For almost a decade, “Africa Rising” had been a buzzword in international investment circles, referring to the fact that Africa hosts four of the top 10 fastest growing economies in the world.
The continent offers the possibility of significant returns, if risks are managed properly, and the UAE has been no stranger to this. Optimism for Africa’s investment potential, however, seems to be typically associated with “anglophone Africa” leaving the majority of francophone Africa out of the conversation. Suffice to say, francophone Africa has been shrouded in mystery.
Certain French speaking African countries have been unfamiliar to even the most open-minded and adventurous investor. While English-speaking Nigeria, South Africa and Kenya have firmly positioned themselves as the powerhouses, francophone Africa has traditionally lagged behind.
Diverse social and business customs and language barriers have traditionally deterred many businesses from entering this seemingly complex market. The truth is that francophone Africa is just too important to ignore. Covering over 5,000 square kilometres in an area with 31 countries, the region makes up about 17 per cent of Africa’s population and hosts two of the top ten largest economies in Africa — Cameroon and Cote d’Ivoire.
Francophone Africa has made important strides to be the continent’s next growth frontier. Algeria, Africa’s largest country with a mammoth GDP of $156.1 billion in 2016, could possibly be francophone Africa’s hidden treasure.
Unlike several of its counterparts in the region, the Algerian government has adopted an economic plan focusing on the private sector and a three-year budget stabilisation strategy. It has recognised that unlocking private sector investment could hold the key to diversifying its economy and meeting infrastructure needs, building crucial road and rail links, hospitals and health facilities. These are key features that any business would look out for before investing funds in the country.
While Algeria has traditionally depended on hydrocarbons, it has now made significant strides in diversifying its economy, unlike its neighbours who still rely on oil. According to the Africa Development Bank Group, the non-hydrocarbon manufacturing industry in Algeria in 2015 accounted for no more than 5 per cent of GDP, compared with 35 per cent at the end of the 1980s.
The private sector is predominantly driven by the leather and footwear industry, textiles, agri-food, chemicals, rubber and plastics and construction material. This range provides extensive prospects for investors from varying business verticals around the world.
The UAE has already invested more than $9 billion in Algeria, signifying the importance of Algeria’s growing economy to UAE investors. In fact, just in the past few months, several partnerships have been forged with the Algerian government in a bid to attract private sector investment into key sectors.
One such example is Emarat Dzayer Group, a UAE corporation which set up a $1.6 billion steel plant in collaboration with Algerian firm Groupe Imetal, to produce 1.5 million tonnes of directly reduced iron and one million tonnes of steel in the form of rails, steel structures, and seamless pipes per year. Hot on the heels of this announcement, came the news of the $1.1 billion engineering, procurement and construction contract signed between Dubai-based Dosal Group and Sonatrach, Algeria’s state-owned energy producer, to work on a separation and compression centre in the periphery area of the South HGA-Hassi Messaoud oilfields.
While these examples are specific to Algeria, opportunities abound throughout the region. Francophone Africa is increasingly picking up the pace with governments focusing on policies and structures to work more closely with the private sector and opening new markets and sectors to investors from around the world.
Now is the time to redefine the term Africa Rising to include the lesser-known but equally promising French-speaking countries. While France used to be the main driver for business in the region mainly due to language similarities, speaking French is no longer the prerequisite for doing business and the region is open to investors from all over the world.
The writer is a Partner at Bourabiat Associés, Algeria. He was a speaker at the ALN Annual Investment Conference in Dubai.