16 November 2016 / 0 Comments
Africa investment: Jobs to build a continent
Investment in Africa means jobs that don’t force people to leave their homes and families
For 14 years, Michel Lo worked far from his home in a tiny village 30 km up the Senegal River from Saint-Louis on Senegal’s northern border. The main source of local jobs in fishing was scarce, because invasive plant species had decimated the fish stocks. Lo could afford a trip home to see his family only once a year.
That changed this year when the Compagnie Agricole de Saint-Louis started irrigating arable land near his village. Its aim is to produce 65,000 tonnes of rice each year, answering a big food-security need for Senegal. The company will also provide jobs for hundreds of locals who might otherwise have been forced to move to the capital Dakar 320 km away, or even to migrate to Europe.
Lo, 38, took a job as a foreman on the new project, excavating irrigation ditches for the rice fields. “Now I can return home every day and be with my family,” he says. “Thanks to this company, I can live with my family.”
Across Africa, approximately 15 million people have left their homes to find jobs as far away as Europe, the Gulf or the Americas. The European Investment Bank invests in projects aimed at helping those who arrive in Europe as migrants. But the EU bank also finances businesses in Africa, creating jobs that allow workers to remain in their homes and near their families. Projects like the Saint-Louis rice farm, which received a EUR 15.7 million EIB loan, build Africa’s future by creating viable private sector companies.
Development means African investment, not just aid
“Development in Africa is usually seen through the prism of aid—the notion that in order for African countries to get better, they need this injection of capital through governments and NGOs from overseas basically,” says Patrice Backer, a Congo-born fund manager who works in Senegal. “We look at private equity as another aspect of development that is absolutely critical. You can inject all the aid you want, but fundamentally we need to increase the disposable income of workers in our countries.”
Backer is chief operating officer at Advanced Finance & Investment Group, which attracted a EUR 15.6 million investment from the EIB in 2008. One of the African companies AFIG has since invested in is Senbus Industries. Launched in 2001 in Senegal, Senbus aimed to create a domestic auto industry. The company received a EUR 3.4 million loan from AFIG.
Investment to industrialise Africa
Pape Mbodji is a 35-year-old who wears a blue hard-hat and overalls as he leads a team of 20 on the assembly line at Senbus. Mbodji earns a living in the town where he was born. He also gets a sense of satisfaction at his role in Senegal’s economic future.
“I love my profession,” he says. “I have the possibility of working in Senegal with the top company in the assembly of buses. That’s a great pleasure. I also contribute very much to the development of our country.”
Senbus’s founder Cheik Sadibou Diop declares himself proud to “have succeeded in bringing work, which is important in a less-developed country like Senegal. We have proved also that the industrialization of Africa is possible. We must believe, and we must do it.”
Young Africans fulfil potential
Senbus did this by employing young managers trained at the local technical college and skilled workers who trained on the railways. “Senbus offers young managers the possibility of exercising responsibility at a high level,” says Boubacar Sagna, a 31-year-old engineer who is the company’s head of production and is just the kind of professional who might have been tempted to take his skills out of Africa. “Senbus gives this opportunity to young managers to express their knowledge and their potential. It’s a great potential.”
Chief Executive Diop notes that Africa does, however, need to develop its financial sector, to fund more enterprises like Senbus.
Private equity and competition
That’s where Patrice Backer comes in.
The young private equity manager, who was born to Haitian parents, invests up to USD 20 million in the band of African countries from Cape Verde to Kenya. In five years AFIG investments have generated 2,200 jobs, which in turn support 15,000 other jobs. The companies in which AFIG invests have paid USD 34 million in taxes to African countries in that period.
“We basically need to create wealth, and in order to do that we need private sectors that are fairly well-structured, that are robust, that can create the jobs and increase their revenues to give their workers a better livelihood,” Backer says. “This is where private equity has a role to play—by helping them compete.”
The firm’s investments have gone well enough that the EIB signed a new EUR 18 million deal with AFIG in July.
If this didn't exist...
In Kenya’s Rift Valley Province, the workers on Migotiyo Plantations tend and process sisal, a plant that yields fibres for carpets and roofing. In the fields men and women hoe the long rows of sisal in the hot sun, clearing weeds from between the spiky, knee-high plants. It’s back-breaking work, but it’s a good job that allows the workers to have a decent life in their home country and avoid the uncertainties and dangers of life as a migrant.
The farm got support from the EIB through a EUR 2.3 million loan from local intermediary NIC Bank. It produces 100 tonnes of fibre each month for export to Arab countries and Nigeria. Each tonne yields USD 2000 profit, says Peter Gashoka, the 34-year-old estate manager. “It’s quite a profitable project.”
Despite the tough environment, Samuel Gruto is glad of the work. “If this farm didn’t exist,” says the young man from a nearby village, “I would go somewhere else, like Nairobi or outside Kenya. I would go to Europe.”
More senior workers also acknowledge the importance of the sisal farm in keeping them near their homes. Kalija Komen, a manager on the plantation, says that without the farm, “I would have to find a job somewhere else, maybe Nairobi or somewhere outside Kenya.”