In this month's P+ Special Magazine, Peter Van Mierlo of FMO calls on investors to stay in Africa, especially now.
And there is every reason why they should. The reality is that Europe desperately needs Africa. The continent offers huge areas of agricultural land, an abundance of raw materials, and a vast sales market. The CEO of the Dutch development bank shares his vision with us, at a time when tens of billions of dollars of investment in Africa are being withdrawn as a result of the corona crisis.
For the time being, the number of corona infections in Africa appears to be lower than expected. ‘Appears’ should be emphasized here, as many countries hardly test for contamination. However, thanks to the relatively young population, the virus does not seem to spread as fast as elsewhere.
Yet the continent is being hit hard by the crisis. Lockdowns ensure that millions of people who earn their living in the informal economy from one day to the next, have no income. Which means no food. Countries that rely on one important sector (tourism, oil or other raw materials) are hit hardest. In addition, a huge capital flight is taking place.
As early as March, international investors removed nearly USD 78 billion from emerging markets, an outflow of capital more than twice the size of that which occurred during the 2008 credit crunch.
Van Mierlo on this in P +: “We tell this to entrepreneurs. Together with VNO / NCW (the Confederation of Netherlands Industry and Employers) we are looking at how we can better explain this to their members. For a medium-sized company, the question is not whether you will invest in Africa, but when. Are you waiting, or are you on the front line? I believe that Dutch companies should be at the forefront. Of course, with due observance of the social and environmental standards associated with investing in these types of markets. And with a focus on the medium term. Look at the companies that are already out there. The flower growers, all kinds of agricultural companies, beer brewers such as Heineken and Bavaria. Companies with family-like structures. Apparently they dare to think further ahead.”
Are FMO's customers also affected?
Van Mierlo warns "that we are still in the early days of this crisis." “The effects will continue for a long time. As FMO we focus on energy, agriculture and banks. Projects in solar parks and wind are still ongoing. But will the buyers of that electricity continue to pay? And what will the extremely low oil price mean for investments in sustainable energy? Another problem may be the supply of parts. They come from all over the world. If that supply chain breaks down, everything will stop. This also applies to the agricultural sector. We are concerned about logistics. If the harvests cannot be processed, this has immediate consequences for the population and for exports. You can already see food prices rising, though there are no shortages yet.”
Click on the image below to download the full P+ Special “Investors in Africa: STAY" (in Dutch)