The relevance of advice for investing in Africa

Madrid hosted the Africa-Spain Cooperation Summit to analyse the commercial and economic link between Africa and Europe, more specifically Spain. Atalayar spoke with David Garay, founding partner of Indegate Consulting, to look at the key issues involved and to explain the great need for advice on investing in the African continent. 

Mr Garay, how would you assess the holding of this summit, the Africa-Spain Cooperation Summit? This is the first time it has been held, how would you rate it and how is it going?

I sincerely believe that it is a turning point in relations between Spain and Africa, a continent that is right next door to us and to which Spain, with the exception of Morocco, has historically devoted little commercial effort, and it is a continent full of opportunities. In recent days we have seen, with delegations from 20 or 30 African countries, that there is a great deal of interest on the African side and also on the Spanish side to begin to develop these relations, these ties between African countries and Spain.

You have been doing this for 17 years. What does Indegate Consulting do?

I lived in Africa 17-18 years ago. I have lived in six African countries, in the south, in the east, in the west, in the north, and that allows me to have a knowledge of the continent. Indegate Consulting, the company that my partner Edgar and I founded in 2010, had the objective, precisely, of supporting both governments and private European and American companies to enter and access markets with a lot of potential, but unknown. So the knowledge we have of these markets is our added value and what we basically do is inform companies, inform public institutions, obtain suppliers or clients for these companies, help them to set up in the different countries, various market studies. In reality, what the English say, "what is top shop", or what they say in Spain, a one-stop shop for all the services that a company might need in Africa.

Africa is a very diverse continent, we are talking about 54 different countries, so you have to access each market independently and what you do in one market will never be valid for another. Even if they are neighbouring countries, as in the case of Morocco and Algeria, or Morocco and Mauritania, they are neighbouring markets, but very, very different culturally, in terms of business climate, legal framework, etc. That is why it is very important to get advice before entering Africa. 

Information is fundamental, you can't just go and try to do business, get a plane ticket, show up there and that's it. I think that in this sense, Spanish businessmen are more serious and need to know which sector is more or less buoyant, more or less interesting. Right now, in some African countries where Indegate Consulting is working, which sector can create or have more opportunities for Spanish companies?

We must bear in mind that Africa is a developing continent and, in many cases, underdeveloped. What does that mean? That there are opportunities in all sectors of the economy, almost everything remains to be done. We are talking about new ports to be built, new airports to be built. I just had a meeting with one of the delegates from Mauritania who has to build a new port and a new airport in Nouadhibou.

We are talking about major infrastructure works that are necessary and where Spain can contribute experience and know-how. But we also have the agricultural sector. In the agricultural sector, we are talking about a sector that employs almost 70% of the African population and it is a sector in which, unfortunately, productivity is very low. What does this mean? That what we have to do or what African countries have to do is to improve productivity, how? Well, with access to new technologies, with access to new means of production, new irrigation systems, new greenhouses, new drone control systems and all that, Spain is a world power in that sense. Therefore, the agricultural sector is also a priority. So, infrastructures, the agricultural sector and then, obviously, we cannot forget the IT sector, the digital economy. In the digital economy we must bear in mind that it will enable Africa to go from A, B, C and D, where we are now, instead of what we have done, they can go from A to D directly using the new digital tools in all sectors of the economy.

Within infrastructure we can talk about energy, renewable energy, which is an important sector, like green hydrogen. Africa is now emerging as a great power.

Javier, you know it well and, indeed, energy is one of Africa's most important problems. We have to think that, for example, in regions like East Africa or West Africa, only 25% of the population has access to electricity. Imagine that not only for daily life, but also for professional life, for industry. If there is no electricity, we cannot develop industry. So it is clear that what we cannot do right now in African countries is to build an electricity network like the one we have here in European countries, because it would cost a lot of time and a lot of money.
What we can do are individual renewable energy projects, one-off projects, in an industrial park, a wind or solar farm to supply electricity to that industrial park, in a tourist area, a solar farm for that tourist area, or a city, a wind farm or a green hydrogen plant to supply a whole country. In other words, we are seeing that there is a great deal of interest, there are many high-level projects, without going any further, here in our neighbour, Morocco, there are projects that are going to be developed for more than 5,000 million dollars in green hydrogen production projects. So it is true that these African countries can move directly to economies based on renewable energies and green hydrogen.

And another issue that we also suffer from in Spain is water. I believe that in the area of water, and even more so with the drought that many African countries are suffering, cooperation must be fundamental.

Without a doubt, water is one of the problems that, unfortunately, we will see more and more between countries in the future. Without going any further, we have the problem we are seeing in Ethiopia, between Ethiopia and Egypt, where Ethiopia has built a large water reservoir blocking the Nile and, therefore, there is already a cause for conflict because the Egyptians say that we are not receiving the water that we used to receive to irrigate our crops. And indeed, this is a problem that we will see more and more between countries.

The solution that we are seeing being implemented in most African countries is desalination. We are seeing more and more projects. In fact, right now in Morocco, for example, one of the priorities in the development of infrastructure projects is to build desalination plants. Spanish companies also have a lot to say there. In fact, the largest desalination plants in Morocco are being built by Spanish companies. We are also world leaders in this technology. And this is going to be done in all the African countries that have access to the sea, of which there are many. Therefore, this is also an opportunity for Spanish companies in this sector because we have the solution in the sea, both for drinking water and for green hydrogen. So, yes, yes.

Finally, Mr Garay, what would you say to any entrepreneur considering going to any African country to carry out projects, make investments or embark on an adventure?

Without a doubt, get advice. We are talking about markets that are very different from European markets where there are different cultures, different religions, different languages, different currencies, different ways of understanding business, different priorities in life. And, without knowing all these details thoroughly, the chances of success are small. I would say almost none. So there are public institutions that companies can access. There are private companies like ours, like Indegate, where they can also access and we accompany them throughout the process. But without a doubt, the important thing is to get advice because these are unknown markets. Where a small unknown detail of religion or culture can be the trigger for a business failure. We see it many times. Companies that go it alone, because in the end, unfortunately, because of this lack of knowledge, end up failing in their business ventures.

And perhaps forget about clichés. Africa right now is not the Africa of the films of 30 years ago. 

In reality, stereotypes are one of the most serious problems in personal and professional life, unfortunately. Africa is a continent, as I said at the beginning, very diverse, where we have big cities like Johannesburg, like Cape Town, like Cairo which has 25 million people. Now they are building two new cities in Cairo, the new capital and Cairo, connected by a first class monorail. We have wonderful cities like Rabat, very developed cities in the west, which already have 7 million people and with very developed urban projects. Africa has these two sides, the rural side, which is still a bit anchored in the past, but the world of cities is developing at breakneck speed. In a city like Rabat, for example, you walk around and it's as if you were in Europe. So stereotypes do us a lot of harm because they make us think things that are not true. So, what we have to do is either get to know it from our own hand, that African reality where there are very educated people, with many languages, who have travelled a lot. All my African friends from all African countries are people like you and me, they have travelled, they have languages, they have culture.

The difference between people is not race, or colour, or religions, it is the level of education. So, the level of education, unfortunately, in Africa, is one of the pillars for the future in Africa, the issue of education, that everyone has access to that education and that it is a quality education. This is what will make Africa take off in the near future. We are already seeing this in Morocco, where there are educational institutions from all over the world, American universities, European universities that are setting up there. So, the level of education rises and the middle class rises and the economy grows and that is what is going to happen in all African countries. But Africa is an extraordinary continent.

I, who have travelled a lot in Africa and have lived in many African countries, have been treated extraordinarily and the truth is that I would like us to treat Africans here in the same way and not be afraid to go to this continent, which is full of opportunities, but we must always do business in an ethical manner.

So far, Africans are waking up and saying why are France, England and these countries just coming here, taking resources and leaving nothing behind. I think what we have to do now is to come to Africa, to do business, but as the English say, a "win-win", so that everyone wins, those there and those here. And in that way, if we do business in an ethical way, I think we will all win and everyone will be much happier.