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Interview by Alfred MIGNOT, AfricaPresse.Paris (AP.P)
@alfredmignot | @PresseAfrica
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The Ambition Africa 2020 event, expected in November, has been postponed for health reasons, but you had to participate in the round table dedicated to access to finance for African SMEs. What message would you have sent to African entrepreneurs ?
Pedro Novo – First of all, an observation: if today we have been able to build a financing architecture which is reinforced, which is simplified, which is organized better and better, for the address of the major African contractors – industrialists or states for their investments – there remains a border that we have not yet crossed.
This border is co-construction, co-investment, co-development between African and French entrepreneurs.
It is therefore our next horizon to be exceeded, one of our major challenges for the next five years: to succeed in bringing together around common projects more entrepreneurs from Africa and France, from sectors as diverse as the French Touch, French Tech, French Fab, French Healthcare (the health sector)…
What do you mean by French Fab ?
Pedro Novo – It is the standard of French industry, of all industry ! Transport, water, energy, agrifood, processing … So much French know-how of excellence in line with the needs or projects which, from North Africa to Africa of the South, would allow us to strengthen more links between the French and African entrepreneurial ecosystems.
One of the tools that would allow us to achieve this would be to make available the financial resources that would put these African SMEs within the reach of our companies’ balance sheets. And reciprocally, which would put within the reach of African SMEs the services of our SMEs, the tools and products that can sell companies anchored in our territories.
How do you see this synergy of the African and French entrepreneurial ecosystems? ?
Pedro Novo – The desire for a common destiny is strong, we must bring together the conditions and the means for it to be realized. Being able to connect is already great, but it is not enough. Financial fuel is also needed to allow African and French companies to project themselves into significant investment ambitions. It is our ambition to Bpifrance.
As we have done for large accounts or States, there is a work of harmonization and organization to be accomplished between the French actors of the financing of French companies in Africa, and of the financing of African companies in their development on the continent.
To move forward in this direction, we are deploying an engineering quite within the reach of the French entrepreneurial culture… First, to bring together entrepreneurs from both continents around common projects and the priorities of African entrepreneurs. This ability to cooperate can be seen in particular in Francophone West Africa, which is culturally closer, but also in East and Central Africa.
In fact, whatever the territory, there are many opportunities for French know-how to Africanize there. Our French entrepreneurs know how to do it, probably better than other competitors in the world. The ability to become a local player, the ability to co-invest in common projects, to combine financial resources, to adopt flexible governance involving the authorities, by increasing the skills of a management that is also local … It is a know-how. do and an agility, an execution capacity which is specific to our French companies and their managers. Certainly others know how to do it, but we do it very well !
With what financial mechanisms are you supporting this strategy ?
Pedro Novo – It is indeed important to have the means to keep the promise. We have several financial tools to allow French companies to project themselves and succeed on the continent.
Let us quote first export credit, which is international financing often reserved for very large amounts, but which we have adapted to smaller amounts. With the export credit and its two formulas that are the buyer credit where the repurchase of supplier credit, we make possible a loan to an African company which would like to invest, to develop by associating itself with French entrepreneurs or by equipping itself with French suppliers.
Bpifrance does not normally intervene in transactions of less than one million euros, but if there is a recurrence of financing with a buyer, we will study the feasibility of transactions of lower amounts.
That being said, our cooperation with local banks makes it possible to provide solutions for smaller amounts, despite everything at scale, since, depending on the banks, entrance tickets vary from 500 K € to 1 million euros.
Thus, with companies on the continent, we have more and more financing opportunities that make it possible to make them accessible to French industry: buy a production line, as was the case in Tanzania with an industrialist from France. ‘agrifood ; buy transport equipment, as has been the case with construction companies in Mali, Burkina Faso or Senegal. And this is possible with French suppliers in part, but also Moroccan, Tunisian, and even local suppliers who include the French offer in their commercial offer.
Our footprint is also strong and historic, as you know, on Africa’s investment infrastructure. We have deployed there alongside Proparco for 17 years nearly 1.2 Md€ in some twenty private equity funds and more than 150 companies in 40 countries. We thus have financial tools of equity – in particular with the recent launch of our last fund of funds Averroes Africa, of which a third of the 150 million euros of the final closing is intended for our direct investments on the continent.
In 2017, the skills of Coface on the allocation of public guarantees for the international action of companies were transferred to Bpifrance. What stage can we make of it today ?
Pedro Novo – We have never taken out as much export prospecting insurance as since 2017 ! The promise of the transfer was precisely to take advantage of the French network of Bpifrance which, by capillarity, affects more than 80,000 entrepreneurs per year, to take advantage of this network to irrigate through it the tools of public guarantees, including the iconic product, the ‘Prospecting insurance.
Thanks to the French originality of Prospecting Insurance, the African continent and international issues are even more within the reach of our entrepreneurs. On average, we validate some 1,500 prospecting insurances each year and the export recovery plan gives us three years of visibility for a budget available for companies of 1 million.d€. It’s historic !
You said “ French originality » ?
Pedro Novo – Oui, Prospecting insurance does not exist anywhere else, just like the VIE (international corporate volunteering).
It is therefore a good chance for our companies to be able to project themselves while taking a minimum risk, and to have it done now, because in six months to a year, it will be too late to position themselves well in the competition of post recovery. -Covid. It is now that they must begin to build turnover for the next ten years of international growth, especially in Africa. The recovery will be strong and rapid for a majority of economic sectors. We have to be ahead and be ready.
Can we consider that French companies now have all the necessary tools to export to Africa? ?
Pedro Novo – When it comes to financing foreign trade and therefore exports, we have many tools. These tools complement the systems well established by Proparco, reciprocal interventions are perfectly articulated, like everything we do with AFD Group. It is up to us to make them more visible, simpler, more digital, faster in execution and in particular on international financing matters.
Because in the panoply that I mentioned, there are two – and this was my first comment – which directly concern African companies: the buyback of supplier credit and buyer credit.
In these two cases, the borrower is the African SME, it uses these export financing mechanisms, which therefore allow, through a loan from Bpifrance, to secure a commercial contract between a French SME and an African SME.
This financing solution will certainly not revolutionize everything, but it will provide an African SME with the possibility of accessing credit under competitive conditions and with extremely attractive medium-long term maturities, between 5 and 7 years. For example, it opens the possibility for an African company to acquire an industrial production chain, financed at rates equivalent to access rates in Europe and modulated by a public guarantee, a credit insurance that we manage on behalf of the company. ‘French State in a dedicated subsidiary Bpifrance Assurance Export, and this under the transfer of public guarantees from Coface to Bpifrance.
This is a very promising approach, and it is up to us to make this system even more accessible to African SMEs who would like to work with French companies. It’s our commitment, the next frontier we want to cross
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