lionel Zinsou said, we are not going to ask you to come home to invest. We are going to tell you that, if you are interested, we have opportunities, we can share them together, as equals, we can put together our skills, our knowledge to try to build the world of tomorrow.  

I think it is an objective for us to do good communication, good information, and that this delivery should be done again next year. I think it should be a very good tool in the relationship between Spain, Europe and Africa. There are two activities that are very different. We have to move forward, we have to try, and we have to make communication an objective in itself. We have to work on it, we have to take care of it, and I think that initiatives like this event are very interesting, very important, and we have to repeat them. I sincerely believe it. It is incredible. I think we need to talk about it. We have learned many things, and sometimes it is a dialogue between people who do not listen to each other. We have to make an extra effort over the next few years. If it is true, as I believe it is going to be, this great Africa plan of the European Commission, we will necessarily have to make additional efforts in terms of communication, exchange, opinion, proposals, trying to understand others and ourselves with an open, flexible, cooperative and ethical mentality. Yes, communication is fundamental, and I thank you for this effort to play this very important role of facilitator of understanding and dialogue. 

I also thank Aldo, because he is a professional and I am a teacher, although we have managed to establish a bridge between two thoughts and two worlds, and we have managed to understand in order to try to advance certain ideas very modestly. And, of course, our diverse and various administrations must take into account the sound we make, the ideas we formulate and the modest contribution we try to make, thanks also to the media, which play a transparent role and which we hope will become more and more important.  

I would like to add that there is a big challenge related to the concept that the new Africa cannot be developed with the old concept of funding related to public support. Today, if you want to carry out an operation in Africa, if you do not have the guarantee of a state, if you do not have the guarantee of your state, if you are Spanish, you always have bilateral policies, while civil societies and private operators have very little space, because if the public decision is not to guarantee a country, nothing is done. And, therefore, we need to deepen capital markets, we need to privatise in Africa to bring international capital into Africa, we need to liberalise sectors, there are many things to do on both sides, but the concept, the old concept that nothing is done if there is no state guarantee. The importance of education must be emphasised. I think there is a great work, a great path that is open to us in terms of education of our population, of our future leaders; education in a vision of fairer, more equal, less condescending cooperation, and that is also nice, of course, based on a vision of durability, of human development and durable development. I think it is very important that we can, on both sides, make a way in this form of education that will be very useful for a better understanding.