As economies in Sub-Saharan Africa gain strength, companies from other developing countries are rapidly increasing their investments in the region.
Supporting such cross-border investments and helping to increase the capital, technology, management expertise and jobs that flow to the region is a key component of IFC's strategy in Sub-Saharan Africa.
Moroccan companies are a good example of the trend towards regional investment between emerging markets. In May, IFC partnered with two Moroccan businesses that are looking to extend their reach south of the Sahara.
A €70 million loan from IFC to Banque Marocaine du Commerce Exterieur will help Morocco’s second-largest private sector commercial bank fund its recent acquisition of a 35 percent stake in African Financial Holding, the holding company of the Bank of Africa network.
IFC also invested €7.5 million to support the upgrade of fixed and mobile networks at Onatel, Burkina Faso’s telecommunications operator, which is majority-owned by Morocco’s Itissalat Al-Maghrib.
IMPROVED BUSINESS CLIMATE
It’s hardly surprising that companies from outside the region are expanding in Sub-Saharan Africa. In recent years, Many Sub-Saharan African countries have dramatically improved their business climate, making them much more attractive investment targets.
Governments have also implemented better macroeconomic policies and shown a greater commitment to the private sector, helping to stabilize exchange rates, hold inflation in check, and enable banks to more easily provide long-term financing.
A sharp rise in commodities prices has boosted the economies of Nigeria and Angola and other countries rich in natural resources. While areas of caution and danger remain, increasing political stability across much of the region has helped reduce the perception that Sub-Saharan Africa is a risky place to invest.
Emerging market companies investing in Sub-Saharan Africa also gain by diversifying their risk exposure and developing experience in other markets.
"By facilitating cross-border investments between developing countries, IFC helps facilitate the exchange of knowledge and experiences, which creates opportunities for private sector growth," says Thierry Tanoh, IFC Director for Sub-Saharan Africa. "An increasing number of our clients are now based in emerging market and helping them expand into other regions is therefore a crucial part of our mandate to support the private sector in developing countries."
CASABLANCA CONFERENCE
In order to support Moroccan companies looking south, IFC and the Confederation of Moroccan Industries in November 2007 sponsored a conference in Casablanca to help local businesses identify investment opportunities in central and western Africa. The conference was attended by top-level management from Morocco's largest firms and banks and IFC staff, who helped them identify potential opportunities.
It's not just Moroccan companies that are looking to expand in Sub-Saharan Africa.
IFC has also supported a project by Brazilian construction firm Construtora Norberto Odebrecht to develop idle land in Angola’s capital Luanda by providing water treatment and supply, sanitation, electric power, public lighting, and roads.
In 2007, IFC also provided a loan and raised additional capital to support the sale of Nigeria’s Eleme Petrochemical Company to Indonesia’s Indorama International Finance.
IFC’s Global Trade Finance Program, through which IFC issues guarantees to support international trade transactions, has also helped facilitate more than $1.5 billion worth of trade since its inception in October, 2005. Around half of these transactions have been in Africa, and more than a third of the guarantees were issued for ‘south-south’ trade, indicating strong support for trade between emerging markets.
For more information contact:
Houtan Bassiri
Communications Officer
Johannessburg, South Africa
Tel: +27-11-731-3179
Email: HBassiri@ifc.org
