Master’s Degree
in Global Development
and Entrepreneurship
Final Thesis
Business opportunities in the
Sub-Saharan African market
The Group ETC case
Supervisor
Prof. Armando Sozzi
Graduand Andrea Battistel Matricolation number 851395 Academic Year 2018 / 2019
Index
1 Introduction: African region overview………3
1.1 Global analysis……….4
1.2 African region analysis………..8
1.2.1 Recent past and actual trend………..9
1.2.2 Future trend……….10 1.2.3 North Africa……….……….12 1.2.4 East Africa………….……….13 1.2.5 West Africa………….………..14 1.2.6 Central Africa………….……….14 1.2.7 South Africa………….………..……….14 1.2.8 Country-level analysis………..……….16
1.2.9 The drivers of economic growth………...17
1.2.10 Macroeconomic stability………..…………18
1.3 Sub-Saharan Africa analysis………..……….21
1.4 Should we invest in (Sub-Saharan) Africa?………..23
1.4.1 Africa’s threats and risks………..…………..23
1.4.2 Africa as untapped business potential………..25
2 Actual framework………..31
2.1 Italy and Africa……….31
2.1.1 Italian import-export situation………...32
2.1.2 Italian export………...34
2.1.3 Italian import………..37
2.1.4 Italy-Africa axes……….40
2.1.5 North and Sub-Saharan Africa……….41
2.1.6 Italy and North Africa………42
2.1.7 Italy and Sub-Saharan Africa……….43
2.2 Italian players in Africa………46
2.3 African needs………49
3 Africa economic attractiveness rank………..61
3.1 Economic performance………..64
3.2 Socio-economic context………71
3.3 Business climate……….77
3.4 Banking system………...83
3.5 Average country risk indicator………..84
3.6 Final rank……….86
4 The group ETC………...94
4.1 Group introduction………..94
4.2 The story………..95
4.3 The mission……….96
4.4 Group structure………..97
4.5 Group Business Model………...97
4.6 Strategic partnership……….112
4.7 Group highlights………..115
4.8 Reference countries………..119
5 ‘Rebar’ project and ETC Business Model evolution………..123
5.1 ‘Rebar’ case……….123
5.1.1 Document collection………..123
5.1.2 Financial analysis………...124
5.2 ETC support for ‘Rebar’ project……….141
5.3 ‘Rebar’ company nowadays……….144
1 Introduction: African region overview
This master thesis is based on a few questions: it is wondered if the African region, and especially the Sub-Saharan one, is a profitable market, what are the business opportunities, and how to deal with this market, through a concrete case.
A general overview of the continent is presented, according to macro-economic, geopolitical and social factors, focusing also on market frameworks and future trends of the region.
In a second step, the focus moves towards the actual business and commercial situation between Italy and the African continent: Italian import and export linked to African region and Italian relationships with the African continent have been analyzed, giving a snapshot of the actual Italia-Africa axes.
Thirdly, countries belonging to this area have been analyzed and ranked, discovering the most economically attractive ones. Countries have been analyzed through some key indicators, trying to collect the most important macroeconomic, socio-cultural, political and financial aspects.
Finally, the second part of the dissertation analyzes ‘how’ to approach this market through the case of an Italian specialized financial institution playing in this field: the group ETC. The story of its ‘entrepreneurship and finance’ business case is briefly presented, in which the entrepreneurial vision of the founders is carried out today with a larger institutional mission: to develop new profitable industrial projects in Africa, in order to build a virtual bridge to connect Europe and the African continent.
A practical business case of support, managed by the group ETC, is analyzed through the analysis of a real business plan and the ‘after-sales’ monitoring of the interested company. ETC’s business model is presented and questioned if it is sustainable, profitable and replicable in the future also for other business cases.
1.1 Global analysis
“Global growth has continued to moderate, amid soft trade and manufacturing activity, reflecting slowdowns in advanced economies as well as emerging markets and developing economies”1 (image 1.1).
This is the opening of the ‘annual analysis of issues shaping Africa’s economic future’ - as it is written in his report header - guided by the World Bank Group, called Africa’s Pulse (April 2019, Volume 19).
Image 1.1 Global growth trend (Source: World Bank)
As we can notice from the graph, the world global growth is slowly decelerating, after a little upward movement in 2017.
Focusing firstly on ‘advanced economies’2, World Bank on his Africa’s Pulse report
underlines how “growth in the United States has been robust, bolstered by procyclical
1 World Bank Group (April 2019), Africa’s Pulse, page 5
fiscal stimulus and accommodative monetary policy”3. Despite this, for the first quarter
of the year 2019, exports are predicted to restrict the predicted growth.
On the other hand, forecasts in the euro area show that the actual decelerating pace will occur for another few years. World Bank Group stated that inside the Euro area the “industrial production has contracted to its lowest level since 2012”4, with weaknesses
also in Germany and France (to mention two solid European economies).
On the other hand, focusing on ‘Emerging Markets and Developing Economies’ (EMDEs), the World Bank Group affirms that also in China the economic trend is not so florid with the industrial activity that is slowing in respect to the previous years.
To conclude, also “major EMDEs - including Brazil, India, Mexico, and the Russian Federation - slowed significantly in the last quarter of 2018, pointing to slowing momentum into 2019”5.
Image 1.2 Global industrial production and goods trade trend (Source: World Bank)
3 World Bank Group (April 2019), Africa’s Pulse, page 5 4 World Bank Group (April 2019), Africa’s Pulse, page 5 5 World Bank Group (April 2019), Africa’s Pulse, page 5
From a global perspective, in 2018 goods trade and industrial production (as notable in the image 1.2) followed a similar pace, declining sharply at the end of the year.
Policy restrictions and increasing fiscal policies adopted by some relevant nations (ex. the USA) are leading to commercial wars and trade restrictions, creating a climate of policy uncertainty. If at a local scale these measures could have generated some benefit, at a global scale they will boost the sharp decline of goods trade and industrial production, with a strong negative impact on less empowered countries.
Image 1.3 Global growth (Source: World Bank)
Looking at image 1.36, global growth is projected to reduce from +3.0% in 2018 to +2.9%
in 2019, and +2.8% in 2020 and in 2021, remaining quite stable after some years of up and downtrends.
Advanced economies
Projected growth in ‘advanced-economies countries’ will remain below the average global one. From +2.2% in 2018, the expected growth will fall into +1.5% in 2021, drawing a forecast period of few positive stimuli. However, “unemployment rates have continued to decline, and for many countries are below levels seen prior to the global financial crisis”7.
Emerging markets and developing economies - EMDEs
On the other hand, “EMDEs growth is expected to stall at +4.2% in 2019: 0.5 basis points below the previous forecasts, partly reflecting the lingering effects of recent financial stress in some large economies (e.g. Argentina, Turkey), with a sharply weaker-than-expected pickup in commodity exporters accompanied by a deceleration in commodity importers. EMDE growth is projected to plateau at an average of +4.6% in 2020-2021, as the recovery in commodity exporters level off.”8
Low-income countries - LICs
The World Bank9 affirms that the LIC-countries economy is growing and reinforcing. This
growth has been affected by a favorable year in agricultural production (Uganda and Rwanda), by good performances of industrial-commodities exporters (Chad), and by public investments in infrastructures guided by national reforms (Benin and Senegal). However, for Ethiopia - the largest LIC - and for metal exporters growth has been softer. Furthermore, LIC countries are exposed to any global financial market stress due to their strong exposition on national debts.
7 World Bank Group (January 2019), Global Economic Prospects, chapter 1, page 7 8 World Bank Group (January 2019), Global Economic Prospects, chapter 1, page 5 9 World Bank Group (January 2019), Global Economic Prospects, chapter 1, page 27-28
1.2 African region analysis
A big region of 30.3710 million km², three times the European surface11, that is larger
than China, United States, India, Japan, and Europe combined.
Image 1.4 African surface12
“Its 54 countries have a collective population of 1.2 billion. It has over a thousand languages and huge diversity in income levels, resource endowment, infrastructure development, educational attainment, and business sophistication.”13
In 2018, the continent has had a total unemployment rate of 6.8% and a pro capita GDP of $1,871 US dollars.14
10Google answer to ‘Africa surface’
11 That is 10.18 million km² - source: Google answer to ‘Europe surface’ 12 Website “Uniafrica”
13McKinsey & Company (November 2018), Africa’s overlooked business revolution, page 2 14MISE, Osservatorio economico, Scheda sintetica Africa
1.2.1 Recent past and actual trend
Looking quickly at the recent past, in the 2010-2014 period African GDP growth rate reached +4.7%, slowing to +3.5% in 2015 and +2.1% in 2016 (image 1.5).
In recent years, growth has recovered the previous pace, reaching +3.6% in 2017 and +3.5% in 2018.
In 2018, “East Africa led with GDP growth estimated at +5.7% in 2018; followed by North Africa at +4.9%; West Africa at +3.3%; Central Africa at +2.2% and Southern Africa at +1.2%.”15
Image 1.5 Africa real GDP growth
1.2.2 Future trend
Projections say that growth will accelerate to +4.0% in 2019 and +4.1% in 2020, higher than in other emerging and developing economies as a whole, but lower than China and India.
As a matter of fact, African Development Bank affirms in his report “African Economic Outlook” that 40% of African countries will grow faster than +5.0% in 2019 and only 25% will grow under the pace of +3.0%.
“While the recovery from 2016 is good news for Africa, the projected medium-term growth of 4% is insufficient to make a dent in unemployment and poverty.”16 African
Development Bank declares that the African working-age population is planned to increase +2.75% every year from 2016 to 2030, but only an economic growth between +4.6% and +6.9% a year would be able to absorb new entrants to the labor force. So, “the challenge is thus twofold: to raise the current growth path and to increase the efficiency of growth in generating employment.”17
McKinsey & Company underlines how the low elasticity level between employment and growth is mainly due to the fact that the African economy is heavily based on primary commodities and extractive sectors, instead of on labor-intensive manufacturing as it happens for China, for example. This is why a high growth pace in Africa does not correspond directly to lower unemployment, and consequently a low poverty level.
16 African Development Bank, “African Economic Outlook 2019”, page 2 17 African Development Bank, “African Economic Outlook 2019”, page 2
1.2.3 North Africa
Looking at the table below (image 1.7), it is notable that Africa is expected to grow in 2019 at a pace of +4.0%. North Africa is expected to account for 160 basis points: it means 40.0%.
Image 1.7 Contribution to GDP growth in Africa by region
African Development Bank Group affirms that North Africa’s GDP-growth-performances are affected by the unstable Libyan situation. “After declining for three years, Libya’s GDP increased in 2017 and 2018 because of higher oil production. Despite this, the country’s GDP remains roughly 15% below its pre-revolution level. But the political and humanitarian crisis continues, and the highly uncertain outlook depends on achieving political stability”18.
Analyzed by ADB19 Group, Tunisia is starting again to grow after a stop in 2015 and 2016,
due to heavy social conflicts. Country’s economic recovery is now driven by
18 African Development Bank, “African Economic Outlook 2019”, page 5 19 African Development Bank
economic choices such as an expansive fiscal policy, jointly with manufacturing production growth and tourism expansion.
“Unlike other main commodity exporters, Algeria weathered the commodity price shock in 2015 and 2016 through expansionary fiscal policies”. However this, “growth is expected to weaken in 2019 and 2020”20.
In ‘African Economic Outlook 2019’ it is indicated that extractive industries and agriculture supported the national economy in Morocco, together with a low inflation level. On the other hand, growth in Egypt has been driven by private consumption - thanks to the restored investor confidence, by a higher export level and a governmental stabilization program.
1.2.4 East Africa
Image 1.8 Real GDP growth in Africa by region, 2010-2020
Looking at image 1.8, East Africa is the African region that grows the fastest, both in the recent past that in the future forecasts. In 2019 and 2020, the region is projected to reach +5.9% and +6.1% growth level.
“Between 2010 and 2018, growth averaged almost +6%, with Djibouti, Ethiopia, Rwanda, and Tanzania recording above-average rates.
But in several countries, notably Burundi and Comoros, growth remains weak due to political uncertainty.
In South Sudan, GDP continues to fall due to political and military conflicts and because the 2015 peace agreement has not been implemented.”21
20 African Development Bank, “African Economic Outlook 2019”, page 6 21 African Development Bank, “African Economic Outlook 2019”, page 6
1.2.5 West Africa
“West Africa saw high growth until 2014, but an economic slowdown followed due to the sharp drop in commodity prices and the Ebola crisis.
Nigeria, Africa’s largest economy and largest oil exporter, fell into recession in 2016. Its gradual recovery in 2017 and 2018, helped by the rebound of oil prices, is restoring growth in the region.
Other countries- - -including Benin, Burkina Faso, Ivory Coast, Ghana, Guinea, and Senegal- - -have seen growth of at least +5% in the past two years and are projected to maintain it in 2019 and 2020.”22
1.2.6 Central Africa
Looking at image 1.8, Central Africa’s growth on GDP level is gradually and constantly returning to 2016 values, before the economic-sharp-breaking. This recovery is lead by increasing agricultural production and higher commodity prices.
“Several countries have reduced public spending, including on investment, to restore debt sustainability. After rapid growth, Equatorial Guinea’s economy has been shrinking since 2013 as oil production declines and the non-oil sector has been too weak to compensate. In 2018, its real GDP was about a third below its level six years ago.”23
1.2.7 South Africa
Growth in the South Africa region is forecast to remain significantly below the continent’s average level of growth (image 1.8). Despite this, a moderate recovery from the actual growth-level is expected to happen.
South Africa’s bad performance is slowing down regional growth.
22 African Development Bank, “African Economic Outlook 2019”, page 7 23 African Development Bank, “African Economic Outlook 2019”, page 7
On the other hand, growth in Botswana is accelerating, due to diamond trade, agriculture and macro-economic arrangements of expansionary fiscal policy and accommodative monetary policy. Tourism (and exports, in general) and consumptions are guiding the steady growth in Mauritius.
1.2.8 Country-level analysis
At the country level (image 1.9), Nigeria and South Africa are curbing African growth. They strongly affect for a large share of Africa’s GDP, but only for 20/40 basis points Africa’s GDP growth (image 1.10). On the other hand, Ethiopia is continuing his growing process, accounting for about 20 basis points more than South Africa, even if his share on Africa’s GDP cake is smaller. Finally, Egypt is the leading nation in the continent’s economy, accounting for more than 100 basis points in Africa’s growth cake.
1.2.9 The drivers of economic growth
The image below (image 1.11) analyses three (3) drivers of economic growth in the African continent in the last years, from 2005 to 2018: net exports, consumption, and investments. As it is notable, ‘consumption’ has been the most relevant source of demand in Africa for several years. On average, in the period analyzed, about 80% of GDP was driven by consumption. In contrast, investment - the second-larger contributor of the continent - weighed about 25% of GDP.
As can be seen from the image, in 2017 incidence as a share of GDP started to change: consumption started to decline while investments picked up. As a matter of fact, “fiscal consolidation measures to reduce deficits have constrained public consumption and investment in some countries: Benin, Botswana, Burkina Faso, Ivory Coast, Djibouti, Ethiopia, Senegal, Tanzania, and Uganda have all increased public investment”. Moreover, “conditions for the private sector have improved for example in Egypt, Ethiopia, and Seychelles, subsequently increasing FDI ”24.
Finally from 2015, as a result of the above-mentioned changes, Africa’s drivers of economic growth rebalanced their incidence on GDP: from 2015 to 2018 (image 1.11) contribution declined from 55% to 48%, on the other hand, investments grew from 14% to 48% on the GDP percentage incidence. Net exports, historically a brake on African economic growth (image 1.11), from 2014 started a positive trend, inverting the last year’s negative trend and supporting African growth in a less flourish period than usual, becoming a vital element in the process.
Image 1.11 Contributions of demand components to GDP growth in Africa, 2005-2018
1.2.10 Macroeconomic stability
Inflationary pressures have eased
“Africa’s average inflation fell from 12.6% in 2017 to 10.9% in 2018 and is projected to further decline to 8.1% in 2020”25.
Image 1.12 shows the inflation level in African countries. Highest continent inflation in 2018 occurs in South Sudan, Sudan and the Democratic Republic of Congo: in particular in conflict-affected countries and countries that are not members of a currency union. On the other hand, Togo, Ivory Coast, and Equatorial Guinea had the lowest inflation level of the continent in 2018. It is notable how the better performer countries in this field are members of the Central African Economic and Monetary Community (CEMAC) and the West African Economic and Monetary Union (WAEMU). Moreover, the top-lowest-inflation-level countries are members of the CFA zone that, thanks to his link with the euro currency, maintains the inflation level stable.
Image 1.12 Consumer price inflation by country, 2017 and 2018
Fiscal position is gradually improving
African average fiscal deficit was 7% in 2015 and 2016 (image 1.13). In 2017 it was less than 6% and in 2020 it is estimated to reach less than 4%, continuously improving. At a country level, “fiscal deficits are expected to remain at 10% of GDP or higher in Burundi, Djibouti, Eritrea, and Zimbabwe and at 5%-10% in Comoros, Egypt, Mozambique, Swaziland, and Zambia”26.
Image 1.13 Avg fiscal balance by country group, 2010-2020
Debt levels are rising, but there is no systemic risk of a debt crisis
“In 2017, Africa’s gross government debt-to-GDP ratio reached 53%, with considerable heterogeneity across countries. Of 52 countries with data, 16 (including Algeria, Botswana, Burkina Faso, and Mali) have a debt-to-GDP ratio below 40%, and 6 (Cabo Verde, Congo, Egypt, Eritrea, Mozambique, and Sudan) have a ratio above 100%”27.
African Development Bank affirms that the African continent as a whole is not facing a systemic risk of a debt crisis. The debt vulnerability is recently increased in some countries, however it is not expected to reach a worrying level.
A relevant new trend that the African Development Bank highlights in his report “African Economic Outlook 2019” is on the shifting towards new emerging creditors. African countries are today lending money not only from Europe and the United States (the so-called ‘traditional bilateral lenders’) but also from China and other emerging economies. “For example, new loans from China to Africa increased from $2 billion in 2003 to $17 billion in 2013, before stabilizing around $13 billion in 2015”28.
For African countries the debt financing has crucial functions, such as to develop a new infrastructure network, to buffer against unforeseeable macroeconomic fluctuations and to boost the productive capacity that will generate growth in the long run.
Image 1.14 Gross government debt-to GDP ratio in Africa, 2008-2017
27 African Development Bank, “African Economic Outlook 2019”, page 18 28 African Development Bank, “African Economic Outlook 2019”, page 19
1.3 Sub-Saharan African analysis
Image 1.15 GDP growth forecasts
Sub-Saharan African GDP growth in 2018 decelerated up to +2.3% (image 1.15).
However in the next years GDP growth is expected to reach +2.8% in 2019, +3.3% in 2020 and an estimated +3.4% in 2021.
In image 1.15, there is once more the evidence on how the big-three (3) countries of the region - Angola, Nigeria, and South Africa29 - are curbing the regional growth. Excluding
them, the regional growth is predicted to rise of +4.8% in 2020 and 2021.
The average GDP per capita growth in the region is foreseen to improve from the actual -0.3% (in 2018) to +0.7% in 2021 (image 1.16).
From this image extracted from the report “African Economic Outlook 2019” is appreciable the obstacle that the top-three regional economies represent on Sub-Saharan African growth, due to their weight on regional GDP. Excluding them, altogether the other SSA30 countries would reach a GDP per capita growth of +2.1% in 2021 (image
1.16).
29 The top-three countries with the highest GDP level of the Sub-Saharan African region 30 Sub-Saharan African
Image 1.16 GDP per capita growth forecasts
At the country level, “growth in Nigeria is projected to rise from +1.9% in 2018 to +2.1% in 2019”31. Stagnation in oil production, high inflation, lack of infrastructure and policy
distortions drag the national growth. In 2020 it will remain at a +2.2% level, reaching +2.4% in 2021.
In 2018, Angola faced a decline of -1.7%. In 2019 the World Bank predicts that it will restore a +1.0% growth. In 2020, thanks to non-oil business activities, moderating inflation and improving business environment policies, it is expected to reach a +2.9% growth.
“Growth in South Africa is forecast to recover from +0.8% in 2018 to +1.3% in 2019 and rise to +1.7% in 2020 and +1.8% in 2021.
This gradual pickup in growth reflects expectations that consumer spending will strengthen, spurred by low inflation, and long-delayed structural reforms will help revive investment, as business confidence rebounds”32.
31 World Bank Group (April 2019), Africa’s Pulse, page 19 32 World Bank Group (April 2019), Africa’s Pulse, page 19-21
1.4 Should we invest in (Sub-Saharan) Africa?
The African continent is composed of fifty-four (54) countries that have extremely different levels in terms of population number, GDP level, growth rate, industrial development, economic drivers and socio-cultural aspects.
On one hand, Nigeria has about 200 million inhabitants, and the Democratic Republic of Congo, Ethiopia and Egypt nearly 100 million ones. On the other hand, most of the African countries have inhabitants below 30 million. Furthermore, half African countries (twenty-seven countries) have less than 13 million people.
“Likewise, nine countries make up three-quarters of Africa’s GDP, and in 2030 three countries will represent almost half of the household consumption on the continent: Nigeria (20%), Egypt (17%), and South Africa (11%). Many smaller countries, however, are growing quickly and increasing their share of continental GDP and consumption”33.
Acha Leke and Laundry Signé, authors of “Africa’s Untapped Business Potential”, expect that Eastern and Western Africa will play an important role in African growth in the next years, increasing significantly their share of Africa’s total consumption.
1.4.1 Africa’s threats and risks
On one hand, Africa is a field of interesting business opportunities, a growing market and a potential winning bet for the future. On the other hand this region is also clouded by several risks.
Firstly, “a further escalation of trade tensions between the United States and its main trading partners would reduce world economic growth, with repercussions for Africa”34
(image 1.17). If this happens, there will be a decline in global trade volume “from +4.4% to +3.9% in 2018 and to +3.7% in 2019”35as World Trade Organization estimates.
33 Acha Leke and Landry Signé, “Africa’s Untapped Business Potential”, page 80-82 34 African Development Bank, “African Economic Outlook 2019”, page 11
Image 1.17 Potential impacts of increasing trade tensions on GDP in Africa
As it can be seen from the image 1.17, in the short term (within one year) these trade tensions can vary the African GDP of ±0.07%. In the medium term, the possible negative impact is more impressive. Due to the trade intensity that Africa has both with the United States and China, a sharp decline in African export could affect the growth pace of the African continent, which is highly dependent on external macroeconomic variables.
Secondly, another weakness of the continent is related to large companies. McKinsey on his report “Africa’s Overlooked Business Revolution” claims that Africa host even too few large companies. In fact “nearly half of Africa’s big firms are based in South Africa”.36
They claim that a higher presence of big companies in the continent would be helpful for having higher than the average paid wages, more taxes paid to the local government, a higher level of quality, innovation, and technology in the workplaces. Big companies would be able to attract other capital and to create a network, pushing the area to be
more competitive and attractive, getting them off. Furthermore, due to the presence of these big companies then many of its younger firms will need to think big. [..] The World Bank, for example, estimates that SMEs are responsible for 77% of all jobs in Africa and as much as half of GDP in some countries. Midsize companies, in particular, are major job creators: McKinsey research shows that firms with between 50 and 200 employees create jobs at twice the pace of both large corporations and small businesses”37.
1.4.2 Africa as untapped business potential
“Africa’s potential as a growth market for business remains both underestimated and misunderstood - as does the potential for business to play a transformative role in solving the continent’s biggest challenges”38. Acha Leke39 and Landry Signé’s40 give
evidence that Africa actually hosts more than 400 companies that earn annual revenues of $1 billion or more, “and they are both faster growing and more profitable than their global peers”41. They underline the growing opportunity that the continent gives in a
period of global stagnation. Having the market several lacks, at the same time there are many business opportunities for entrepreneurs that want to explore this interesting market, meeting “Africa’s unfulfilled demand for goods and services, close the gaps in its infrastructure, create jobs and decrease poverty”42.
37 McKinsey & Company, “Africa’s Overlooked Business Revolution”
38 Acha Leke and Landry Signé, “Africa’s Untapped Business Potential”, page 77 39 Senior Partner and Chairman of Africa Region, McKinsey & Company 40 Brooking Institution Chairman, Global Network for Africa’s Prosperity 41 Acha Leke and Landry Signé, “Africa’s Untapped Business Potential”, page 77 42 Acha Leke and Landry Signé, “Africa’s Untapped Business Potential”, page 77
Acha Leke and Landry Signé’s analysis exhibits five (5) business opportunities investors that should ride to convert these potential opportunities into concrete profits.
1. Population is fast-growing and urbanizing
Image 1.18 Africa’s population by 2030
“Africa’s current population of around 1.2 billion people is projected to reach 1.7 billion by 2030. More than 80% of Africa’s population growth over the next few decades will occur in cities, making it the fastest-urbanizing region in the world”43.
As a matter of fact, by the end of the next decade, Africa is projected to have nearly 90 cities (89, exactly) with at least 1 million inhabitants, as it is notable from image 1.18.
2. Africa is industrializing
“An African industrial revolution is underway”44 affirm Acha Leke and Landry Signé in
their analysis. Simply answering local demand through local manufacturing, substituting imports, they computed that in a decade African corporates could be able to double their industrial production, nearly reaching $1 trillion dollars (image 1.19). They argue that the macro-conditions are favorable to have an acceleration pace. In fact, many corporates are ready to shift away from China directed to lower-cost global regions.
Image 1.19 Africa’s manufacturing output projections
3. Africa is pushing to close its infrastructure gap
Despite a big lack of infrastructure - about 600 million African inhabitants have no access to electricity - Africa is slowing trying to restore the gap. “Africa’s annual investment in infrastructure has doubled to around $80 billion a year since the beginning of this century”45.
4. Innovations to unleash agriculture and resource wealth
“We estimate that the domestic gas market in Africa will grow by 9% a year to 2025, by which time the continent could use up to 70% of its own gas”46.
Africa is a resource-abundant country in agriculture, mineral resources, and the oil and gas market. Nevertheless it is plenty of rich and unexplored areas. For example in oil and gas market, the continent is both an unexplored and a potential region, with huge unmet demand. New investments are required to close this gap, and new business opportunities are available in many industries.
5. The potential of increasing digital and mobile access
“Sub-Saharan Africa saw the world’s fastest rate of new broadband connections between 2008 and 2015, and mobile data traffic across Africa is expected to increase sevenfold between 2017 and 2022. Africa has more than 120 million active mobile money accounts, over 50% of the global total; this has leapfrogged many people over traditional banking accounts. This trend will allow companies to improve productivity, speed up transactions, and access wider markets, and could add $300 billion to the continent’s GDP by 2025”47.
45 Acha Leke and Landry Signé, “Africa’s Untapped Business Potential”, page 80 46 Acha Leke and Landry Signé, “Africa’s Untapped Business Potential”, page 80 47 Acha Leke and Landry Signé, “Africa’s Untapped Business Potential”, page 80
TABLES & IMAGES
Image 1.1 Global growth trend (Source World Bank) - Africa’s Pulse 2019
Image 1.2 Global industrial production and goods trade trend (Source: World Bank) - Africa’s Pulse 2019
Image 1.3 Global growth (Source: World Bank) - Global Economic Prospect Image 1.4 African surface - Uniafrica website
Image 1.5 Africa real GDP growth - African Economic Outlook 2019
Image 1.6 Forecast growth rate of African countries - Where to invest in Africa
Image 1.7 Contribution to GDP growth in Africa by region - African Economic Outlook 2019
Image 1.8 Real GDP growth in Africa by region, 2010-2020 - African Economic Outlook 2019
Image 1.9 Real GDP growth by country, 2018 - African Economic Outlook 2019
Image 1.10 Contribution to GDP growth in Africa, by country, 2010-2020 - African Economic Outlook 2019
Image 1.11 Contributions of demand components to GDP growth in Africa, 2005-2018 - African Economic Outlook 2019
Image 1.12 Consumer price inflation by country, 2017 and 2018 - African Economic Outlook 2019
Image 1.13 Avg fiscal balance by country group, 2010-2020 - African Economic Outlook 2019
Image 1.14 Gross government debt-to GDP ratio in Africa, 2008-2017 - African Economic Outlook 2019
Image 1.15 GDP growth forecasts - Africa’s Pulse 2019
Image 1.16 GDP per capita growth forecasts - Africa’s Pulse 2019
Image 1.17 Potential impacts of increasing trade tensions on GDP in Africa - African Economic Outlook 2019
Image 1.18 Africa’s population by 2030 - Africa’s Untapped Business Potential
Image 1.19 Africa’s manufacturing output projections - Africa’s Untapped Business Potential
BIBLIOGRAPHY
World Bank Group (April 2019), Africa’s Pulse
World Bank Group (January 2019), Global Economic Prospects
McKinsey & Company (November 2018), Africa’s overlooked business revolution African Development Bank, “African Economic Outlook 2019”
Acha Leke and Landry Signé, “Africa’s Untapped Business Potential” World Trade Organization, World Trade Report 2018
WEBSITES
“Uniafrica”
2. Actual framework
2.1 Italy and Africa
The central focus of this master thesis is discovering how to enter (Sub-Saharan) African market. In order to do this, it is important to better discover the relationship and business exchanges that Italy has with the African continent.
Differently from France48, Italy does not have a unique, important, and empowered
public entity in charge to both facilitate investments, develop international export strategies and maintain business relationships with the other existing countries. As it often happens, Italy moves in an inefficient and fragmented way.
In political affairs, the competent Public Prosecutor, local embassies and national associations act as a unique entity. On the other hand, in the business field, the situation is completely different: without a reference entity, Italian companies often adopt private channels rather than public ones, to go international and export in foreign countries. Enel and many multinational companies, for example, work independently and not via institutional entities.
When an Italian company decides to go international - selling, producing, or investing - it has the possibility to choose between many intermediary subjects: sometimes public entities, some other private ones.
On the other hand, when a foreign company would like to have business exchanges with Italian companies, things are different. In this case, there is the evidence of a lack of a unique interlocutor. Foreign entrepreneurs who have interesting business ideas ready to be implemented and that are looking for Italian support (supplies, engineering, financial and managerial support) often have difficulties to find what they are looking for. They have no unique Italian interlocutor to ask their needs, and their demands
48 In France the political support mixed with the economical one for business initiatives exists: it is called
“Business France” and it funnels the promotion of French companies and the French business initiatives all around the world.
remain unfulfilled. Trying to cover this inefficiency, many entities (public and private ones) entered this business segment trying to cover this gap.
Among these entities (the private ones) it is included also ETC Invest S.p.A., an Italian company specialized in the support of investment and supplies projects between Europe and Sub-Saharan Africa, that will be the object of a detailed analysis later.
2.1.1 Italian import-export situation
Table 2.1 Italian commercial trade49
As it is notable in table 2.1, we can see the trend of the last 10 years of the Italian commercial trade. Generally speaking, we can see that the annual trade balance started to increase in 2012, the year when the export trading amount overcame the import trading one. From 2012, export started to increase constantly every year - from €376 billion in 2011 to €463 billion in 2018 - and imports started to reduce, creating a visible gap: the trade balance.
In the first 5 years, from 2008 to 2012, the sum of the trade balance generated has been -€62 billion euros; while in the last 5 years, from 2013 to 2018, the sum of the generated trade balance has been +€220 billion euros.
Interesting to know: based on the 2018 date, Italy is the 9th export country in the world and the 11th import country in the world.
Table 2.2 Main importers and exporters countries in the world50
2.1.2 Italian export
Table 2.3 Destination of Italian export51
Analyzing deeper the Italian export, based on data found on “Osservatorio Economico” of “Ministero dello Sviluppo Economico”, table 2.3 clearly shows its distribution. Data are collected from 2015 to 2018.
On average, Italian export transactions are intra-Europe transactions: 66.3%. Going deeper, 55.7% of global transactions are within countries belonging to the European Union. Another 10.6% (on average from 2015 to 2018) of Italian export is directed to European countries outside the European Union.
There is a huge gap between Europe - the 1st destination - and Asia, the 2nd destination region. Italy exports in Asia the 14.7% of global exports - Far East 8.6%; the Middle East 4.6%; Central East 1.4% -, while in America the 13% - North America 9.8% and Central and South America 3.2%.
Africa, our global region of interest, is relegated at the end of the rank.
As a matter of fact Italy exports in Africa only 4.1% of its national exportations: it means about €18 billion, of which €12.5 billion are exchanged in North Africa.
The African continent is the sum of 54 countries. North Africa is composed of five (5) countries: Algeria, Egypt, Libya, Morocco, and Tunisia. The rest of the continent is composed of the remaining forty-nine (49) countries.
Italy, in these forty-nine (49) countries, exports the 1.2% of the total national export. It means €5 billion euros. Meanwhile, France exports in Sub-Saharan Africa - in 2017 - the 2.4% of his total national export: it means €11.1 billion euros52.
In the rank of Italian export destination, after Africa it is placed only Oceania region, at the last rank.
Interesting to know: in these forty-nine (49) countries there are also important countries like Nigeria, South Africa and Angola, that are the big three countries of the Sub-Saharan Africa (SSA) region.
Table 2.4 Top 30 destination countries of Italian export53
52 Data source: France Diplomatie
This is the list of the top 30 destination countries of the Italian export.
At the bottom line, at the 30th place, we can find the first African country: Tunisia54.
On average, in the last 5 years, €3 billion euros of goods and services have been exchanged from Italy to Tunisia every year: it means (on average) the 0.7% of the total Italian export. Tunisia is the African country geographically the nearest to Italy, a factor that surely helps these trading exchanges.
Interesting to know: from Tunisian point of view, Italy represents both in 2017 and 2018 the 1st country of origin of Tunisian import for market share55: 15.7% of the total
amount. Moreover, stable from 2014 until now, Italy is the 2nd recipient country for the Tunisian export, with a market share of 18% (on average in the last 5 years).
In Tunisia, Italy exports refined petroleum products (28.3% on total Italian export in Tunisia), basic precious and other non-ferrous metals and nuclear fuels (8.0%), fabrics (6.0%), and other goods indicated in table 2.5.56
Interesting to know: in Tunisia on 31/12/2017 there was the presence of 507 Italian companies, engaged in the textile, fashion and construction sector.
54 Following data source: Osservatorio Economico Ministero dello Sviluppo Economico
55 In 2014, 2015 and 2016 Italy represented the 2nd country of origin for market share for Tunisia. 56 Source: table 2.5 in ‘attached tables’ section, from MISE website
2.1.3 Italian import
Table 2.6 Destination of Italian import
Import side, the general framework of the net of importers is quite similar.
Stable at the 1st place we find again the European region. In the 2nd place, we find once more Asian region, again after a huge gap. 3rd place is in American countries. Africa, our focus, is located again at the bottom, before Oceania region.
From African countries comes the 4.9% of the Italian import. There is a big difference between the five (5) countries belonging to the North African region (€12.5 billion of import) and the remaining forty-nine (49) belonging to the Sub-Saharan African one (€6.5 billion of import), which count for the 1.7% of the total Italian import.
Table 2.7 Top 30 countries of origin of Italian import57
This is the list of the top thirty (30) countries of origin of the Italian import.
In this list, we can find two African countries: Algeria at 16th place and Libya at 22nd place. Once again, two North-African countries.
In the last 5 years, €4.36 billion euros of goods and services have been moved from Algeria to Italy on average every year, with an average weight on total Italian imports of 1.1%.
Interesting to know: from the Algerian point of view, Italy represents an important partner for the trading of goods and services. As a matter of fact, Italy is the 1st destination country for the Algerian export: 20.6% of Algerian goods that are sold abroad are sold in Italy. Moreover, 9.8% of imported goods comes from Italy (that is the 4th country of origin of Libyan import).
From Algeria, Italy imports natural gas (72.8%), refined petroleum products (13.0%), crude oil (11.0%), and other goods.58
Interesting to know: in Algeria on 31/12/2017 there was the presence of 162 Italian companies, engaged in the energy, construction, telecommunication, mechanical, defense and transport sector59.
--
On the other hand, in the last 5 years € 3.35 billion euros of goods and services have been moved from Libya to Italy on average every year, with an average weight on total Italian imports of 0.9%60.
Interesting to know: under Libyan point of view, Italy in the last 5 years has always been the 1st destination country of Libyan products and the 4th country of origin of Libyan export.
From Libya, Italy imports mainly crude oil (65.3%), natural gas (23.9%), refined petroleum products (10.0%), and other goods61.
Just to know: in Libya, on 31/12/2017 there was the presence of 24 Italian companies, engaged in the oil, infrastructure, mechanical and construction sector62.
58 Source: table 2.8 in ‘attached tables’ section, from MISE website
59 Data source: Osservatorio Economico Ministero dello Sviluppo Economico 60 Data source: Osservatorio Economico Ministero dello Sviluppo Economico 61 Source: table 2.9 in ‘attached tables’ section, from MISE website
2.1.4 Italy-Africa axes63
Italy (on average in the last 5 years) has been the 6th country in the rank of the origin countries of African import goods and services, with a market share of about 4.2%. On the other hand, Italy is at 7th place in the rank of the destination countries of African export of goods and services, with a market share of 5.0%.
The main Italian products exported in Africa in 2018 are refined petroleum products (18.3%), other special-purpose machinery (8.7%), general-purpose equipment (7.7%), other general-purpose equipment (7.1%), and other goods described in the attached table 2.1064.
And the main destination African countries for the Italian export are Tunisia (19.2% of total African exports, that means €3.5 billion euros), Algeria (17.1%), Egypt (14.9%), Morocco (11.2%), and Republic of South Africa (11.1%)65.
On the other hand, the main African products imported in Italy in 2018 are crude oil (29.1%), natural gas (19.0%), basic precious metals and nuclear fuels (9.8%), refined petroleum products (7.6%), and others66.
And the main African countries of origin are Algeria (25.9% of total African imports), Libya (19.0%), Tunisia (11.3%), and Egypt (9.6%)67.
Interesting to know: on 31/12/2017, in Africa there have been 1,980 Italian companies, operating in the energy, construction, transports, logistics and mechanical sector. Meanwhile, France has 1,100 French groups based in Africa, with more than 2,109 subsidiaries68.
63 Data source: Osservatorio Economico Ministero dello Sviluppo Economico 64 See the table 2.10 in the ‘attached tables’
65 Data comes from table 2.11 in ‘attached tables’. 66 See the table 2.12 in the ‘attached tables’. 67 See the table 2.13 in the ‘attached tables’. 68 Data source: France Diplomatie
2.1.5 North and Sub-Saharan Africa
The Italian markets divide Africa into two macro-regions: North Africa and Sub-Saharan Africa.
On one hand, North Africa is composed of five (5) countries (in geographical order, from West to East): Morocco, Algeria, Tunisia, Libya, and Egypt, with a total population of 196.6 million people (in 2019)69.
On the other hand, Sub-Saharan Africa is composed of all the remaining 49 countries, from Senegal to Somalia, from Sudan to South Africa, with a total population of 1,083.3 million people (in 2019)70. Dividing the total GDP of the macro-region by the population
number, clear evidence is the difference in GDP per capita in 2019 between the two regions: $3,070 dollars in North Africa and $1,386 in Sub-Saharan Africa: more than twice.
North Africa Sub-Saharan Africa
In 2019 In 2019
Total GDP (in billion dollars) $603.5 $1,555.9
GDP growth (in real prices) from 2012 to 2018
-1.42% +1.82%
Population (in million)
Trend from 2012 to 2018 196.6 +2.03% 1,083.3 +2.48% GDP/population in 2019 Trend from 2012 to 2018 $3,069.7 -3.37% $1,385.5 +0.63% Unemployment rate in 2019 Trend from 2012 to 2018 13.1% -0.41% 3.4% -0.65%
Table 2.14 Comparison between North and Sub-Saharan Africa71
69 Data source: International Monetary Fund - IMF 70 Data source: International Monetary Fund - IMF
2.1.6 Italy and North Africa
Analyzing deeper the relationship between Italy and North Africa region, looking at the data of “Ministero dello Sviluppo Economico”, we can notice that Italy is (on average in the last years) the 3rd country of origin of North Africa’s import, with a share of 6.5%. Moreover, Italy represents for North Africa region the 2nd (on average, in the last years) destination country for the regional export, with a share of 14.8%. It means that the commercial relationships between these 2 regions are really strong72.
In decreasing order, the highest Italian export share in North Africa is destined to Tunisia (26.2%), Egypt (25.8%) and Algeria (24.4%), followed by Morocco (14.5%) and Libya (8.6%).73
On the other hand, from North Africa, Italy imports (in decreasing order) from Algeria (38.9%), Libya (20.5%), Tunisia (17.1%), Egypt (15.4%) and Morocco (8.2%)74.
Interesting to know: in the North Africa region on 31/12/2015 there have been 1,159 Italian companies, operating in the energy, construction, textile-clothing and logistics-transports industry.
72 For other details, look at table 2.15 and 2.16. 73 Table 2.17; data source: MISE
2.1.7 Italy and Sub-Saharan Africa
In the Sub-Saharan Africa region the situation is completely different.
Differently from before, here Italy appears at the 13th place for the origin countries of Sub-Saharan Africa’s import, with a little share of barely 2.2%.
Furthermore, Italy appears at the 12th place (on average) in the rank of the destination countries of the export of Sub-Saharan Africa75.
The destination countries for the Italian export in the Sub-Saharan African region are mainly focused in the Republic of South Africa (34.8%), followed by Nigeria (9.1%), Angola (6.5%) and Ethiopia (5.8%)76.
On the other hand, the countries of origin of the Italian import are, once again, the Republic of South Africa (23.7%) and Nigeria (13.8%), followed by Congo (8.0%), Mozambico (6.8%) and Cameroon (6.6%)77.
Interesting to know: in Sub-Saharan Africa region on 31/12/2015 there have been 811 Italian companies, operating in the energy, construction, transportation, iron and steel, and mechanical industry.
75 For other details, look at table 2.19 and 2.20. 76 Table 2.21; data source: MISE
2.1.8 Meanwhile in Europe
In Europe, “France (€26.7 billion), Germany (€25.6 billion), Spain (€17.6 billion) and Italy (€17.4 billion) were the largest exporters of goods to Africa in 2017. Together they accounted for almost 60% of all EU exports to Africa. Portugal (31%), Cyprus (23%), Malta (19%) and Spain (18%) had the highest shares for exports to Africa in their total exports to countries outside the EU”78.
Table 2.23 Export of goods to Africa by the EU Member States in 2017
“The four largest exporters were also the largest importers of goods from Africa in 2017. Spain (€23.9 billion) led, followed by France (€21.1 billion), Italy (€18.5 billion) and Germany (€17.3 billion). The highest shares of imports from Africa in total extra-EU imports were found in Spain (19%), Portugal and France (both 13%) and Italy (12%)”79.
78 Website “Eurostat” 79 Website “Eurostat”
Table 2.24 Import of goods from Africa by the EU Member States in 2017
“In 2017, twenty-three (23) EU Member States had a trade in goods surplus with Africa. The highest two were Germany (€8.3 billion) and France (€5.6 billion). The five countries that had trade in goods deficits with Africa were Greece (€130 million), Slovenia (€134 million), Italy (€1.1 billion), the United Kingdom (€4.9 billion) and Spain (€6.3 billion)”80.
Table 2.25 Trades in good balance with Africa by the EU Member States, in 2017
2.2 Italian players in Africa
“Some of the major Italian companies are investing in Africa for many decades, enabling Italy to be the third major investor country in the African region. Chinese companies lead with $38.4 billion dollars of investments, companies from the United Arab Emirates follow with $14.9 billion and the Italian company has already invested in Africa $11.6 billion dollars” - says EHI Journal.
“Eni - continues the journal - has done $8.1 billion investments in 16 African countries for exploration and production activities. It is important to underline that 2,798 Eni employees that are working in Africa out of 3,546 are local workers, improving the living and working conditions of the region. In Algeria, Eni has his direct presence since the 1950s, in Congo since the 1960s.
Salini Impregilo has been around in Africa for 70 years, building some of the most important African dams, large hydroelectric plants, the biggest railways of the continent, and many other interventions. Actually, 17% of their turnarounds come from the African continent.
Ferrero has a commercial presence in all the 54 countries of the region and an industrial presence in Cameroon and South Africa. Moreover, thanks to the conversion of some Expo Pavilion81 into school, hospital and similar, Ferrero tries to pursue also a social goal
of development of the area”82.
And what about banks and institutions?
Italian banks' presence in Africa is a scarce presence.
Moreover, Italian banks' presence in Sub-Saharan Africa is almost zero.
In March 201983 there were twenty-seven (27) Italian banking subsidiaries in the
fifty-four (54) African countries. Focusing on Sub-Saharan Africa, removing the Italian banking subsidiaries in North Africa84, ten (10) Italian banking subsidiaries still remain in the
forty-nine (49) Sub-Saharan Countries. Eight (8) out of ten (10) are BNP Paribas
81 Expo Milano 2015, most Pavillons have been converted
82 EHI Journal, 19-02-2018 online edition and ‘Il Sole 24 Ore’, 22-06-2017 online edition 83 Source: ABI ‘Rete Estera Banche Italiane’ updated March 2019
subsidiaries (BNL Group) and rumors say they are going to withdraw from the African marketplace. If this happens, the Italian banking presence in the SSA region will be of two (2) subsidiaries: a Crédit Agricole subsidiary located in Madagascar and a representative Unicredit office in Johannesburg, South Africa.
Despite the scarce presence of Italian bank subsidiaries in Sub-Saharan Africa, some Italian banks have done some investments in SSA countries, providing funding and support: the Intesa San Paolo case.
Intesa San Paolo has granted special funding for the construction of the biggest football stadium in Africa, in Cameroon with 60,000 seats (agreement dated August 2016). The total cost has been of about €250 million euros and Intesa Sanpaolo finances 85% of the total amount85.
Once again, just to cite another recent example of Italian banks investing in Sub-Saharan Africa, in 2017 Intesa San Paolo has also signed a contract of supplier credit (granted by Sace) for the building of a social housing complex of 11,000 accommodations in Cameroon (60,000 beds) in the suburbs of Yaoundé, the political capital of Cameroon.86
Public institutions' side.
In fifty-four (54) African countries, Italy has its own embassy in twenty-four (24) of them (19 in 2015). The number of consulates is, instead, thirty-eight (38) out of fifty-four (54) countries, but some countries have more than one consulate and others have zero. As a matter of fact, thirteen (13) African countries have neither Italian embassies nor consulates.87
It is easy to understand that, without a public presence and public support, it is difficult to explore business opportunities if you are not a big company. As an inquest of ‘Linkiesta’ showed some years ago, in 2015, without a public presence in the territories it is difficult to have economic exchanges. Italy has done huge investments in the region thanks to the major Italian multinational companies (Eni, Salini Impregilo, Ferrero), but
85 Websites “AffarItaliani.it” and “Investir au Cameroun” 86 Source “Journal du Cameroun”
87 Burundi, Capo Verde, Comore Island, The Gambia, Equatorial Guinea, Lesotho, Liberia, Mauritania,
SMEs have difficulties to enter in this (unknown, for the Italian companies) market without any support.
In Italy, suggests Linkiesta, we have a confusing system for the internationalization of the Italian companies: we have many actors that do not cooperate with them. Chambers of Commerce, ICE, embassies, municipalities and Regions, Sace, Simest are all actors playing in the same field, without communicating with each other. The Italian public system for internationalization support is fragmented, and companies try to do their best.
In this framework, in the Italy-Africa axis, public institutions have allowed a free market space for other private initiatives in which to enter, with only one request: to know the African market. In Italy, knowing the African market seems to be really complex work, as a matter of fact, the actual players in the field are only two: Banca UBAE and ETC Invest.
The first one, Banca UBAE is a banking corporation established in 1972 as ‘Unione delle Banche Arabe ed Europee’, it means ‘Arab and Europe Banks Union’. Over time it has turned towards the North Africa region. As a matter of fact, today Banca UBAE is controlled by the Libyan Foreign Bank.
The second one, ETC Invest, is the holding company of the group ETC (‘Export Trading & Cooperation’), born in 2012, leading for the trade finance, correspondent banking, advisory and project finance between Italy (and more in general Europe) and Sub-Saharan Africa, especially Western and Central Africa.
Concluding, the player that works in the Sub-Saharan Africa region is only one, and it is the group ETC. In chapter four (4) the Group is detailed described and in chapter five (5) a real business case is analyzed.
2.3 African needs
First of all, speaking about “Africa” as a single unit is the wrong expression.
As seen in the introductory chapter, Africa is a widespread region with hundreds of different cultures, languages, and situations. It must be said that the African region is a continent rich in resources and a densely populated area.
Some of the main lacks of the continent are a low level of technical know-how, low specialization workforce and a weak connection with European and foreign entities (banks, financial institutions, funds) that are willing to invest in potential markets.
Know-how
European and Italian companies have a deep knowledge of the materials’ quality, production processes and products’ transformation: more than the African ones. African companies that want to pursue an entrepreneurial activity often have to face with the search for the right supplier. They often look for European ones, not knowing which one to choose. They should be guided through this process, finding the right ones, but banks and classic financial institutes do not usually pursue this specific activity.
Engineering
Most of the African countries have plenty of resources: both human and environmental ones. The African lack, generalizing, is on how to transform them and how to better perform in resource transformation, from raw material to finished products.
For this reason, many international companies have landed in the African continent to exploit the natural and mineral resources they have, bringing with them the ‘engineering’ capability and the knowledge of the process, in addition to foreign capital.
Financing
Often, suppliers and investors that are willing to invest in the African continent are foreign ones. To have business exchanges they must be supported by their local banks: European, Asian, and American ones.
For this reason, foreign banks are determinant for the development of the African continent. However, the cooperation and the trust between African banks and foreign ones is very difficult. The lack of respective knowledge, weak trust in creditworthiness and lack of communication due to the geographical distance and cultural differences, are heavy barriers in international cooperation.
Management
Another widespread lack in many African companies is the lack of corporate management. Often, the holder of the firm is also the sole director of the company. Since African is a land of small-medium companies, of started-from-nothing entrepreneurs, few companies are structured with competent managers. Often, in the long run, this will lead to carelessness that could affect also the profitability of the company.
TABLES and IMAGES
Table 2.1 Italian commercial trade - MISE
Table 2.2 Main importers and exporters countries in the world - MISE Table 2.3 Destination of Italian export - MISE
Table 2.4 Top 30 destination countries of Italian export - MISE Table 2.5 Exported products from Italy to Tunisia - MISE Table 2.6 Destination of Italian import - MISE
Table 2.7 Top 30 countries of origin of Italian import - MISE Table 2.8 Imported products from Tunisia to Italy - MISE Table 2.9 Imported products from Tunisia to Italy - MISE Table 2.10 Main Italian products exported in Africa -MISE Table 2.11 Main destination countries of Italian exports -MISE Table 2.12 Main African products imported in Italy - MISE
Table 2.13 Main African countries of origin of Italian import - MISE Table 2.14 Comparison between North and Sub-Saharan Africa - MISE Table 2.15 Main exported Italian products in North Africa - MISE Table 2.16 Italian import coming from North African countries - MISE
Table 2.17 Destination countries for the Italian export in North Africa - MISE Table 2.18 Countries of origin for the Italian import from North Africa - MISE Table 2.19 Italian products exported in North Africa - MISE
Table 2.20 Italian import from the North African region - MISE
Table 2.21 Destination countries for Italian export in the Sub-Saharan African region - MISE
Table 2.22 Countries of origin of Italian import from SSA region - MISE Table 2.23 Export of goods to Africa by the EU Member States in 2017 Table 2.24 Import of goods from Africa by the EU Member States in 2017
ATTACHED TABLES
Table 2.5 Exported products from Italy to Tunisia - MISE
Main Italian export to Tunisia € % of total Italian
export to Tunisia
Refined petroleum products € 983,000,000 28.3%
Basic precious and other non-ferrous metals; nuclear fuels
€ 278,000,000 8.0%
Fabrics € 208,000,000 6.0%
Electric motors, generators, and transformers; electricity distribution, and control apparatus
€ 137,000,000 4.0%
Tanned and dressed leather; luggage, handbags, saddlery, and harness; dressed and died fur
€ 128,000,000 3.7%
Table 2.8 Imported products from Tunisia to Italy - MISE
Main Algerian products imported in Italy € % of total imported
goods from Algeria to Italy
Natural gas € 457,300,000 72.8%
Refined petroleum products € 81,800,000 13.0%
Crude oil € 69,300,000 11.0%
Basic chemicals, plastics, and synthetic rubbers
€ 10,300,000 1.6%
Steel products € 7,900,000 1.3%
Tanned and dressed leather; luggage, handbags, saddlery, and harness; dressed and died fur
€ 600,000 0.1%
Table 2.9 Imported products from Tunisia to Italy - MISE
Main Libyan products imported to Italy € % of total imported
goods from Algeria to Italy
Crude oil € 2,737,000,000 65.3%
Natural gas € 1,001,000,000 23.9%
Refined petroleum products € 418,600,000 10.0%
Steel products € 17,500,000 0.4%
Basic precious and other non-ferrous metals; nuclear fuels
€ 10,300,000 0.2%
Table 2.10 Main Italian products exported in Africa -MISE
Italian products exported in Africa - 2018 € % of total Italian
export in Africa
Refined petroleum products € 3.303.000.000 18,3%
Other special-purpose machinery € 1.570.000.000 8,7%
General-purpose equipment € 1.380.000.000 7,7%
Other general-purpose machinery € 1.288.000.000 7,1% Electric motors, generators, and
transformers; electrical equipment
€ 680.000.000 3,8%
Basic chemicals, plastics, and synthetic rubbers
€ 567.000.000 3,1%
Table 2.11 Main destination countries of Italian exports -MISE
Main destination countries of Italian exports € % of IT export in Africa Tunisia € 3.469.000.000 19,2% Algeria €3.091.000.000 17,1% Egypt € 2.688.000.000 14,9% Morocco € 2.028.000.000 11,2%
Republic of South Africa € 2.009.000.000 11,1%
Libya € 1.210.000.000 6,7%
Nigeria € 738.000.000 4,1%
Table 2.12 Main African products imported in Italy - MISE
Main African products imported in Italy € % of total import from African countries
Crude oil € 6.396.000.000 29,1%
Natural gas € 5.185.000.000 19,0%
Basic precious and other non-ferrous metals; nuclear fuels
€ 2.166.000.000 9,8%
Refined petroleum products € 1.672.000.000 7,6%
Fish, mollusks, and crustaceans stored and processed
€ 686.000.000 3,1%
Wearing apparel, except fur apparel € 648.000.000 2,9%
Table 2.13 Main African countries of origin of Italian import - MISE
African countries of origin of Italian import € % of total African
import
Algeria € 5.710.000.000 25,9%
Libya € 4.190.000.000 19,0%
Tunisia € 2.486.000.000 11,3%
Egypt € 2.107.000.000 9,6%
Republic of South Africa € 1.447.000.000 6,6%
Nigeria € 1.215.000.000 5,5%
Morocco € 1.024.000.000 4,7%
