Want big projects? Join hands, African firms told

African companies seeking to play a bigger role in developing the continent will need cross-border consolidation and deep pockets to compete against global players.

McKinsey Partner Acha Leke said African companies should form multinationals with a robust balance sheet and growth management strategies to demonstrate their capacity to handle big government projects.

African companies have been relying on foreign multinationals, mainly Chinese, who are able to mobilise funds for the projects through China’s Export and Import (Exim) Bank.

There are about 400 Chinese companies in Kenya with the largest number in manufacturing, according to a World Bank research.
Chinese involvement in roads and railways construction is also significant but these are classified under projects that “will come and go” rather than foreign direct investment (FDI).

Mr Gabriel Malan, group managing director of Unlimited Group (Pty) Ltd and the chair of Young Presidents’ Organization’s (YPO) Africa Region who was in Kenya last week said African companies have come of age and should be allowed to play a bigger role.

“Many companies have the capacity to deliver big projects. Capital is not a problem, what we need are bankable projects and packaging them to attract capital,” he told Smart Company.

Mr Malan said organisations like YPO offers networking opportunities that can spur cross-border consolidation to manage the huge projects.

Elite club

The elite member club founded in 1950 in New York City by a young president named Ray Hickok today unites 22,000 business leaders in more than 125 countries globally. It has 719 members in Africa.

Africa has 21 chapters in 20 countries with the CEOs controlling a combined turnover of Sh4.3 trillion ($43 billion) which is almost equivalent to the Gross Domestic Product (GP) of Tunisia, the 12th largest economy on the continent.

The Nairobi Chapter founded in 1993 as Young Executives Limited and incorporated in October 1995 has become one of the most active chapters with about 100 members.

Mr Malan said with such networks, Africa can build more resilient CEOs adaptable to the continent and able to conduct substantial business with governments.

“African companies have come of age and with more movement of human capital and removal of trade barriers and protectionist tariffs there is a lot of opportunity in the continent,” he said.

During the Africa CEO forum, Ivory Coast President Alassane Ouattara said the private sector should take up more government projects.
“You should fund two-thirds of the national development projects in 2016/17. Come up with concrete proposals for alliances for structural projects,” he said.

The World Bank’s International Finance Corporation, whose funding for projects have grown from $200 million to $5 billion in the past 20 years, say they are willing to finance African companies.

Africa Development Bank (AfDB) who have provided $9 billion for projects with $2 billion going into private sector projects, said they are willing to do more to drive growth from within with African companies leading the way.