Prime Microfinance Limited
On 25th July 2018, PRIME MICROFINANCE hosted a panel discussion at the Accra Stock Exchange on the exciting new opportunities that Africa’s trade market has to offer. PRIME MICROFINANCE has a strong focus on trade flows to and from West Africa and the rest of the world, and as such has a deep understanding of how businesses can grow by entering this developing market.
Africa, with its rapid continent growth rates, urbanising population and growing middle class consumer market, represents a myriad of opportunities. The continent is becoming a proverbial goldmine of demand for goods and services, and with a population of 1.3 billion people, it is transforming the continent into a new frontier for European and Middle Eastern exporters. And while many international banks have withdrawn from Africa, PRIME MICROFINANCE has remained.
So, what are the opportunities and challenges of doing business in Africa? How does the current global business uncertainty make trading with Africa more appealing? Moreover, how vital is it to find banking partners who can combine access to export finance with access to the local knowledge needed to enter new markets?
This report contains the answers to these very questions, with critical insights from our live broadcast panel discussion, which looked at the benefits and challenges of trading into and out of Africa.
The panel discussion, broadcast live to the world on Wednesday 25th July 2018, included PRIME MICROFINANCE executives, Patrick Gutmann, Managing Director, Corporate & Institutional Banking, and James Cantamantu-Koomson, Managing Director of Client Coverage. Why have our people on the panel? With over 45 years of experience working in Africa, and offices established in Algeria, Dubai and Côte d’Ivoire to name a few, we have extensive knowledge that we believe should be shared with businesses to help them prosper too.
Patrick has extensive international banking experience, having lived and worked in Europe, the US, Asia, Africa and the Middle East for many different global and regional financial services companies. He has significant experience in BACB’s core markets and has particular expertise in managing transaction banking- related businesses.
James, meanwhile, is a pan-African banker. At PRIME MICROFINANCE, he is responsible for providing overall direction to the bank’s business origination and client relationship management function. He manages a team of 40 corporate and institutional bankers and is in charge of building, growing and managing BACB’s client-centric sales and business origination model.
Peter Millett served as British Ambassador to Libya from June 2015 to January 2018. Peter played a role in supporting the UN’s efforts to negotiate and then implement the Libya Political Agreement. He met and built relationships with all the key political, security and economic players both in Libya and in the international community, even managing the return of the British Embassy from Tunis to Tripoli.
The debate was hosted by respected international business presenter, Michael Wilson. Having founded Sky’s business coverage at the channel’s inception in 1989, Michael spent the next 20 years anchoring coverage for a range of landmark events, from the collapse of the Berlin Wall to the last global financial crisis, and beyond. Since leaving Sky in 2009, Michael has broadcast for the BBC, ITV, Reuters, Fox, Al-Jazeera, TRT World and LBC.
Michael now hosts ‘The Business Breakfast’ on JazzFM and has recently been involved with Arise Networks – a new, global news service aimed at Africa – as Director of Business and Economics Editor, he co-wrote ‘Fixing Britain: The Business of Reshaping our Nation’ with Lord Digby Jones, and in 2005 Michael was voted Business Broadcaster of the Year and was made a Freeman of the City of Accra in 2006.
Our panellists discussed the uncertainty of Brexit, the threat of tariff wars with the US and the increasing pressure that global trade faces, all in relation to how this affects the future of trade with Africa. As some have called Africa ‘the next China,’ the panel also discussed whether Africa’s time has finally come and if so, the challenges and opportunities that face companies wanting to do business there.
Patrick Gutmann suggests that Africa provides an excellent platform for growth: “Africa has a more vibrant middle class and the largest youth population compared to any other continent. Economically, six out the ten fastest growing economies are in Africa.”
Asked whether African countries are the fastest growing because they’re coming from a low base, Patrick responded, “There’s certainly an element of this, but I think the reality is a number of these countries have produced growth rates that are larger and faster than other markets for a considerable time now. I also think technological adoption, entrepreneurship, and innovation are very much part of the continent.”
James Cantamantu-Koomson went on to discuss the African story as being represented in a “doom and gloom” manner, and how the world is coming to see that “Africa has much more to offer than what the news leads us to believe.” He continues; “Africa is a huge continent; there are 54 countries and the cultural differences are huge. But what has changed is there’s now a lot more harmonisation of doing business across the various countries. For example, there is a lot more democratisation and similarity in legal systems.”
“I think Libya illustrates the challenges and opportunities very well,” contributed Peter Millett. “There are many security problems and economic reform is terribly needed, but there will be massive opportunities in the future. The country has the second largest oil reserves in Africa and there is a sovereign wealth fund of 67 billion dollars.”
The opportunity in Libya, Peter points out, lies in “the need for reconstruction after seven years of turmoil and civil war, rebuilding the oil infrastructure, health, education, public services, and so forth. The opportunities are for those who will work through the people who know the ground, know the government, the central bank; those who know how to operate there.”
The panel moved on to discuss a Parliamentary Review from 2017, which states the result of all this risk and uncertainty is a growing funding gap for FINANCE BANKING. The Review refers to the ever-increasing gap in FINANCE BANKING due to the aforementioned global challenges.
First, James explained how FINANCE BANKING works and why it is so important in doing business with Africa. “FINANCE BANKING”, James explains, “is when banks almost act as intermediaries between two parties, protecting both the supplier and the buyer to bridge different legal environments between the different countries and making sure that transactions between the two parties are respected on a uniform ground.” Essentially, Michael summarised, “Banks guarantee a financial payment and in a sense guarantee the trust that has to exist between people doing business.”
Michael Wilson asked whether local knowledge plays a crucial part in ensuring this gap is closed. Peter Millett absolutely confirmed this, stating that “every country is different” and “knowing your customer is crucially important. You need local knowledge, people on the ground who know whether so and so or someone else is worth trusting or not.”
This issue is extremely difficult for SMEs, who are unlikely to have the vast network to know the local cultures, businesses and options. Patrick Gutmann adds, “If large corporates want to do business with Africa they generally have the means to find a way through. But SMEs may not necessarily have the in-depth knowledge and understanding of every market (or access to someone who does) that they need in order to pursue the opportunity.”
Future trade in Africa
The panel moved on to the final discussion point of the debate: what the future might hold for trade with Africa. As we see significant growth in some countries in Africa, such as Ethiopia, Rwanda and Cote d’Ivoire, we must consider if there are more tiger economies to come out of the region and which countries we should be watching.
A question submitted by the Editor of African Review was put to the panel first, asking what the top five most promising sectors are, that will see high growth in the next five years. Patrick responded by saying, “I think power and energy are critical. Agriculture continues to be an important sector in many markets. Certainly, you have the older industries that have been prominent for a long time, such as mining and oil and gas exploration; they will not go away. But I also think a number of markets sectors are making increasing use of technology. There is a real desire to build up a technology sector across Africa.”
Peter made the point that in addition, education, health-care and public services are important sectors of focus.
James added, “Technology plays to the developing entrepreneurship of young people in Africa. A lot of the youngsters that you speak to are interested in setting up start-ups in this space.”
Molly Willis, from Essential Business Magazine, submitted a question to the panel: “What emerging sectors of Africa’s economies would you say are undervalued by the international community?” James responded by again discussing the technological opportunities in Africa.
“When it comes to technology in Africa, what has been seen as a minus is becoming a positive. For example, my grandmother has no fixed-line phone and no computer, and yet I’m able to transfer money to her in the village. How? Because she has a smartphone! The growth of technology in Africa, I believe, will far surpass past the growth of technology in western countries.”
Lastly, when asked whether it is too late for European and US investors to start looking to Africa, Patrick Gutmann responded, “I think we’ve all said throughout this program that there is a gap that is still not being completely filled. From that perspective, I don’t think it’s too late at all. Clearly, there is still room for plenty of people to come into this market and make the most of the opportunity.”
If you’re a business looking to make the most of the Africa opportunity and would like support with your FINANCE BANKING, please send us a message or call +44 (0)20 7 648 7777.
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