Downtown Africa
Beyond the major world powers seeking influence on the continent, Africa is high on the agenda of many countries, from Finland to Spain and Turkey. Each brings its own interests and expertise, be it in fighting insecurity in the Sahel, protecting the continent’s forests or setting up companies that boost employment and trade opportunities
The limelight may fall on France’s security investments in the Sahel, the Chinese companies building large infrastructure projects or the US energy giants spending billions on deep offshore oil projects.
But Africa’s partners are multiplying, and the figures are starting to add up. Turkey’s bilateral trade with Africa jumped from $5bn in 2003 to more than $23bn in 2018. Over the past decade, it adds up to almost $200bn.
European countries like Spain are increasingly engaged in markets beyond their traditional ‘backyard’, and not just to sell their wares. South Africa’s exports to Spain have almost tripled since the early years of the century, now averaging $1.2bn annually.
Madrid, with its ancient colonial possessions of Ceuta and Melilla on the North African coast, and its concerns about migration, plays a more traditional partner role. Spain quadrupled its aid budget to €673m ($798m) between 2015 and 2019. It will head up a training programme in Mali and is involved in European security missions in the Sahel.
But, increasingly, technology and investment have become the watchwords of African engagement with foreign partners. Morocco’s green energy landscape has been revolutionised by the arrival of Spanish companies specialising in concentrated solar power. The Noor solar power project in Ouarzazate is now the world’s largest next-generation concentrated solar power project, and Moroccan researchers and contractors are woven into the fabric of the project.
“Finland was known for its humanitarian engagement on the continent,” says Jaakko Kangasniemi, the CEO of Finland’s development finance agency Finnfund. “But for some years, African politicians have been saying: ‘Where are your businessmen?’ Delivering jobs is more important to these leaders now.”
And while Helsinki may seem some way from concerns at the equator, Arctic and African countries have a common interest in climate change. Finland’s strength in forestry management has convinced African partners that Finland is there for the long haul. “Our projects have a long time horizon,” says Kangasniemi. “Trees are the very definition of patient capital!”Africa InsightWake up to the essential with the Editor’s picks. Sign upAlso receive offers from The Africa ReportAlso receive offers from The Africa Report’s partners
Too many players?
Africa has become crowded recently, and nations are realising that nothing beats feet on the ground. As a result, embassies are mushrooming – Finland will open a new one in West Africa next year, Spain recently opened one in Chad bringing its total to 24 in Africa, while Turkey will soon have 44, with Togo and Guinea-Bissau.
Turkey has exemplified the ‘trade first’ approach of new partners, mostly avoiding interference in the internal affairs of African countries and pushing for UN solutions in the case of conflict. Turkey–Africa business forums are held in major capitals across the continent and Turkish energy and construction companies have become heavyweight players in bidding rounds.
But political objectives remain. The country was able to open a military base in Somalia, where it is training the Somali army. In Libya, observers struggle to separate Ankara’s support of the UN-backed regime from its goal of countering Egyptian influence.
The emergence of China as a major player led the West to worry about a new ‘scramble for Africa’. But so far the competition is putting pressure on each country to up its game. After complaints about the quality of Chinese construction projects in Africa, Spanish firm TYPSA is now overseeing the work done by Chinese contractors on an Angolan project.
Reyes Maroto, the Spanish Minister of Industry, Trade and Tourism has initiated the ‘Horizonte África’ strategy to support the presence of Spanish companies on the continent. She also advocates greater economic integration between Africa and Europe. The Africa Report spoke to her more on Spain’s growing interest across the continent.
The Africa Report: In July 2020, your ministry presented its new Horizonte África strategy. What is it about?
Reyes Maroto: It is a commercial and financial strategy designed to help our companies to develop in the African market. It also aims to strengthen the presence of Spain in general. Our country has a very special interest in Africa, for political, migration and security reasons, and positioning ourselves well on the continent is one of our major objectives in terms of commercial policy.
How is it different from Spain’s previous approaches?
Horizonte África is structured around two axes. The first, financial, proposes measures related to the FIEM [internationalisation fund] such as strengthening concessional financing in sectors of special interest. We have also introduced changes in the policy of the CESCE [export credit insurance corporation]. Finally, the COFIDES [development finance corporation] wants to strengthen its relations with other European bilateral companies and open an office in Casablanca as a base for its operations in sub-Saharan Africa.
The second axis is institutional and aims to increase the presence of our Spanish economic and trade advisers on the continent by organising regular missions and strengthening our capacities on the ground. We will streamline the network of Spanish economic and commercial offices abroad and will soon open a new one in Addis Ababa. Our strategy is ambitious, but our resources remain modest, so we are focusing on key countries and sectors.
How do you identify the countries and sectors of interest to Spain?
In selecting countries, we consulted some Spanish companies and the economic and commercial offices in Africa to evaluate the prospects of the different markets. At the same time, we identified a series of sectors specific to each country, such as energy, water and sanitation infrastructure in Côte d’Ivoire, waste management in Senegal, agribusiness in Algeria, rail transport and electricity generation and distribution in Kenya, Rwanda, Tanzania and Uganda. In Morocco, we focus on renewable energy and the water sector.
What is Morocco’s role in Spain’s strategy?
Morocco is a market of great importance due to its geographical position. It’s our top trading partner in Africa, our eighth-largest customer in the world and it received 45.6% of all Spanish exports to Africa in 2019. The kingdom is also Spain’s 11th supplier worldwide and the leading destination for Spanish investments in Africa. For all these reasons, it is at the core of the Horizonte África strategy. It will further strengthen its role as the Spanish hub on the African continent in the next few years.
Has Covid-19 changed Spain’s priorities in terms of trade with Africa?
The pandemic has had an undeniable negative effect on the global economy, and African countries have been no exception. But the IMF announced in October that none of the sub-Saharan African countries selected in our strategy will experience negative GDP growth in 2020.
So we remain convinced that the medium-term prospects for African countries will be excellent. Our priorities on the continent will not change.
Many countries are now interested in the African continent. What can Spain bring to Africa compared to its European and Asian competitors?
Spain has a privileged relationship with the African continent, which is a vital market for our companies. They are behind major projects such as the Gabel el-Asfar wastewater treatment plant in Egypt – the largest in Africa. Spanish products have become references in some African countries where we can provide added value and know-how.
How do Spanish investors see Africa today and how do you support them in the region?
They see Africa as a continent rich with opportunities. We have two types of tools to support them institutionally. First, bilateral treaties containing measures and clauses to protect private investment. We are in full negotiations with Kenya and Côte d’Ivoire.
Second, we have financial tools such as the Corporate Internationalisation Fund (FIEM) and Compañia Española de Financiación del Desarrollo (COFIDES). In fact, within the Horizonte África strategy, it is planned that the latter will play an active role by investing funds in Spanish companies with operations on the continent.
What do you think of the establishment of the African Continental Free Trade Area (AfCFTA) and what are the trade implications for Spain?
We are convinced that this initiative will have a very positive impact on the prosperity of African countries and contribute to their dynamism. This is therefore excellent news for Spain.
READ MORE Wamkele Mene: ‘AfCFTA is going to be difficult but we’ve got to do it’
But we must not forget that the effective elimination of trade barriers is always a difficult and complex task, especially if the number of countries is substantial. For this reason, we would like to reaffirm our support and confidence in the authorities responsible for this matter.
You represent the Spanish government in the European Commission to strengthen trade relations with Africa. What does this mean?
All EU member states are obliged to improve their trade relations with the African continent. Recently, we have started talks for the establishment of Deep and Comprehensive Free Trade Area (DCFTAs) with Morocco and Tunisia.
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Regarding sub-Saharan Africa, with the expir[ation] of the Cotonou Agreement in 2020, negotiations are underway for a new partnership between the EU and the African, Caribbean and Pacific (ACP) group of countries.
