For Cheikh Faye, head of investments at Questar Holding and evangelist of investing in Africa, through the economic drought, growth can only come from within.
Sub-Saharan Africa is a fast-changing region. Merely 60 years ago, western powers were officially reassigning their colonized lands to their rightful owners, sometimes leaving only crumbs of development behind them. Since then, Africa has been struggling to make ends meet, fighting both internal and external forces to build its own sovereignty. But step-by-step, cotton becomes loincloth, as goes the old African saying.
The last wave of SS Africa’s development came with the commodities’ supercycle that spanned from 2001 to early 2010. In 10 years, GDP tripled, population doubled, life expectancy grew, all indicators pinned up progress during the economic boom. However, with China’s slow-down, SS Africa is feeling the withdrawal, and a clear state of economic dependency to external power blocks betrays Africa’s growth and stability.
We’re at the dawn of a new cycle, based on new parameters. Development is not over, but diversification and economic sustainability will now prevail, because Africa depends on it. The region has no one else to turn to but itself.
Cheikh Faye, head of investments at Questar Holding – born in Africa, bred in the USA – is a fierce evangelist of investing in Africa. His vision? With the economic drought, growth can only come from within: Banking and financial institutions, infrastructures, power supply, food and retail, those are the fields to watch closely as the continent moves forward.
Afrikonomics : Africa looks like a sinking boat right now, how can you stay optimistic ?
Cheikh Faye: I think the sinking boat narrative is a bit pessimistic. There are issues for sure. With the end of the commodities supercycle, it’s time for Africa and its leaders to take a step back and look at the new fundamentals: despite high debts and low currencies, a good deal of progress has been achieved. Following the demographic boom, rural influx is creating booming cities, construction projects are everywhere, retail is strategically following the lead, banks are full of cash, and global corporations making revenues domestically and abroad are barely feeling the depression’s whiff.
Foreign investments are still pouring in. There was a time when large corporations from the so-called developed world came to Africa in small numbers. Now they are aggressively pursuing Africa-focused strategies. Major private equity funds have raised significant capital for African funds. These are indeed reasons to be sanguine about the future.
The five key items in my mind are: currency risk, fiscal regime, rule of law, infrastructure and political stability.
Afrikonomics : For foreign investors, what are the key indicators to follow for sustainable investment in Sub-Saharan Africa ?
Cheikh Faye: Data until very recently was quite elusive. However, things are changing for the better. But one needs to analyze countries and their true potential. For example, countries like Angola and Zambia are suffering today because of their lack of diversified economies, and the latest downturn is proving challenging to them. Countries such as Senegal, Morocco, Ethiopia, have built more diversified economies, thus weathering reasonably well the storm.
While levels of foreign investments may have diminished, new players will have to get their goals right. The five key items in my mind are: currency risk, fiscal regime, rule of law, infrastructure and political stability.
Afrikonomics : How will the China-Africa relationship evolve ?
Cheikh Faye: China’s relationship with Africa has already evolved from what it was a decade ago. Back then, there was a strong desire to establish influence, trade and alliances at almost any cost. Today, the relationship is one where China picks very specific countries and sectors to play in. The days of the never-ending Chinese check book are definitely over. China will pursue its own interest aggressively to be sure. With its growth now significantly lower, there will be a new model for Sino-African relationships. The flip side is Africa needs to diversify partners and vectors.
One billion people are all aiming for development, information, health, education, etc…
Afrikonomics : Can you draw a portrait of the new Africa ?
Cheikh Faye: In my opinion, it is a perilous exercise to draw a portrait of the new Africa. It changes at such a rapid pace that one cannot capture its full portrait. What is certain:
1. One billion people are all aiming for development, information, health, education, etc…
2. The new generation of Africans, thanks to connectivity, sees the world from a different angle. They are keen to have plasma TVs, travel, download content online, and the list goes on. The internet is also creating a huge source of inspiration in terms of replicating successful political and societal models. The new Africa has dynamic range.
Afrikonomics : Where does Africa need to start to achieve this vision ?
Cheikh Faye: Vision, strategy and execution are key. The continent has such a huge potential. With the right ingredients, it will do well.