Tuesday , February 7 2023

Africa's economic war: will the Franco-German struggle take place?


Africa's economic war: will the Franco-German struggle take place?
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At a time when the French lose their market share in Africa, Germany wants to be more offensive. Chancellor Angela Merkel announced the color of the "Compact with Africa" ​​forum by creating a € 1bn fund to promote European SME investment on the African continent. And if the battle should happen …

Berlin plans to invest over one billion euros in Africa to support European companies, while France loses its market share for several years on the continent. This allocation will be used to provide loans and equity to European and German SMEs wishing to invest in Africa. Seeing companies, can this device reshuffle the cards between Paris and Berlin?

For Berlin, Africa has tremendous growth potential

"For many years we have been very much focused on Asia, I think that in the future, the look must go further towards Africa," said the German Chancellor during this initiative created during the German G20 Presidency last year, involving 12 countries African. Angela Merkel believes the African continent has "tremendous potential for growth". But if the smiles are heard in Paris, the analysis implies an inevitable battle with Berlin.

Paris has already launched a similar fund for SMEs. More …

This new interest of Germany for African economies is resumed in France. In 2017, President Emmanuel Macron announced in Ouagadougou, Burkina Faso, the launch of a similar EUR 1 billion fund for African and French SMEs wishing to invest in Africa. But, unlike the Germans, France has long been a major economic actor on the continent through large historical groups such as Total in Hydrocarbons, Societe Generale in the Bank or Peugeot in a car.

France's market shares in Africa to the lowest level in 2017

In the last fifteen years, the market shares of French companies on the continent have continued to collapse and reached the lowest level in 2017. According to a study by the French foreign trade insurance company COFACE published in June 2018, the French export market to Africa "has fallen by half, from 11% in 2001 to 5.5% in 2017", according to Guy Gweth, Kowdys economic intelligence expert and founder of Lionel Zinsou, banker of business and chairman of the IAP partners on May 6, 2015, on RFI, despite the persistence of the latter … The show to listen again here: Africa – France: Towards a New Partnership? . These losses have benefited China and India, whose cheap products have invaded the continent due to an increasingly aggressive economic strategy.

Turks and Chinese have launched French exports to Africa

For example, in the machinery and equipment sector, "France's share of exports to Africa was halved between 2001 (12%) and 2017 (6%) due to competition from Turkey and, in particular, China, whose share has been multiplied by eight to a quarter of total car exports, "COFACE notes. With higher disparities in some African-speaking African countries such as Algeria, Côte d 'Ivoire, Cameroon and Senegal.

By injecting generic drugs, India has caused the fever of the pharmaceutical industry

In the electrical and electronics sector, France, the leader by 2006, market share fell to 3% in 2017 (compared with 16% in 2001). The same is true in the pharmaceutical sector, where the export market share was almost halved over the same period (from 33% in 2001 to 19% in 2017), for India's benefit, whose weight has increased. from 5% to 18%, growth driven by the low-cost generic sector. Moroccans and Tunisians are not left either, adds the founder of the Knowdys Consulting Group.

The decline in French exports is in favor of new players

"French exports to Africa have not fallen in value, but they have not even grown," says Etienne Vauchez, president of the Federation of International Specialized Operators of Trade (OSCI), less alarmist. However, the development of the private consumer market on the continent explains, at least partially, the decline in French exports to the benefit of new players. "The French have failed to understand that the subtleties of the African economy dominated over 80% by informals," says Etienne Vauchez.

French products are expensive for a not necessarily easy clientele

"The French, he continues, wanted to trade with emerging economies, so big companies." They had trouble understanding the distribution circuit in Africa, which is not very structured, and interrupted them. "As a result, French products are expensive for a clientele that is not necessarily easy. Instead, the Chinese, Indians or the Turks came up with cheaper products, very close to expectations. "They found in particular an African distribution that was still in their countries," explains Étienne Vauchez. "There is a general lack of French exports that must not leave the market …"

In the car, the French did not know how to adjust the demand

The car sector is not left out. China and India (which became Africa's fourth supplier in this sector) led France to drop from 3rd place in 2001 to 7th in 2017 (with a market share of 5% vs. 15%). % in 2001). Long before the massive arrival of Chinese manufacturers, French brands like Peugeot were already fighting against Japanese like Toyota or South Korea, such as Hyundai. "In the automotive sector, French brands have not adapted to demand, but they come back with low-cost vehicles for the African middle class. This is the case, for example, with Renault Duster, whose cars are manufactured in Morocco and are sold in Sub-Saharan Africa. "

French companies earn points on services

However, analysts believe that statistics on French foreign trade with Africa need to be tinted. ASCI believes that "French companies are gaining points on services, such as Orange's mainland telecom performance in Telecom, Canal Plus does well, Bolloré Group in ports is not bad, and companies in the construction industry as well. These are data that are not taken into account in customs statistics. "

French companies should better understand South Africa

It is good to know if the blue-white-red firms are more global after China on the continent, but they do not know the crisis in South Africa. Nearly 370 tricolor companies are installed there and almost all emancipated in CAC 40. South Africa is now the first economic partner of France in sub-Saharan Africa with a volume of exchanges of 2.9 billion euros in 2017. "The South- African economy is structured for the economy of large companies The country is rich It is a market that the French know how to understand Unlike economies like DR Congo, Angola or Nigeria whose heart is informal. "However, French analysts are well back , they do not say whether German companies will better understand this African reality, "said an expert from the African Center for Intelligence and Business Intelligence (CAVIE).

Launched in collaboration with the IMF, World Bank and AfDB

An analyst at the Public Affairs Office of Knowdys Consulting Group wants to point out that the Compact program with Africa is formally aimed at supporting private investment to create jobs in Africa and thus reduce African migration to Africa. European continent. "It is a program," he said, "which was intelligently launched in collaboration with the International Monetary Fund (IMF), the World Bank and the African Development Bank (AfDB)."

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