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September 2017

Ready for
Today’s Africa?

<p>Ready for<br /><strong>Today’s Africa?</strong></p>
Blanche Leridon
Executive Director, Editorial and Resident Fellow - Democracy and Governance

Blanche Leridon is Editorial Director of Institut Montaigne, specialized in democratic and institutional issues. She lectures at Sciences Po on the evolution of political discourse under the Fifth Republic.

  • Jean-Michel Huet, Partner, in charge of the Africa and International Development Team, BearingPoint, co-president of the taskforce
  • Dominique Lafont, CEO, Lafont Africa Corporation, Executive chairman, Smart City Africa, co-president of the taskforce
  • Dalila Berritane, Founder & CEO, Nedjma Consulting, rapporteur
  • Fabien Bouvet, Head of the Treasury department, Agence France Trésor, rapporteur
  • Aulde Courtois, Deputy director, Spallian, rapporteur
  • Ludovic Morinière, Director Africa and International Development, BearingPoint, rapporteur
  • Blanche Leridon, Head of Operations, Institut Montaigne

Yet another report on Africa!

Few regions of the world inspire as many readings, comments and fantasies as Africa. Reasoned (sometimes), whimsical (often), passionate (always), the narratives and counter-narratives surrounding Africa follow one another and each have their particularities. From the excessive Afro-pessimism of the 1960s to the inordinate Afro-optimism of the 2000s, significant literature has focused on "Africa". This indistinct geographical space is sometimes apprehended as a whole, and other times dissected by the most astute commentators.

So why are we discussing Africa today?

Because Africa is undergoing a series of transitions that are propelling it into the future. These transformations are demographic, political, economic, social, climate-related, and are together shaping a rapidly changing Africa, which stands further and further away from its oversimplified image.

Because France is one of the continent’s historical partners. The country’s shared past and continuous relationships with many African countries are undisputed. However, France has not been able to support the latter’s economic development. Now in competition with emerging countries, and particularly with China, it is struggling to renew its discourse, the latter being entangled in a past that it has long refused to fully recognize in order to move forward.

Finally, because it is possible to build a new and different approach to Africa. The political and institutional lens that has long prevailed can now give way to a vision coming directly from thefield. The vision held by companies, be they large or small. The one shared by entrepreneurs, whether novices or experienced. That of startups, be they idealistic or rather pragmatic. These are the voices we wanted our report to represent, with nearly 50 interviews with companies of all sectors and sizes.

What are we proposing?

The five-year presidential term that has just begun must emphasize Afro-realism.

In France, we must invest more and differently, and we must multiply opportunities for our companies by forging local partnerships and by strengthening our relations in the education sector and regarding human capital. At the European level, we must change our approach and shift from a "country-continent" relationship to a "continent-continent" relationship, built on renewed agreements and shared ambitions.

This work focuses on countries of sub-Saharan Africa. The West African area has been the subject of special but not exclusive treatment. 

Sub-Saharan Africa is composed of 48 countries (including islands), and gathers all countries located in the south of the Sahara. Morocco, Algeria, Tunisia, Libya and Egypt are thus excluded from our analysis.

The African Continent: Challenges and Opportunities

The African Continent: Challenges and Opportunities

Africa is doing (rather) well....

A positive economic situation
Sub-Saharan Africa is one of the most dynamic regions in the world, surpassed only by emerging Asia. Since the early 2000s, its economic performance has been superior to that of the world economy. While the latter increased by 4.2% per year from 1999 to 2008, African activity grew by an average of 5.6% over the same period. Since then and until 2015, growth fluctuated between 3.4% and 7%, while world growth remained close to 3.5%.

Successful political transitions
In recent years, relatively successful democratic transitions have also occurred in Africa, such as the ongoing transition in Burkina Faso or the confirmation of the stabilization of the situation in Guinea Conakry, through elections deemed free by international observers. The coming to power of opposition parties also marks the beginning of cycles of alternating elections, as in Nigeria in 2015, or in Ghana in 2016. However, these recent developments should not obscure the fact that authoritarian regimes are still in power, and that their leaders are in no hurry to lead their countries towards democratic transition.

The African continent’s demographic challenge
The continent is undergoing profound demographic transformations: the population of sub-Saharan Africa has increased from 186 million in 1950 to 670 million in 2000. According to estimates, it could go up to 2.5 billion inhabitants in 2050, and then to 4.4 billion inhabitants in 2100. This demographic growth represents both challenges and opportunities for African public authorities.

... but faces persisting structural weaknesses

The organization of its economy
The informal sector (or "black market"), which is estimated to represent nearly 80% of the continent’s overall market, remains largely predominant. While the share of the agricultural sector in the economy has significantly declined since 1990 in sub-Saharan Africa (from 40% to 32% between 1990 and 2010 in low-income countries), this has not led to a growth of the industrial sector (around 10% of the economy of these same countries). The services sector is the one that has developed the most, yet it has not had an important impact on employment. According to the International Labour Organization, the services sector accounted for 32.4% of total employment in Africa from 2009 to 2012.

Funding the state and the economy
Structurally deficient in sub-Saharan Africa, the tax system is not able to adequately fund states, even though it is an essential condition for supporting their development.

A significant lack of infrastructure
Sub-Saharan Africa is the least developed region in terms of energy infrastructure, transport, public education and health services. Encouraging investment and improving infrastructure are thus two key challenges.

An education and training issue
Issues related to education and skills are particularly important. With over 300 million young Africans on the labour market by 2050, the integration and the valorization of these talents are high-priority challenges. 

The lack of training, the low enrolment rate and the heterogeneity of educational structures are considered to be the main factors stopping entrepreneurs, whether French or African. 

While primary school enrolment has risen sharply in recent years, up to over 76% of the population in 2010, enrolment rates remain low in secondary school (40%) and in higher education (7%). The quality of education also remains generally low.

Investment in human capital, which is a crucial prerequisite for the continent's development, must therefore be strengthened.

Africa Will not Wait for France

Africa Will not Wait for France

Loss of speed and influence: France’s presence in Africa is declining

France's assets on the African continent are undeniable: 

  • The country’s shared past and continuous relationships with many African countries are undisputed. The cultural, linguistic and legal proximity with French-speaking Africa builds bridges between France and the continent.
  • French public authorities, companies and development players have a thorough understanding of the challenges Africa is facing, be it the strengthening of institutions and democracy, the training of youth and employment, urban planning, economic diversification or the risk of a return to over-indebtedness.

However, France is clearly becoming less attractive on the African continent:

  • In the field of education, despite the many and deep links between France and French-speaking Africa (163 French schools on the continent), France is losing influence, particularly to the benefit of Anglo-Saxon countries, whose educational system is increasingly favored by African students.
  • In terms of commercial presence, while France remains a key partner for sub-Saharan Africa, with market shares approximating 4% in 2016, its presence is also declining sharply. Since the early 2000s, French market shares have been divided by 2.5 (9.7%). While they are more significant in the Franc Zone (13.7% in 2016), France has lost 10 market share points since the early 2000s, mainly to China.

Competition from emerging countries

The "Belt and Road Initiative" developed by China, the "Asia-Africa Growth Corridor" led by India and Japan, the thwarted yet proactive strategies deployed by Turkey, Qatar, Israel and Brazil signal the considerable interest emerging countries have in Africa.

Beijing is accelerating its strategy of long-term establishment on the continent and distancing itself from its competitors. In 2016, China was the largest investor by value, with nearly €31 billion invested on the continent, far ahead of the United States (€3 billion) and France (€1.8 billion). Yet China’s game plan does not only generate enthusiasm. The deficiency of certain infrastructures and the lack of transparency in calls for tenders are elements that could, in the long term, weaken Beijing's dominant position.

Redesigning the Relationship between France, Europe and Africa

The need for a new discourse 

France must pursue an outspoken economic development policy and strategy in Africa. It is essential to leave our inhibitions behind and to collectively establish a new discourse: one of "restart". This involves breaking taboos. Corruption, democratic changeovers, some emerging countries' financial practices, the CFA Franc… none of these should be addressed in veiled words. On the contrary, these topics must be the subject of wide democratic debates in order to clear the air, and confront problems worsened by a lack of transparency. Above all, this new discourse must dispel the fantasies of both Afro-optimists and Afro-pessimists. This "restart" phase should be Afro-realistic and pragmatic. Such an approach will prepare us for the Africa of today and tomorrow.

It is also time to consider African countries as our political and economic partners. Africa presents many opportunities for French companies. This "restart" discourse should promote French companies’ access to African markets.

Moving from a "state-continent" relationship to a "continent-continent" relationship

Does Europe have a policy in Africa today? Should the Member States of the European Union, which are discovering the value of cooperating on security issues in Africa, undertake more joint actions on the African continent? 

France must ensure that Europe's policy in Africa is not exclusively dictated by the migration challenge.

France remains an important trading partner for sub-Saharan Africa (its market shares in countries of the Franc Zones reached 13.7% in 2016). Its in-depth knowledge of the continent is undeniably an asset. Moreover, Germany wants to invest further in Africa, with its armed wing and its development bank, the KfW, which allocated €1.6 billion to sub-Saharan Africa in 2015. 

In the coming period, which will be driven by a reaffirmed Europeanism, the current "state-continent" relationship with Africa must shift to that of two continents facing each other. 

Paris and Berlin must join forces to revive Europe’s relations with Africa in a strategic context:

  • Given the forthcoming Brexit, should funding from the European Development Fund (EDF) dedicated to Africa be maintained? The United Kingdom is the third largest contributor to this fund (€534 million per year), so funding could be reduced accordingly.
  • The fact that the Cotonou Agreement, which governs trade relations between the European Union and Africa, are about to expire should encourage us to redesign the format of our relations, in particular by involving private players in the negotiations.
  • The 5th Africa-EU Summit in November 2017 in Abidjan, the goal of which is to negotiate a new agreement between the European Union and the 79 African, Caribbean and Pacific (ACP) countries, will be an opportunity to boost Africa's ties with both France and Europe. 

So, Ready for Today's Africa? If so, the nine following conditions must be met:

Redesigning the funding model of international institutions
In detail

Under France’s leadership, redesigning the regulatory framework for international institutions at the European level, by requiring that they monitor and verify that the projects they fund comply with the application of clauses.

Widening the spectrum of companies that receive French official development assistance
In detail

Ensuring that French Official Development Assistance further targets startups, very small businesses, SMEs and mid-caps.

Increasing the amounts dedicated to venture capital and seed capital, through Proparco and the new fund between AFD (the French Development Agency) and the Caisse des dépôts et consignations.

Making our system of public export aid more readable and effective
In detail

Creating a single window for French companies' access to various funding, insurance and technical export assistance tools. 

Considering the advisability of further concentrating certain tools within a French export bank.

Helping and encouraging our companies
In detail

Making use of French institutional relays in development organizations to help French companies seize the opportunities offered by the implementation of private sector funding tools by funders.

Using technical expertise more effectively as a source of both information and influence to mobilize funding.

Strengthening our technical assistance system
In detail

Strengthening our technical assistance system by: 

  • Promoting international technical assistance to administrations, in order to facilitate the provision of these voluntary public skills internationally, and in particular in Africa;
  • Accelerating and finalizing the merger of public operators in charge of international technical cooperation, in order to improve their ability to mobilize French public expertise to exclusively serve the interests of the countries supported and of French companies.
Diversifying training opportunities and accelerating their development
In detail

Promoting the creation of Public-Private Partnerships in education, by including companies investing in Africa, foreign and African schools and universities, and African public authorities. 

Focusing these PPPs on skills that are both more technical and less developed on the continent (mathematics, engineering, etc.); directing them towards the BAC - 2 / BAC + 3 education level, in particular through the development of BTS training. 

This diversification and massification must serve as a solution to the decisive challenge regarding training for middle management, technicians, innovation, research and development in Africa.

Promoting the recruitment of Africans
In detail

Facilitating the issuance of economic and student visas in order to increase opportunities for Africans in France. All the administrative procedures required to recruit African employees must follow the same simplification approach.

Rebalancing relations with Africa: from "France-Africa" to "Europe-Africa"
In detail

Within the framework of the 5th Africa-EU Summit, proposing a clear, renewed and coordinated strategy for European policies in Africa. Relying on the Franco-German couple to redefine the post-Cotonou development goals, in coordination with African public authorities. Involving the European private sector, which is a crucial stakeholder, in these negotiations.

Promoting a discourse centred on ‘restart’
In detail

Promoting a French discourse centred on the notion of ‘restart’ in Africa, carried by public authorities, in order to free our companies from a historical and political burden that hinders their development on the continent. This ‘restart’ discourse should favor French companies’ access to African markets.

<p>Ready for<br />
<strong>Today’s Africa?</strong></p>
(128 pages)
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