Marta Pardo de Santayana, Incatema: "Africa's potential in agriculture is immense"

Marta Pardo de Santayana opens the doors of Incatema to Atalayar to talk about the important activity of her group on the African continent and to delve into the lights and shadows that exist when it comes to investing and materialising projects related to agriculture and trade in Africa. Pardo de Santayana analyses the great opportunities that Africa offers for his group and for anyone seeking to carry out initiatives in African territory. Incatema has a team with more than 20 years of experience in the implementation of projects in agriculture, fisheries, rural development, markets, water and infrastructure.

Atalayar: How and when was Incatema created, what is its mission and who are its clients?

Incatema was founded in 1999 by my father and my uncle Javier Pardo de Santayana, with a third partner, an engineer who worked with them called Ángel Cano. They started working on engineering and consultancy projects for the Spanish Administration, mainly for the Ministry of Agriculture because all three are agricultural engineers. 

The company has evolved a lot. They soon discovered the opportunity to export the development model of the Spanish agricultural sector, which is an example, to developing countries. With the help of the Spanish Agency for International Cooperation, we started doing consultancy work in Africa, in countries where the Agency was established. But over time we have evolved geographically and sectorially and we have gone from engineering and consultancy projects to "turnkey" projects.

The company that started out doing engineering and consultancy in the agricultural sector in Spain has now become a turnkey project company that carries out 99.9% of its business abroad in the sectors of agriculture, fisheries, infrastructures and the entire water cycle. 

Atalayar: Marta, from your life and business experience, can you tell us about Africa?

My experience in Africa has been pleasantly positive, to be honest. We haven't had any bad experiences. Maybe some negative experiences working for a private client without risk coverage, who left us with a non-payment. But the truth is that Africa has a worse reputation than it deserves. I think it is a continent where there are very diverse countries and within them there are countries that are quite serious and are a "nest of opportunities". 

In Africa everything is still to be done. The middle class has yet to develop, with all that this entails in terms of investment, consumption, and primary sectors that are already developing. For example, Africa's potential in agriculture is immense, it has yet to be exploited. With regard to Africa, we had the myth of drought, that it has no water, but there are countries in Africa that do have a lot of water. 

It is true that we do not take credit risk. Although we have done so in countries where we know the client and the institutions very well in order to have a certain legal security, but in Africa there are many countries that represent immense opportunities for us. 

Atalayar: In relation to the agricultural sector, what Africa needs is a major land reform. 

It needs to be exploited, it needs to be professionalised, it needs to be industrialised. Most agriculture in Africa is self-consumption, smallholder agriculture. For example, we are implementing a very nice project financed by the World Bank in Angola to support small agricultural entrepreneurs in the implementation and financial approval of business plans from the start. I think the World Bank is right to support this because what you have to achieve is to increase the size of farmers' businesses and turn them into small entrepreneurs. This is key for Africa's development. And this is a tender organised by the World Bank in Angola.

Atalayar: To what extent can China's presence in Africa condition these approaches?

We have seen very strong competition from China in Africa until a few years ago. I think that now the Chinese in Africa are in the doldrums, mainly because of their lack of financial support, they entered the African continent with money first, so it is very easy. It is true that at the beginning the quality of execution of their projects was poor, but a myth was also generated and then there were very serious Chinese companies that carried out well-executed projects. It is true that they competed with different weapons because they did not comply with the financial rules of the OECD, they did not comply with labour aspects of the workers, they "dumped" raw materials, and so on. It was very easy for them. And now that is over and the ground left by China is being used by other countries, such as the United Kingdom, which after Brexit has a huge appetite for Africa, and is doing very well. 

Atalayar: And it should also be the European Union that has this appetite, bearing in mind that Africa's development also implies being able to avoid such a serious problem as irregular immigration.

In the European Union we have a general problem in that we talk a lot about internationalisation and Africa, and then everything is less real than they say. But it is also true that within the European Union there are countries with very different attitudes. France and Germany are champions in their support and investment in Africa, while in Spain, for example, all the governments, regardless of the party they belong to, talk big about Africa Plans that are not endowed with a budget or resources. And all of this when we are the ones most exposed to the problem of immigration. I believe that we need a real will that translates into investment, into money, to develop policies to support Spanish investors who want to come to Africa; when, in addition, we have the added handicap of language, because the French and the English have parts of Africa that, for us, from a cultural point of view, are like Latin America for the Spanish. Spain has that handicap.

Atalayar: They are colonial legacies.

In Ghana, for example, we have a partner who is a fourth-generation Italian who has settled in the country. Finding a Spaniard like that in sub-Saharan Africa is like looking for a needle in a haystack. I'm sure there are some, but very few. 

Atalayar: In your opinion, is there a need for more government policy?

The message is clear, but it doesn't translate into investment.

Atalayar: What do you think of the attitude of Spanish banks in terms of financing on the African continent?

Financing is getting better and better, but there is a lot of ignorance and as banks are risk averse, this makes them less aggressive. They compete in a different league to other international banks that do know, are established and are committed to Africa. Part of this lack of support or appetite is due to the issue of ECAs (export credit agencies) because it is true that very few financial institutions take risks in Africa. They always go hand in hand with ECAs and Spanish banks have worked exclusively with the Spanish agency CESCE (spanish ECA)  until a few years ago. This limited the banks' capacity to bet on Africa.

For some years now, Spanish banks have been opening up to other export ECAs through simple things such as signing framework agreements that facilitate the negotiation of credit insurance. This is allowing Spanish banks to have more appetite and more capacity to finance in sub-Saharan African countries. 

They go to other agencies that have more capacity. This is due to the policies of the countries, their balance sheet, their financial capacity, their size. 

Atalayar: Are there differences between North Africa and Sub-Saharan Africa?

There are many, and not only in this area. In Spain, people in the sector who are more established in Latin America comment that they don't want to go to Africa and I tell them how can you tell me, for example, that you are working in Nicaragua, which is a country of maximum risk, and that you are afraid to go to the Ivory Coast. This is due to a lack of knowledge. Africa is a continent, but within Africa, Mauritania is nothing like Egypt or Tunisia. And, of course, Tunisia and Morocco are nothing like South Africa, but neither are they like Mozambique or Rwanda or Angola. They are very different realities. I think there is a lot of ignorance because to acquire that knowledge you need to invest a lot of time and money. The size of the continent is immense. 

Atalayar: When you have a project in Africa, what strategy do you follow? Do you present yourself with financial support if required?

We have two ways of financing our projects. One is multilateral tenders, where we try to bid in countries we know. I think that bidding for a tender from a multilateral organisation in a country that is new to you makes it difficult to be super competitive because you have to have a local partner or know subcontractors, really know the prices, see how to optimise, really know the needs of the client, the project and the area where it is going to be executed. 

We bid for tenders financed by multilateral organisations that we know and then we invest in conceptualising projects in which we propose to clients, mostly in the public sector, that we sell because of our technical and execution capacity, not just because of the idea. And because we are able to structure financing for that project. 

We are different from many of our competitors because we have very specific sectors. Some of our competitors do everything from roads, to an agricultural project, to a school... We don't, we are very clear about our sector specialisation because we believe that in this world it is very important to know what you are doing and even more so in countries where there is already an intrinsic risk. We are focused on very specific things that are very diverse because in agriculture we do everything from irrigation, catchment, agro-industry, putting part of the agricultural production into production, in water we cover the entire water cycle: purification, sanitation, supply, drinking water treatment; everything and with different technologies, from the most basic for some countries, to the most cutting-edge. But always in countries we know. 

Atalayar: Which are the countries where you work?

In Africa, we started working in Nigeria a long time ago. We have been in almost every country. Right now, where we have more presence and projects underway is, of course, Angola, which has great agricultural potential. 

In West Africa we are in Senegal, Ghana, Ivory Coast, Cameroon, even pursuing things in Burkina Faso. And our unfinished business is East Africa, where there are very attractive countries like Rwanda, Uganda, Mozambique or Kenya. Ethiopia has political problems at the moment. 

Atalayar: And North Africa?

No, we don't work in North Africa, with the only exception of Tunisia, where we bid for a water tender, for a water treatment plant project, and we came second, moreover at a very politically complex time in Tunisia. 

Atalayar: Do you use local partners for projects?

Occasionally, yes. They are often very complementary. We always have to subcontract a part of the civil works and, normally, as a partner or subcontractor, we do like to go hand in hand with a local partner who knows what they are doing. Although it depends on the type of country and government. 

We also bid for projects in countries we know and there is not so much need for a local partner, but there is a financial complementarity or complementarity of knowledge or specialisation. Then we try to do it with the partner. 

Atalayar: Has the pandemic affected you much?

We were very surprised by how little it affected us because, of course, when it started we were very afraid that it would take the African continent by storm and make it more vulnerable. But we were surprised by the continent's resistance to it. We did have some delays in project implementation and quite a lot of delays in project negotiations because not being able to travel did complicate negotiations when governments were focused on solving this imminent problem, in the face of other projects of ours, which are often very necessary for water and agriculture. Governments had turned to other efforts. But, for example, it has greatly improved our ability to work remotely with clients, which was unthinkable before. I have now had several online meetings with African public clients. 

Atalayar: Has your company thought about providing support in supplying, implementing or coordinating vaccination in some African countries? This would be welcomed by African governments and could facilitate your entry into other projects.

We never use Corporate Social Responsibility to enter a country. It's a bit the other way around. For example, after having been working in Haiti for many years, with all the multilateral organisations, such as the World Bank, the European Union or the Spanish Agency for International Cooperation, we have given our support to the Haitian government in the crisis that occurred after the last great earthquake, a time when we supplied many water purification tablets because there was a real problem. 

We do it the other way around. For example, in Guinea Bissau we have collaborated with an NGO for many years and we have never implemented a project. We collaborate with La Caixa, which has an important child vaccination programme. But we don't ask them which country they go to. We do it a bit the other way around. 

Atalayar: Africa has experienced remarkable growth. In your opinion, what should this growth look like in order to be more inclusive? What transformation does the African continent need to undergo in order for this to happen?

By encouraging investment. I think that is the only way. Because at the end of the day, with support policies, credit insurance that allow public investment, which is very good, infrastructures are being improved in Africa, which is a necessary condition for investment, in the same way that legal security and governance are. But until we have strong private investment in Africa, we will not be able to develop the middle class, which I think is what is most necessary for greater inclusion. 

Atalayar: Perhaps less development aid and more investment. 

More investment. We ourselves, who have been in Africa for 25 years, have not invested in Africa and, now, in some of the countries we know, we are thinking of making direct investment and, for example, putting land into exploitation. We have done this for the government, we know the market, we know that the demand exists, that the production is sold, but until now we have not dared, probably because of the legal insecurity that we perceived. 

Atalayar: And is that easy with certain governments?

I think so. In fact, it is very easy because all the governments in Africa are aware that what they have to do is to encourage private investment, so there is a lot of aid. For example, it is incredible that a hectare of land in Africa is almost given away for free, being much more fertile than in Europe, when a hectare of land in Europe costs a lot of money. This is because governments are aware that they must support investment. The problem is the lack of infrastructure, legal uncertainty, etc.

Atalayar: One of the main problems are failed states, corruption, lack of seriousness and lack of strength of institutions. 

The role of the International Monetary Fund is very important in this regard. As they hold the key to the money, they are managing to improve governance and the institutional quality of many governments, and this is very important. 

Atalayar: The higher the rate of good governance, the higher the investment. 

I think so. 

Atalayar: How do you see the role of women in Africa? Education is very important. 

That is one of the main deficiencies in Africa. There are differences between countries, but girls' education in Africa should be a priority and we have to support it with policies that allow it. But there are many socio-cultural and even religious aspects that are complicated. However, when women in Africa are educated, I have been surprised by the power they have. For example, in the Angolan government there are a lot of women ministers and those who have power are very educated and empowered. Once you are educated, I don't think there is such a strong cultural problem in some countries that women don't have positions of relevance. But you have to start by educating. 

Atalayar: Spain is starting to become the seat of education in the upper strata of society, even more so than France. 

Of course, because of the climate, the way of life, and even the prices, we are a very attractive market. With Africa, however, we have the problem of language. A teenager with economic possibilities in Senegal will go to study in France, Belgium or Switzerland rather than in Spain because he doesn't speak Spanish. 

Atalayar: We are facing a perfect storm, a food crisis, an energy crisis, a financial crisis, etc. Could the AfCTA trade agreement signed by so many African countries be a way out?

As a solution for what is to come, I see it as complicated. But it is a very necessary step that will be of enormous benefit to the whole continent. I also believe that it will be difficult to implement because if in the European Union it has taken many years to harmonise fiscal and trade policies and it has not yet been fully achieved, something similar will happen in Africa because the linguistic and cultural differences between the different countries are even greater than between European countries, and the lack of institutional quality of the governments will make it difficult for this to become a reality. Now, I agree that the idea is a good one, that it is necessary and that we have to start somewhere. 

Atalayar: On the subject of Russia's invasion of Ukraine, let's talk about the economic and diplomatic consequences in Africa. 

The grain issue is a very serious issue. Macky Sall just met with Vladimir Putin last week and I imagine they talked about this. Africa's problem is that it doesn't produce the food it consumes with a growing population, so our agriculture projects, and we see that we are in a very necessary sector that all governments at least say they support. With this crisis, a large part of the food that could be imported by Africa is now going to other destinations with the consequent increase in prices. I think this could have devastating consequences for the whole continent. 

Atalayar: Is instability in the Sahel a concern for companies like yours?

Very much so. We have been working on a project in Burkina Faso and after years of working on it, our main problem is the very long maturity processes of our commercial action with the consequent investment in time and money and, of course, political instability means that you have been working for three years on a project in Burkina Faso and there is a coup d'état and all support from the credit agencies and therefore from the banks is withdrawn, and you are left without a client and until that is recovered, at least two or three years go by again. 

And then in execution it is also a problem. For example, we are about to start a project in the north of Cameroon and there we have to be very careful because in the extreme north there is Islamist terrorism which makes it much more difficult to bring people to work and execute the projects. 

Atalayar: Has it ever happened that these Islamist groups try to blackmail companies?

Not us. I think they try to blackmail more governments or foreigners who, if they are established there, are going to kidnap them. This is where the network of embassies does a lot of good. On the trips we made to Burkina Faso, we went hand in hand with the Commercial Office and the embassy, which warned us where to go with caution. 

Atalayar: Given your experience on the African continent, what practical advice would you give to Spanish companies that want to enter the continent?

I would say two things: patience and prudence. Patience and perseverance must go hand in hand with the ability to invest time and money. You cannot expect to arrive in Africa and win a contract in a year. That doesn't happen and if it does, there is a problem that you haven't detected. There may be an issue of corruption, insecurity or prices that you have not been able to detect. Be very careful, get to know the markets you are going to very well before entering them. It is impossible to enter many countries because in order to get to know a country in Africa and dare to enter it, you must have knowledge of the institutions, the people, the economic situation, the partners. You have to have the capacity to invest time and money and then a lot of prudence because even in countries that are apparently structured and with financing from multilateral organisations, you can have delays in collections. For example, in Angola, in a project financed by European banks, with European credit insurance agencies, we found ourselves with a debt of 20 million for four years, and then it is paid, but you suffer and you have to take steps that are very complicated and slow. You have to be very careful. 

Atalayar: As a curiosity, on the subject of agriculture, it is said that you have to be careful with mines in countries that have had wars and conflicts.

In Angola, we always start our projects with a demining certificate because it is a problem that exists. It is a requirement of the government to start the project. They have to give you a demining certificate. It is not only in Angola, but in some other countries as well. 

Atalayar: How is the reception of the African population towards the Spanish?

It depends a lot on the country. For example, in Angola it is very good, they have a much better relationship with the Spanish than with the Portuguese, with whom they have this conflict between the former colony and the colonising country. In Senegal we are also very well perceived. It is true that the network of commercial offices and embassies has improved a lot and that helps. 

Atalayar: There is a problem of communication and information. The media should pay more attention to reporting what is happening in Africa, because there are not only conflicts, diseases and wars, but Africa is much more than that.

In the Spanish press it is very difficult to find Africa. You have to surf a lot to find anything about Africa. El País is the newspaper that includes some news, but if you look in any other Spanish media it is difficult.

It is very important to make known the economy, history and culture of the countries, not just the conflicts, in order to overcome these fears about Africa.