Investisseurs & Partenaire pour le Développement (I&P), one of Africa’s leading private equity investor, is seeking responsible partners for a mutually-beneficial marriage. This was exactly how I&P’s Chief Executive Jean-Michel Severino put the company’s quest on the African continent. Mr. Severino made this request when the B & FT sat with the former Inspector of Finances for the French Ministry of Finance and Economy in the new office of I&P in Ghana. Mr. Severino was on visit to the country to open the new office as well as to celebrate the company’s second investment in Ghana.
The former World Bank Vice-President for Asia, an affable individual with a great sense of humour, was obviously excited to be in the country. He stated that Ghana was not only a great place to do business, but it was also a great place to be. He explained that he felt at home in the country because this visit was his second to the country.
Within the first few minutes of the interview, one thing became evident—the man’s passion for Africa. The former CEO of French Development Agency, Agence Française de Développement (AFD), explained that from the very beginning, I&P was very clear on the positive impact it wanted to make on the African continent. The CEO intimated that I&P was not started on a purely profit motive.
He said, “It started not because we just wanted to earn money but our founder Patrice Hoppenot wanted to make a contribution and to help entrepreneurs succeed. He didn’t make any business plans or investment surveys. He started with his own money investing in start-ups and SMEs. It happened that those businesses became profitable.”
A stated goal of I & P, clearly inscribed on the organisation’s website, is “to support a new generation of responsible African entrepreneurs.” Mr. Severino further explains who a responsible entrepreneur is: “African entrepreneurs who cared for their staff, cared for the environment, who will pay their taxes to their government and abide by the laws of the country.”
But how easy is it to come by these “responsible” entrepreneurs? Mr. Severino exclaims, “The good news is that we find many.” He attributes this to the fact that many things have changed on the continent over the past decade—one of these being the emergence of a new generation of entrepreneurs. Some of these entrepreneurs have returned to the continent from Europe and the United States. Many of these individuals who have had their studies abroad are now, more than ever, willing to return to contribute their quota to the development of the continent. According to the former World Bank Vice President, these new breed of entrepreneurs understand that “they cannot be successful in the long run if their community is not successful as well.”
It is understandable for foreign businesses to want to invest in Africa but I&P’s enthusiasm about Africa’s future is quite overwhelming. Over the past 13 years, I&P has invested about 70 million Euros in close to 60 businesses in Africa across sectors as varied as agribusiness, construction, microfinance, pharmaceuticals and services. What accounts for this positive feeling about Africa?
In explaining why I&P felt so positive about Africa’s prospects, Mr. Severino listed three things which were going to account for the new Africa. The first is the demographic transition whereby there will be more active Africans in the next decades with more adults and fewer aged. The second reason he added was that since the continent’s density was increasing by the year, infrastructure would become more and more profitable annually. The third and final reason was that cities in Africa are growing between 8% and 10% a year and cities are the place where productivity has always increased and wealth has taken rooted.
According the former World Bank Vice-President, Africa has two very important lessons to take from the Asian experience—the macroeconomic management and the competitiveness policies that have been pursued in Asia. He however added that there is also a very big difference, especially between Eastern Asia and Africa. He explained that Eastern Asia has based its economic development on export towards Organisation for Economic Co-operation and Development (OECD) countries. However, according to Mr. Severino, “The wheel of history has now turned. OECD countries are not anymore the place where you can really target in order to get your fast growth.”
It has been said that one of the drawbacks of Africa’s development is leadership. However, this is what Mr. Severino had to say about Africa and its leadership. “Leadership is very important and it is clear that in the past decade, countries that have had a strong and stable leadership have had an edge. But it is not enough. In some cases, even without strong leadership you can do a lot.”
The former board member of the European Investment Bank is of the firm belief that entrepreneurs who take the responsibility to invest in their own countries can do a tremendous lot to change and improve the economic situations in their countries. He admitted that leadership was important but in a democratic country, it is more important that everybody takes the initiative to make a change in their own conditions. He added, “In this democratic world, you cannot count on a “strong man” but more on strong institutions.”
For the past 3 years, I&P’s portfolio in the country stands at just 2 investee companies. The first is Voltacars Rentals Services (VRS), a long-term rental service company founded in 2003. VRS presently has a fleet of 120 vehicles. The latest investee company for I&P is Eden Tree Ltd, an independent provider of fresh fruits, vegetables and herbs in Ghana with more than 375 out-growers across the country.
There is a good reason why only two companies have qualified for I&P partnership within the first three years of the company’s operations in the country. Says Mr. Severino: “It takes, in all, more than one year from the first meeting to the investment decision. It is not one year of processes and procedures. It is a one year during which we get to know each other and we build the trust which is at the core of what we all do because we are going to remain married for five or six years. We are ready to trust each other to face all the problems that we are going to face.”
With 11 investments in microfinance in their portfolio across Africa, I&P has no problems with investing in the risky area of micro-financing in Ghana. According to Mr. Severino, there are three criteria that are applied to all SMEs and those are the same criteria that would apply to microfinance companies in this country. The first is the quality of the entrepreneur; second, the quality of the entrepreneur and third, the quality of the entrepreneur. In other words, one of the main criteria for becoming an I&P partner will be the integrity of the individual at the heart of the venture.
Mr. Severino stated that over the past decades, success on the continent was achieved by going into politics or the civil service to obtain power. He projected that in the 21st century, it will be those who dare to invest in entrepreneurship and take risks that are going to be rewarded by the incredible boom that is going to be around for many decades. He added that businesses that will succeed in this century will be those that will stand on two legs—a financial responsibility leg and social responsibility leg. Africa’s trudge up the road to economic emancipation must therefore be done on those two legs.
(Interview and story done by J. N. Halm; Business Columnist and Author of CUSTOMER ROMANCE)