Big oil-producing countries have faced a double-hit in recent months: the sudden drop in prices of oil and the economic impact of the global pandemic. In the case of Angola, which entered both crises with an already weakened economy, how are its prospects looking? The Africa Report speaks to Sergio Pugliese, the Executive President for the African Energy Chamber (AEC), to find out.
“We could be competitive with the Chinese” – Nick O’Donohoe, CEO, CDC Group, UK
Formed in 1948, the CDC was one of the world’s first development finance institutions. Today, it has a £5bn ($6.5bn) balance sheet and invests in sub-Saharan Africa and South Asia. Wholly owned by the UK government, it reinvests its earnings back into the fund. With Britain’s exit from the European Union looming, the institution – which announced it will invest £3.5bn in Africa over the next four years – is set to play a greater role.
TAR: You got dragged onto Prime Minister Theresa May’s late August tour of Africa. Did you dance?
Nick O’Donohoe: No, I didn’t dance, and we went willingly, trust me! While the Prime Minister was dancing, the business delegation was off talking about business. The Prime Minister’s trip to Africa was a pretty graphic illustration that, post-Brexit, the UK needs to have a broad range of partners. And Africa can be a critical part of that.
So a lot of what we spent time talking about [on the trip]was the Prime Minister reinforcing how important economic development was to our overall development programme in the UK. And, within that context, how important the CDC and UK export finance are, and also the Private Infrastructure Development Group, of which the UK owns 70%.
It’s been quite a busy time for economic diplomacy on the continent. What does that tell you about what’s happening right now?
I think there is a lot of interest in Africa for a variety of different reasons. The importance of economic development on the continent has been highlighted over the last couple of years by the immigration issues in Europe. […] We have unique relationships in Africa and unique advantages there. But I think Brexit has something to do with that, and the need to be seen, the whole ‘global Britain’ story. […]
“Somebody has to be
the first mover […] and take
a risk on Zimbabwe”
The most significant change over the last 15 or 20 years has been the level of Chinese interest in investing. I was [recently] in Sierra Leone, for example, and it’s very obvious how significant a role the Chinese are playing.
Many Western companies struggle to match the ability of Chinese companies to come with vendor financing already bolted onto deals. How do British companies compete?
We have world-leading technology and expertise in building and executing complex projects, particularly in areas like infrastructure. We have export finance support, although we’re probably not as mobile or as well joined up [as China]. And I think this is not just true of us, but of the other Western countries as well.
So I think we could be competitive with the Chinese, but we do have to make sure that we are all joined up. And that was part of the reason for the trip [in August] – [to show] that we’re really joined up and presenting a coherent, competitive package.
Give us an idea of some of the projects that the CDC is targeting for this £3.5bn investment.
Broadly speaking, we invest in six priority sectors: infrastructure, financial institutions, agriculture, manufacturing, health and education. I can’t really talk about specific projects that are in the pipeline and not announced. But if you look at what we have announced in the last three to four months, you’ll see a $100m investment in Indorama: we’re building a new fertiliser plant in Nigeria. We announced a facility of $100m alongside Standard Chartered to invest in Zimbabwe, which was the first real commitment by a private sector financial firm in Zimbabwe since the change in regime.
With the $100m you shared with Standard Chartered in Zimbabwe, where are you investing?
There are significant companies in Zimbabwe who are operating at 20% capacity, principally because they can’t bring in any imports. Somebody has to be the first mover and start addressing that issue and take a risk on Zimbabwe. And we felt – together with Standard Chartered, who’s had an office there for many, many years – that we wanted to be a first mover.
So there’s about 15 companies there in the manufacturing sector, the consumer sector. They are existing, medium-sized companies. This facility, when it’s up and running, will allow them to access principally dollars, which will allow them to import, allow them to manufacture and to sell.
The cash injection a few months ahead of the July election helped the Harare regime at a critical point. Did the Department for International Development (DFID) ask you to do it?
No. In terms of investment policy, we are absolutely independent of DFID. They don’t direct our investment policy in any way and never have. […] First of all, the CDC supports the private sector, it doesn’t support government. We felt that there was an urgent need for capital, we recognised – both Standard Chartered and ourselves – that we could have sat back and waited until the politics had settled down. […] I suppose some people tried to make it seem as if it was some sort of vote of confidence in the government. It was never presented that way. It was a vote of confidence in the country, in the people, in the private sector companies that exist there today.
Interview by Nicholas Norbrook
This article first appeared in the November 2018 print edition of The Africa Report magazinePhoto: Nick O’Donohoe, CEO, CDC Group, UK – DAVID MIRZOEFF/CDC