Gilles Coulombe isn't letting Africa get in the way of doing business in Africa. While civil war rag...
Gilles Coulombe isn't letting Africa get in the way of doing business in Africa. While civil war rages in Sierra Leone and Zimbabwe condones land seizures from white farmers, the engineer's Quebec-based employer provides services that keep African countries running, however imperfectly.
Coulombe, who heads Dessau-Soprin's African operations, arrived at a Montreal trade conference last month to learn that Senegalese energy officials hadn't shown up for a scheduled meeting. Why? The West African country curtailed overseas travel after running across too many forged diplomatic passports.
Unruffled, the French Canadian executive chatted up officials from various development banks - and came away hopeful he can add to the $6.7m in yearly revenue his company generates designing mines, roads and power plants in Africa. For him, such setbacks and recoveries are normal.
"You have to accept some short-term hiccups if you're serious about Africa," says Coulombe, one of the Montreal conference's 900 attendees. "Africa's potential is immense, somewhere in the tens of billions of dollars when it comes to infrastructure."
For investors and business people willing to take risks, the statistics show Africa is a good place to do business. US companies earned 29% on African investments between 1990 and 1997, more than in any other region, United Nations figures show. Many parts of the continent have inadequate roads, bridges and water-supply networks, creating opportunities for engineering firms and builders.
Africa's gross domestic product will expand by 4.4% in 2000, according to International Monetary Fund forecasts. That compares with 4% for Latin America and 6% for Asia.
African nations are falling over themselves to sell state-owned companies to foreign investors. Algeria, Ghana, Morocco, Tunisia, Uganda and Zambia all sent high-ranking government officials to the Montreal conference to woo foreign investment and discuss state-asset sales.
Zambia's list of 'companies available for privatisation' includes Zamtel, the country's state-owned telecommunications company. The government is inviting bids for 20% of Zamtel, which had revenue of $60m in the year ended March 1999.
"I don't understand how Canadians can spend so much time trying to break into Asia when there are all these opportunities for the taking in Africa," says Robert Normand, vice-president for international development with Lambert Somec Incorporated, a Quebec-based construction company.
That's not to say investors are ignoring the continent's political instability.
A recent cover of The Economist magazine branded Africa 'the hopeless continent.' Five of the seven countries deemed by the World Bank to face 'unsustainable' debt are African: Burkina Faso, Ivory Coast, Mali, Mozambique and Uganda. Among the other concerns for investors are outdated investment laws. Zimbabwe, for example, requires mining companies to sell their output to the government rather than letting them market it themselves.
The strife in Zimbabwe has killed at least 26 people since February and led to an outflow of portfolio investment in neighbouring South Africa, the continent's largest economy. That helped push down South Africa's currency, the rand, as much as 15% a week ago to a record low of 7.2 per US dollar.
Elsewhere, Diamondworks, a Canadian mining company, had to suspend work for four months at an Angolan mine in November 1998 after five workers were killed in an assault on the site. Work resumed five months later, but was halted again due to higher-than-expected operating costs. Canadian trade with sub-Saharan Africa, which includes all nations south of Morocco, Algeria, Tunisia, Libya and Egypt, fell to C$1.8bn ($1.2 bn) last year from C$2.1bn in 1998. That pales in comparison with the $1bn that Canada racks up daily in two-way trade with the US, its largest trading partner.
Canada boosting trade
Nevertheless, Canadian officials say they're bent on boosting trade with Africa, and recently unveiled a new strategy to do so. Canadian companies invested $658m in Africa between 1993 and 1997, United Nations figures show. The US led the way, plowing $5.71bn into Africa in that period and accounting for a third of all investments in property and plants.
One bright spot for Africa is mining. Canada's Barrick Gold Corporation and Placer Dome Incorporated last year invested a total of $319m in Tanzanian and South African mines. Canadian companies own stakes in more than half of Africa's mining projects, according to a recent study by South Africa's Rand Merchant Bank.
"Canada has a good reputation in Africa, and that can work to its advantage," said Maggie Kigozi, executive director of the Uganda Investment Authority, who attended the Montreal event. "Unlike some of the European countries, Canada has no colonial past."
Not every Canadian investment in Africa has met with approval.
Talisman Energy's investment in a Sudan oil field sparked allegations revenue from the project was helping pay for a civil war in the country, prompting the US government to slap the company with sanctions in February. Canada has refused to punish Talisman for the investment.
For those with their eyes on Africa and its potential, Montreal provided a good jumping-off point. "Sooner or later, I'm sure these contacts are going to come in handy," said Dessau-Soprin's Coulombe.
Frederic Tomesco is a Bloomberg reporter
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