Patrick Dupoux: “African entrepreneurs are catalysts for the integration of the continent”
“African entrepreneurs are the heroes of the integration of the continent, they give it a concrete reality. That is why we wanted to pay tribute to them, identifying 150 companies – half African, half multinational, who are at the forefront of the integration of the continent. Interview with Patrick Dupoux, Senior Partner & Managing Director at the Boston Consulting Group.
The Tribune Afrique: The Boston Consulting Group (BCG) is about to publish a study on African integration. Why did you choose this theme in particular?
Patrick Dupoux: Because this is the trend that seems the most interesting today. In recent years, we have published several studies on the economic emergence of Africa, as well as on the need to evolve its “countertop” economic model based on natural resource extraction, to a more diversified model based on on the construction of local production ecosystems. Today, everyone agrees on the reality of the continent’s economic emergence and its priorities for diversified development.
On the other hand, there is a more recent trend: the economic integration of the continent – long dreamed but still little implemented, accelerates finally in recent years.
How do you explain that this trend is new, whereas the processes of regional integration have been started in Africa in the political field for several decades already?
Because precisely, if there were certainly political intentions displayed, the reality is that Africa was – and still is – the least integrated continent of our planet. Africa is even a “hyper-fragmented” continent.
From what point of view?
From a geographical point of view already: given the vastness of the continent and the lack of direct airlines, wherever you are in Africa, more than a third of the continent is more than 15 hours by plane, against 7 hours in Asia or South America, and only 3 hours in Europe.
From a logistical point of view, the lack of road corridors makes it difficult to trade goods between African countries. The cost of selling one’s products in another African country is double what it is in other regions.
From a political point of view, with 54 countries with a population of just over 1 billion and a GDP of 2000 billion Euros, Africa is the most fragmented continent. Whether in terms of economic weight or population, African countries are on average smaller than their Asian, American or European counterparts.
But where almost all European countries have built a single European Union, Africa has 16 economic zones which, moreover, overlap and lack coherence. And I do not even talk about visas: 80% of Africans need it to travel to Africa!
What are the concrete elements that emerge from your study that make you say that this fragmentation is making way for integration?
Despite all these difficulties, African integration is under way. It can be seen through four indicators.
The first is the amount of intra-African investment, which has tripled in 10 years. In relative terms, these now account for 13% of the continent’s foreign direct investment (FDI), compared with only 6% ten years ago. If we look at the acquisitions made in Africa in the last two years, for the first time, more than half were made by companies from other African countries. Africa is investing in Africa.
Intra-African exports also rose strongly. They account for nearly 20% of the continent’s exports, compared with 12% 10 years ago. Africa exports to Africa.
Finally, for the first time, Africans account for more than half of international tourists and passengers on the continent. Africa travels to Africa.
Financial, human and commodity exchanges between African countries are progressing. They are the tellers of the continent’s economic integration.
Your study illustrates the importance of businesses in this integration. Why ?
In our previous reports, we chose to illustrate the economic emergence of the continent through its companies, whether African or multinational. But we find that entrepreneurs are pulling the integration of the continent. For example, the 30 largest African companies, which were present on average in 8 African countries in 2008, are today in 16 countries. We can mention the airlines – Ethiopian Airlines, Rwand’Air, RAM, Air Côte d’Ivoire in particular, which more than doubled their coverage in 10 years, and thus allowed exchanges. Banks, especially Moroccan, who have pan-Africanized, pulling behind the economic operators. Telecommunications operators, who have come together to connect African countries to each other and to the rest of the world. African media – like yourself – that accelerate the exchange of information, or organize events for decision makers to meet. African entrepreneurs are the heroes of the integration of the continent, they give it a concrete reality. That’s why we wanted to pay tribute to them, identifying 150 companies – half African, half multinational, who are at the forefront of the integration of the continent.
What are your forecasts for the future evolution of this trend?
We think it will continue. There is no inevitability to the weak integration of the continent. This is certainly one of the obstacles to its economic development. By combining the recent political will – Morocco in the lead, and the dynamism of its entrepreneurs, Africa should continue its integration. What is interesting is that the integration, which was done mainly by regional sub-groups – the CFA zone, East Africa … – is becoming truly regional. Moroccans invest in English-speaking East Africa, South Africans in Morocco, Nigerians leave Nigeria, etc.
What do you say to those who put forward the dangers of excessive economic and commercial openness?
While there is a protectionist pullback in some parts of the world, Africa would benefit from being more integrated. To weigh at the international level. To diversify its sources of investment. To allow his companies to reach a critical size to be competitive. Integration is an economic accelerator.
However, the weaker ones may suffer from the competition implied by the openness …
Regional economic integration is generally beneficial for small countries: this has been the case in Europe, South America, and more recently in Southeast Asia. It makes some countries appear on the radar of international investors, by integrating larger sets. Then, obviously, this integration must be done in terms that allow everyone to win. In many economic sectors, where Africa continues to massively import, integration represents a better opportunity to initiate regional co-development
When is a single African market?
We are not yet close to an African single market. On the other hand, we should witness a stronger convergence and an extension of the economic and commercial zones. The good news is that integration of the continent is finally underway, and that African entrepreneurs are at the forefront of this movement.