Of all the qualities French former leader Napoleon Bonaparte prized in his generals – or so the story goes – the most important was luck. France’s President Emmanuel Macron has had his share. For example, the implosion of the centre-left and centre-right candidates in the 2017 elections, allowing him a clean shot at the presidency. His first term has coincided with another piece of ‘luck’; the nativist inward turn of Brexit and US former president Donald Trump has left more space for France on the world stage, especially in Africa.
Macron has a particular vision for France’s relationship with the continent. First, a more open approach to French abuses during and after the colonial era. In 2018, for example, France officially admitted to the murder of Maurice Audin – a member of the Algerian Communist Party tortured to death by the French army during the war of independence. In Rwanda in May, Macron recognised France’s role in the 1994 genocide.
Macron is also pushing an activist economic diplomacy. It is bound up in a critique of France Inc., which he sees as too timid in its approach to global markets beyond its comfort zones. “40 years ago, France occupied a prominent position in Nigeria,” President Macron tells The Africa Report. “Major French companies occupied leading positions in the construction, manufacturing and logistics industries. More than 10,000 French nationals used to live in Nigeria at that time.”
But, in the the early 2000s, challenged by newcomers, French companies lost their way.
Michelin and Peugeot, for example, had iconic factories in Port Harcourt and Kaduna respectively – both have since closed. Today, there are not even a thousand French citizens registered at the embassy in Abuja. “The irony is that many successful foreign [non-French] companies employ French nationals in Nigeria today,” says Macron.
No inferiority complex
Nigeria is where Emmanuel Macron’s relationship with the continent began. In 2002, he spent six months as an intern at the French embassy in Abuja, and discovered a country that has little in common with more familiar Françafrique haunts like Abidjan, Dakar or Libreville.
“[Nigerians] have no inferiority complex about France because the country is not on their radar,” Macron told Antoine Glaser and Pascal Airault in a recent book. “I was very happy [in Nigeria]. There was so much to do, with extremely entrepreneurial people, very creative, with whom I was able to have a relationship of equals in a very spontaneous and natural way.”
The ambassador thought it would be useful for the young intern to spend time outside the official French diplomatic circuits and sent him to see Jean Haas, who is currently the managing director of Relais International consultants. Since the 1980s, Haas has been building a network of connections to Nigeria’s private sector.
Certainly, ‘hard’ factors like rising insecurity and poor infrastructure make life tough for businesses in Nigeria.
An editorial in Lagos newspaper The Guardian from February 2007 sounds eerily familiar today: ‘Michelin’s exit brings to the fore a number of issues,’ the paper opined. ‘The failure of government to provide an enabling environment for tyre manufacturers, the energy crisis and the effect on the cost of doing business, as well as the abuse of presidential waivers by some privileged Nigerians.’
But there are three ‘soft’ factors, too, that affect French companies in Nigeria – a lack of personal connections, a lack of nerve and a flexibility deficit.
First, networks. In recent decades French multinationals have heavily rotated their expatriate staff members, and boardrooms increasingly lack a ‘Monsieur Afrique’ to help maintain networks. “Business in Nigeria is principally a story about people, and the connections between them – if you don’t have that, it is hard to operate,” says Haas.
Next, nerve. Media house Canal+ has invested in Nigerian streaming service iROKO, created by Jason Njoku, famous for delivering Nollywood productions worldwide. The French media company, owned by Vivendi, has a clear Africa strategy: expanding in the major population centres of Ethiopia and Nigeria. But when ROK Studios, the production arm of iROKO, came on the market, even Canal+ vacillated over the purchase – despite it being a very modest amount, according to industry insiders.
“Companies from the US don’t ask themselves questions. Netflix and Disney understand that the next Black Panther will be ‘Made in Africa’,” says Jacques Eliezer, a partner at Procadres International dispatched by Vivendi to turn around ROK. “Look at Disney throwing millions at a Nigerian illustrator who has only written a few comic books,” he says [referring to Iwaju, the series Disney will create with Nigerian-Ugandan Kugali studio].
Of course, not all French companies lose their nerve in Nigeria. Despite having little visibility over the pending shake-up of Nigeria’s oil laws known as the Petroleum Industry Bill, TotalEnergies commissioned the largest offshore platform it has ever built, which is now operating at the deepwater Egina field. At its peak production of 200,000 barrels a day, this represents 10% of Nigeria’s entire oil output.
For Mike Sangster, Total’s managing director in Nigeria, “where Total was courageous was in carrying on” with the $16bn project after oil prices crashed in late 2014.
The final soft factor at play is what is needed to crack what has been dubbed the ‘fortune at the bottom of the pyramid’, i.e. targeting the small slice of disposable income of Nigeria’s 195 million people who are less well-off, rather than focusing on the five million who are well-off. It takes a certain flexibility to adapt products or services that might work in one context to another.
Of cows and crossbreeds
For French dairy giant Danone, it has been imperative to at least dip a toe into Nigerian waters. Hit by the ban on importing dairy products that is part of the Nigerian Central Bank’s ‘backward integration’ policy, the company reached for a more flexible approach. In July 2019 it bought FanMilk, a manufacturer of ice creams, yoghurt drinks and juices. This year it announced it would be building a flagship dairy farm in Ogun State to supply FanMilk with Nigerian milk.
“We are importing cows, but we will breed hybrids with local cows” to get a hardy but productive crossbreed, says Ferdinand Mouko, the managing director for Danone in Nigeria. A metaphor that is applicable elsewhere, perhaps.
Macron’s solution to plugging French companies back into Nigeria is to create a new France Nigeria Business Council, which will be launched on the margins of the Choose France summit at Versailles on 28 June.
This is the reincarnation of a previous initiative that didn’t quite work out. After Macron’s 2018 presidential tour of Nigeria, which included a trip to the ‘Shrine’ nightclub owned by the family of Fela Kuti, a Franco-Nigerian Business Dialogue was held in Lagos. But on the return leg to France, French business leaders were reluctant to meet visiting Nigerian CEOs.
“Not one French CEO came,” Macron told Glaser and Airault, lamenting the shortsightedness of corporate France. “We had to get involved […]. In the end, Abdul Samad Rabiu [BUA Group] signed with us [a contract with French company Axens for the construction of a refinery]. The Americans are furious that we managed to swing it.”
That pendulum has not stopped swinging. BUA Group is, for example, signing with French group St-Gobain to build a plasterboard factory. In the energy sector, the financial close of Train 7 of Nigeria LNG will provoke a huge investment into gas from all stakeholders including Total.
It is not just one way traffic, either. Access Bank, for example, is opening a bank in France to help serve its clients in Francophone Africa who need correspondent-banking connections.
Nigeria certainly requires courage and a real commitment to local partnerships. But it also carries a ‘Caveat Emptor’ sign around its neck in flashing green and white lights. No one, says Haas, should minimise the risk, even as they highlight the potential. “The challenges are exactly as you might have heard, only worse.”
The South African retailer Shoprite is the latest multinational to pack its bags, struggling with exchange rates, import bans and the spiking cost of infrastructure that puts its products out of reach for the middle classes that might visit a mall. But, almost under the radar in some cases, a series of refineries, free zones and ports coming online over the next two years could unlock the true potential of the country.
Some of them can be seen by hopping into a car and braving the endless traffic jams of the Lekki Peninsula east of Lagos. Housing and retail developments have mushroomed for tens of kilometres to Aja and beyond. Every few hundred metres, there is a petrol station, a supermarket, a shopping centre.
Turn right at the Eleko beach road and you hit the Lekki Free Trade Zone road along the coastal route. Dangote’s 650,000-barrel-a-day refinery looms above and is around 80% complete. Next to it, the completed fertiliser plant pumps out 3m tonnes of urea per year. Between them they will contribute to rebalancing Nigeria’s foreign-exchange reserves.
Joining the dots
Further on, a red-fronted factory signals a joint venture by US cereals giant Kellogg’s and Singapore’s Tolaram. Opposite, China Harbour Engineering is on track to finish the Lekki deepwater port that will be operated by France’s shipping giant CMA CGM. For Dinesh Rathi, CFO at Tolaram, the combination of deepwater port and integrated free zone is a ‘silver bullet’ for those companies who spot the potential of the region but recoil from the infrastructure roadblock of Apapa and Tin Can Island.
Back in Victoria Island, a city is emerging from the water, built by the Chagoury Group. In Port Harcourt, another free zone is getting ready to welcome a sugar refinery that will target opportunities from the African Continental Free Trade Area and compete with sugar imports from Brazil. In northern Nigeria, sugar plantations and rice mills built by Nigeria’s leading conglomerates are acting as anchors for other investors.
Yes, the headlines of Nigeria’s newspapers warn about the disintegration of the nation, report on ethnic strife, stagflation, hundreds of school children kidnapped and the national oil company claiming it will be ‘unable to remit’ money into the government’s federation account. All this is true. But fortune favours the brave, as Napoleon might have said.
THE BIG SIX => NIGERIAN CEOs COMING TO VERSAILLES ON 28 JUNE
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