A market of more than 100 million inhabitants, where only one-third of those over 25 have a bank or mobile finance account (compared to an average ... of 58.5% in sub-Saharan Africa and 79.5% in neighbouring Kenya). An economy where one public institution, Commercial Bank of Ethiopia (CBE), alone manages 55% of outstanding credit. A banking industry so inefficient that its costs absorb 56% of its revenues, but where the return on assets is four times higher than that of Moroccan banks…
A seasoned insurer within AXA Africa was entrusted with the task of “building the foundations of ‘bridges between Asia and Africa’”. Philippe Rocard, the former CEO of the French insurance giant’s Moroccan and sub-Saharan African subsidiaries (Senegal, Ivory Coast, Gabon, Cameroon), was for nearly two years on the lookout for Asian financing opportunities for infrastructure projects, one of the main missions that were assigned to him as head of the “large corporate risks” sector developed with Hassan El-Shabrawishi, AXA’s Africa CEO.
“Sixty per cent of direct investment in Africa comes from Asia,” says Shabrawishi. And he goes on to explain that as the leading “international corporate property and casualty” insurer in China, with a presence in every province of the country, AXA has the means to make a difference. “We are able to speak in Mandarin to all Chinese companies investing in Africa. We have comparable expertise in other countries like Japan,” says the Egyptian manager. These arguments are supposed to convince Chinese public companies and Japanese groups, such as Toyota or Mitsubishi, to sign with AXA to cover their risks linked to the African projects in which they invest.
$200-300 million of investments
If the group remains evasive about its identified projects and the expected results, AXA Africa Holding’s CEO nonetheless speaks of turnover amounting to tens of millions of dollars for projects lasting three to five years. Since Rocard’s departure from the group in July, the foundations have been laid, and the mission has been directly taken over by El-Shabrawishi. The insurance giant is said to be working on a hundred or so projects of this type in Africa alone, and although most of them are estimated at around ten million euros, some represent between $200 million and $300 million of investment.
In concrete terms, for each project, the mission of the “large corporate risks” sector developed within AXA Africa consists of providing guarantees to investors both in terms of financing and during the construction phase itself. The insurer thus proposes to minimise the instability of projects, make them profitable and provide advice on mitigating the risks linked to construction (site, project management, execution of works…).
The group, which saw approximately €100 billion in turnover (2021) and is one of the world’s leading insurance companies, benefits from its ability to create synergies between its different entities. And it is through insurance treaties that they collaborate on the same project. For example, AXA Africa uses AXA XL Insurance/Reinsurance to insure or reinsure a proportion of the risks involved in the construction of infrastructure. As the world leader, AXA XL, with some $19 billion in premiums (mainly in business risks), has the expertise to secure coverage for the largest construction projects in Africa.
Relying on Asia – and on China in particular, which alone accounts for more than a quarter of the financing commitments for infrastructure in Africa ($25.7 billion in 2018, according to the latest report by the Infrastructure Consortium for Africa, ICA) – is not of small importance.
Especially since, as analysts at Fitch Ratings have said, “The Chinese government is expected to deploy more financial support to boost infrastructure investment after this year’s special bond issuance quota was almost reached in late June this year.” Additional resources that should benefit one of its favourite areas of influence: Africa.
The internal reorganisation of the insurer’s activities in 2021, as part of its 2020-2023 strategic plan, has also helped bring the two markets closer together. After questioning the relevance of its African subsidiaries when he arrived in 2016 and then integrating them into an “international & new markets” division, the group’s CEO, Thomas Buberl, finally attached them last year to the group’s Asia general management, led by Gordon Watson from Hong Kong.
Even if the two “regions” do not carry the same weight – Asia’s turnover is more than ten times greater than Africa’s – their specificities are similar, in that they are markets with strong growth potential. “This is a great opportunity for Africa,” said Hassan El-Shabrawishi in an interview with Jeune Afrique in early 2022. “Gordon Watson knows Africa, he has lived there. And the reorganisation has boosted us on many levels”.
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