Éric T. Mboma is an investment banker and chairman of the board of directors of Choiseul Africa Capital.

You were Managing Director of Standard Bank in the Democratic Republic of Congo. Why did Standard Bank choose this particular Central African country? In general, what is its implementation strategy in Africa?

The vision of the Standard Group has been particularly rooted in an African perspective for the past decade. Standard Bank wants to be African and recognizes itself in this way by positioning itself as a partner of its growth. The group is effectively and directly active in nearly 23 countries on the continent. These are jurisdictions representing economies that are often themselves in different but really dynamic phases. It is in these countries that the group gradually intensifies its successful positioning. 

Its deployment on the rest of the continent can be seen from two angles: that of the method used and that of the privileged professions. Indeed, the group is making progress both through external growth with successive acquisitions and through sound organic expansion. To do so, the bank draws on more than 155 years of experience in Africa and selected markets in emerging countries. The Group uses its mastery of the noble business of investment banking, strategically deploying its ability to raise significant financing (debt or equity) in its new destinations, before operating the retail banking component of its offer.

The Standard Bank Group is now the leading banking institution on the continent in terms of balance sheet size and net banking income. The official end of apartheid in 1994, with Nelson Mandela's election as President of the Republic of South Africa, signalled the end of a certain reserve and historical conservatism that South African financiers and industrialists used to observe towards the rest of the continent.  For a long time, they had been confined within the borders of the countries of the famous "front line". For nearly two decades, while President Thabo Mbeki's "African Renaissance" concept has been the backbone of relations between their country and the rest of the continent, South African businessmen have begun their long and slow "Trek" to the north of the continent.

But political changes have enabled all the companies concerned to see the rest of the continent as a market to be conquered. This momentum was reinforced a few years later when the BRIC concept became known as BRICS, including South Africa, albeit with some inconvenience. While this country alone represents a market that is more developed and wealthier than the rest of the continent, home-based leadership has long been the only requirement for local South African companies to dominate the rest of the continent. The recalculation of Nigerian GNP (the latter is now higher than South Africa's) no longer allows so much self-confidence for the rainbow nation.

And the 2050 horizon holds promise for African economies. The place that the African continent will occupy in 30 years' time is that of a continent likely to benefit from the demographic dividend, with a population of 2 billion inhabitants, half of whom will be in their prime youth. In concrete terms, the continent has three decades at its disposal to feed, educate and house 1 billion of its citizens, the majority of whom are attracted by the city's lights, with the rural exodus.

Under the influence of multiple factors (the skyrocketing demographics, the near absence of a international standard health care system in most African countries, etc.), Africa is somehow moving, Africa is growing steadily and showing unprecedented performances. The Standard Bank Group has fully understood this and is now integrating this reality into its strategy.

How would you describe the current state of the business environment in the DRC and in the states of the sub-region?

DR Congo is one of the countries belonging to the so-called "pre-transition" economies segment, such as Ethiopia, Mali and Sierra Leone. These are countries emerging from periods of conflict and whose per capita GNP is only 10% of that of African countries with diversified economies. In this respect, while benefiting from particularly remarkable growth rates during the first decade of the century, the DRC is marked by the need to better enforce its fundamentals (governance, the judicial system, access to capital and lower costs for local businesses). The various economic and political actors must work closely together to create this environment conducive to wealth creation. 

To unlock the extraordinary opportunity it represents, the DRC must be fully aware of its assets (60% of the world's cobalt reserves, among others) and improve its country branding: this country has nearly 2.5 million km² of arable land (which is equivalent to the distance between Paris and Warsaw). With this one resource alone, food self-sufficiency should not be a problem. But it is a country of contradictions, where the potential for economic activity remains unexploited: the formal economy focuses only on mining (cobalt, diamonds, gold), banking (on a more marginal scale) and telecommunications, while much of the economy remains informal and escapes the traditional international grids of interpretation. This reminds me of the famous "Dutch evil", if we consider the disproportionate importance of investment in the mining industry or natural resources in general (and I won’t even mention the implications for monetary policy or inflation control).

Some countries in the subregion are making better use of their potential: Zambia, Angola and Rwanda are among the nine immediate neighbours of the DRC, but there are clear differences in economic performance and attractiveness, as a more robust development rationale has been implemented in their economies by a modern and efficient administration. They see an increasingly unbridled private sector flourishing.

Overall, the continent's progress in terms of attractiveness is still not spectacular, with the exception of a few champions such as Botswana, Mauritius and Rwanda. These countries are now accustoming us to progress that competes with that of the countries of South-East Asia, as they show unequalled progress margins.

Nevertheless, it must be acknowledged that the other African countries are increasingly showing a real awareness of the challenges that hamper their march towards a collective well-being. The annual Doing business report of the International Finance Corporation (IFC) attempts to accurately measure this progress (although the report regularly raises objections as to its methodological objectivity). Similarly, the Lions on the move report shows that there are some growth nests here and there that bring overall growth to attractive levels, but that individual performance (by country) must be sought in order to make the most of the continent's potential.

In short, and my recommendation can be summarised as follows: "Africa can do better".

In 2017, economic growth in Central and Southern Africa slowed down, while East Africa maintained its vitality. What do you think are the causes of these regional disparities in economic dynamism?

Africa is a continent with 54 countries, each with its own specificities and peculiarities. Therefore, it would be presumptuous to draw hasty conclusions that would apply uniformly to all, despite singular trajectories. However, it can be seen that these contrasts are captured in three different reading grids.

1. Level of industrialization and diversification: The countries of the East Africa sub-region are characterized by a more advanced level of economic diversification than most countries in the other two geographical areas. The commodity boom has been the main driver of commodity growth, resulting in spikes in growth similar to China's double-digit performance in its best days. This last aspect is particularly important and reflective of the perilous performance of the countries that have based their activity solely on the demand of the countries consuming their natural resources (category that often boils down to a small handful of raw materials). While the growing demand for some minerals, including cobalt, is exploding, many countries exporting these minerals have not taken the decisions that would lead to accelerated diversification and protect the local economy. In other words, their economic policy choices are often a copy-paste of their options they had back in the 1970s.
   
   
2. In general, the quality of governance in Central African countries is poor, when compared to that of Southern and especially East African countries. In those countries where the role of the state seems to be better understood, reforms are better integrated and appropriate measures are properly designed and implemented. Although, of course, there are disparities depending on how one appreciates particular cases, we can generally argue that governance is still inadequate. In addition, this observation could be extended to elements to which institutional investors are particularly sensitive, including the quality of judicial systems (rapidity and integrity) and the fight against corruption and terrorism. Here again, reality and perception describe a Central Africa whose performance is still too weak and insufficient to convince: the project remains open, even if progress is to be noted, such as the establishment of OHADA (Organization for the Harmonization of Business Law in Africa).

There is also another factor, which has never been the subject of scientific studies: one might think that Anglophone Africans are more pragmatic in the conduct of business than Francophones, which would explain, in part, the disparities in the economic performance of these countries. There is indeed a true Anglophone capitalism that is developing in East Africa on the one hand, with Kenya, and in West Africa on the other hand, in Nigeria.

Finally, we must not forget to analyse the economic dynamism through the prism of new "South-South" interactions with Asian and Latin American countries.

Is Africa's economic dynamism enough to reassure banks and strengthen the continent's financial attractiveness?

Again, the narration that can be affixed to African economies is very contrasting. Broadly speaking, Anglophone countries attract more interest from banks than do Francophone countries. It should be noted that the banks that are most systematically established there are mostly Anglo-Saxon banks. Let us not forget the South-South interest of banks from Asia. Moreover, the absence of firm governance leads Mafia networks to consider African jurisdictions as ideally positioned in the money laundering process.

On the other hand, European players such as France, which have a historical presence in Africa and benefit from considerable expertise, are not positioning themselves sufficiently on the crucial economic stakes of the continent, which I was able to note during a meeting at the Choiseul Institute with African economic leaders.While French banks are still present in countries that have historically been at the heart of their continental approach, banks are essentially conservative organizations that are reluctant to engage in excessive risk-taking. This characteristic remains. Nevertheless, banks are learning, like telecommunications companies in particular, to adapt their distribution model and product specifications to reach African consumers (Orange has been adapting its strategy in this direction for a decade or so).

In your opinion, what is the role of local banks in economic development? Do they stimulate more development than foreign banks?

In view of the challenges and means required to ensure the transition of all African countries from the category of LDCs to the more prestigious and promising category of emerging countries, local banks alone will not be able to guarantee such a transition. However, they have valuable assets to play a decisive role in more than one respect. The local banks have two success factors because of their privileged positions on the continent. 

1. Their assessment of country risk is supposed to be closer to reality and gives them the means of greater flexibility in an environment where transparency is, in many respects, a fluctuating concept.
2. Smaller than their international counterparts, local banks are more flexible and likely to grow at the borders of countries and even in urban peripheries. Like telecom companies, local banks develop a marketing and business development approach that is in line with market expectations.  

What is the impact of security and governance on the state of affairs in Central Africa?

This parameter cuts several points of growth each year from the countries concerned, with Francophone African states being the most fragile in my view. Security and good governance are the two main problems hindering economic growth and human development in Africa. Investors, such as banks, are cautious: the slightest perception of risk provokes their immediate withdrawal. This is why capital investments are heavily directed towards South-East Asian countries, and the few African countries that are good performers in stable governance and security, such as Mauritius, South Africa, Botswana or, soon, Ghana.

These same investments skip most countries in sub-Saharan Africa because, despite the many strengths of these countries, they still have basic structural problems: building infrastructure, ensuring energy supply, critical issues that should no longer be faced in the 21st century.

Let me take the example of electric vehicles: many Western countries have embarked on a sustainable approach by replacing fossil fuel vehicles with electric vehicles. Entire vehicle fleets will be replaced or adapted in the coming decades. This would be a huge opportunity for African countries such as DR Congo, which has more than 60% of the world's cobalt reserves (an essential component of batteries for electric cars), if it could position itself as a central player in the global value chain, not just a supplier of cheap raw materials.

But this requires a strategic approach, a long-term approach. Yet, with a few exceptions, African leaders are still bogged down in short and medium-term approaches. What we need is to give a real political impetus to development, an investment policy like the Marshall Plan. This is not the role of the banks, but that of the State, which has a responsibility to develop better governance. I wrote an article in the South China Morning Post explaining that Africa has basic infrastructure needs, and when I think about it, governance itself is a form of infrastructure.

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