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African capitalism, are you there? – Young Africa

The top 500 African companies in 2022

In the effervescent microcosm of African tech, this was one of the highlights of the end of 2021. The Nigerian company MainOne, created in 2010 and become one of the main managers of data storage centers and communication services in West Africa, announced in December that it had been acquired by the American Equinix (6 billion dollars in turnover in 2020). Finalized at the beginning of April for an amount of 320 million dollars, the operation was applauded by the entire community because it confirms the attractiveness of companies founded and managed by Africans while attracting a big name in Silicon Valley on the mainland. Listed on Wall Street, Equinix has some 220 data storage centers around the world.

The takeover of MainOne is not an isolated case. In recent years, the continent has seen the emergence of a multitude of start-ups, many of them experiencing meteoric success. “Young tech-savvy people have created the kinds of businesses we’ve never seen before,” enthused recently in the columns of JA, Ngozi Okonjo-Iweala, patroness of the World Trade Organization (WTO). Flutterwave, InstaDeep, Copia Global…

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The valuation of these young shoots is skyrocketing, as is the appetite of foreign investors, in particular venture capital funds from the United States, Europe and even Asia. Over the past year, they have attracted an amount of 5 billion dollars. A record. And 2022 got off to a very strong start for these companies in terms of fundraising since, between January and February, the symbolic threshold of one billion dollars had already been crossed.

Starting a business is good, but owning one is even better!

However, this ongoing revolution is already raising serious questions: is Africa really taking advantage of the enthusiasm of foreign capital for its tech? Or is she simply being dispossessed of her nuggets?

High added value

It is true that thanks to these funds which invest in capital to launch or finance the growth of African start-ups, “it is a whole energy that is released in a sector with very high added value”, concedes Cyrille Nkontchou, the co-founder of asset manager Enko Capital. Still, “everything happens as if most of the value thus created is then exported, which is a bit of a shame,” notes the financier, however.

Beyond tech, in many areas ranging from infrastructure to agribusiness and energy, “we can see that the productive apparatus is often not owned by Africans”, adds Bernard Ayitee , a graduate of the London School of Economics and founder, in 2018, of Obara Capital, the first hedge fund African. We all know that creating a business is a good thing, but being the owner (or co-owner), and therefore the main beneficiary of the profits generated, is even better!

Protecting its jewels

Some countries have understood this well and are implementing regulatory mechanisms to better regulate foreign investment. Thus, recently, while the American defense specialist Teledyne tried to buy Photonis, a French start-up focused on night vision, the operation finally came to an end. The French State absolutely insists that Bpifrance, its public investment bank whose vocation is to finance the development of national companies, takes part in the operation through the acquisition of a minority stake. This would have given him a right of veto over certain operations and the management of the company.

Always have this question in mind: what does my country’s economy gain in the long run?

More generally, France has developed in recent years a legislative and regulatory arsenal that allows it to protect its jewels while maintaining a certain balance between attractiveness and control of foreign investment, particularly in sectors deemed strategic such as: defense , energy, water, transport and even data hosting.

It is not a question of developing protectionist reflexes, explains Alex Bebe Epale, lawyer at the bars of Paris and Cameroon. But to have, in the context of this type of deal, strong requirements in terms of, for example, the use of local content, mandatory partnerships with local SMEs or technology transfer. One must always keep this question in mind: what does the economy of my country or that of my region gain in the long term? »

Regulation of foreign capital

This approach is all the more crucial as the flow of foreign capital to the continent will be increasingly important in all areas, if we are to believe the specialists. The entry into force in January 2021 of the African Continental Free Trade Area (Zlecaf), and the possibility of thus accessing a common market (still under construction) of 1.4 billion people will inevitably encourage foreign groups to lead the offensive on the continent.

African public authorities watched helplessly as the logistics empire of France’s Bolloré was sold to Switzerland’s MSC

Beyond the supervision of foreign capital, a fundamental question arises for the leaders of the continent, a fortiori in the context of the establishment of the Zlecaf: how to also promote the emergence of African companies, held by capital Africans? The development model on the continent must “rely more on local savings than on international capital in the financing of equity”, insists Cyrille Nkontchou.

To do this, structures must be created to secure these savings and reassure African individuals who prefer to send their savings to other continents. African pension funds can be a valuable lever: “It’s long-term money with which you can take a little more risk by investing in the best ideas,” he suggests.

Lawyer Alex Bebe Epale does not think otherwise. For him, it is just as essential to consider a new banking model, adapted to the specificity of African economies, and whose “mission would be, for example, to support and finance the informal sector to bring out real SMEs”.

Sovereign interest

Bernard Ayitee complete: “At the start, you need a vision. Then, we must put in place sufficiently powerful financial structures, like Lazard or Rothschild in France, to support the emergence of a hard core of successful companies in sectors identified as being of sovereign interest for the African states. »

commodity exporters find themselves completely offside on their own turf

Words that find a particular echo in the context of what will remain as one of the biggest deals of the year on the continent: the sale of the African activities of Bolloré Transports & Logistics to MSC for 5.7 billion euros ? A French tycoon who cedes part of the logistics empire he has built on the continent to another tycoon, a Swiss this one, all in front of the African public authorities who watched, powerless, at this operation which affects a highly strategic sector of their economies. MSC has apparently found itself in competition with other potential buyers of BTL. Among the companies mentioned, French, Middle Eastern or Asian names. But no African name!

Thus, exporters of raw materials – for whom the transport of natural resources from their place of production to the coasts from where they are shipped to the rest of the world is vital – find themselves completely offside in a matter that is being played out on their own turf.

Why, more than sixty years after their independence, the EHaven’t the coastal states of West and Central Africa succeeded in promoting the emergence of local players or champions in this essential activity for their economies? To meditate!

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