You will get a good return if you persist

The key to succeed in African markets is to think long-term, create strong links and be resilient. “If you manage all that, it makes a big difference eventually,” says Nicolas Tauvel, Deputy Managing Director, Corporate & Institutional Customers and Payments at Société Générale Senegal. We spoke to Mr. Tauvel about the unique opportunities (not only) in Senegal.

SMEs at the forefront

Société Générale (SG) is one of the best-established international banks in Africa and has comprehensive knowledge of the current needs in most countries. Which areas of the Senegalese economy has SG identified as suitable for investors?

The Senegalese economy is projected to grow by 8.3% in 2024 according to IMF. This growth is mainly driven by infrastructure. There is a strong need for roads, including an ongoing project for connecting the new Dakar international airport with the city centre, and also a big construction project of building a new city called Diamniadio which would attract people living and working in Dakar and alleviate the overcrowded capital. There is an express train joining the two cities, and Diamniadio is also midway from Dakar to the new airport. Last but not least, there are two new harbours built in Senegal.

Other major areas include oil and gas, where big projects are due to start in mid 2024 that should be responsible by some 2.5-3% of Senegal’s GDP growth in 2024 alone. Besides that, there are many projects in steel industry, food and beverage industry and the like – after all, Senegal is one of the most industrialised countries in Africa. Agriculture is a very important area as well, with most of the production of vegetables or exotic fruits going to export. And we shouldn’t forget about tourism, whose development is closely linked to that of infrastructure as it increasingly demands more premium facilities.

Based on the good assessment of the first phase of the "Grow with Africa" project, SG has decided to continue with the next phase "Grow with Africa 2025". Have you had to adjust the settings of the primary axes?

This initiative was launched back in 2018 in Dakar. It might still be a little too early to know certainly what the strategic priorities will be in two years’ time, but I don’t expect them to change much. Big priorities will still include infrastructure, since what I’ve mentioned about Senegal also holds for the continent as a whole, or agriculture, which not only attracts foreign investors but also includes many strong local players who we as SG are always ready to support.

Furthermore, financial inclusion is very important for us, since only 18% people have a bank account – so the potential is huge, and for that purpose, SG Senegal has recently signed a partnership with Orange Mobile Money. Another big priority and in fact the biggest change in the project since its inception in 2018 is the increased focus on SMEs. While we keep supporting the state, who is the most important economic player here, we are also very keen to support Senegalese SME champions even more, because SMEs are key for further development of the economy.

SG is very keen to support Senegalese SME champions even more, because SMEs are key for further development of the economy.

Energy is key

Energy transformation is being addressed not only in Europe, but also in Africa. Senegal is known for the most extensive public solar lighting project in the world. What role did SG play in this project?

For SG it was a very important project with great environmental and social impact. The solar streetlamps have improved road safety in several cities, made it easier to do business throughout evenings and overall improved life quality.

I should also add in this regard that SG is the only bank in Senegal to have an agreement with the state of Senegal for ECA (export credit agency) loans, which makes us a key partner. SG has a strong setup and key strength here in structured finance, so if your company has complex or specific financing needs, including financing in local currency or in euro, insurance or distribution, we have the ability and expertise to offer tailormade financing solutions.

West Africa is a stable region

How do the countries in West Africa differ from other African regions?

If you look at political stability, there may have been some troubles in Mali, Burkina or Niger, but if you consider the situation in other parts of Africa, West Africa is still a very stable region and has great potential. There are major countries with economic stability and strong democratic tradition, Senegal being obviously one of them. Local currencies are solid – as opposed to other regions which may experience high inflation.

What the biggest opportunities specifically for Czech companies looking to enter these markets?

I’ve visited the Czech Republic a few times and I have an idea of the strengths of your economy. With your manufacturing expertise and know-how, you obviously have good opportunities in infrastructure as well as industrial projects in food and beverage or any sector where machine assembly is needed, among many other things.

How is Senegal doing in digitization and e-commerce? Could this also be an opportunity for Czech exporters?

Although only 18% people have a bank account, almost everyone has an account with services such as Orange Mobile Money – in short, mobile money services and payments are probably way more advanced here than in many Western countries. These developments are very dynamic in Senegal, and you can pay all your utility bills, monthly subscriptions or invoices easily via mobile on the go. As for e-commerce, there are strong African players such as Jumia, sometimes dubbed as the African Amazon. Overall, Senegal as well as all of Africa are advancing quickly in digitization.

What advice would you give to Czech companies to increase their chances to succeed in this market?

They need to have good local partners – consultants or companies to partner with – and they obviously need a good bank to advise them, and last but not least, they should also rely on their Czech embassy in Senegal. They have to be visible, get information and identify opportunities. It’s always difficult to have a one-shot approach in Africa – you need to be present here for long and you need to convince local people that you are a good partner even in hard times. That’s surely something that comes at a price, but you are certain to get a good return if you persist. All in all, you need strong presence, history, links and resilience – if you manage all that, it makes a big difference eventually.

African countries increasingly favour public-private partnerships (PPPs) to simple imports of goods and services. How has this worked in Senegal?

Many important projects have been launched via PPP in Senegal. Most PPPs are in infrastructure, but they are also in education and other areas. One PPP project SG is working on is related to education, specifically to building training centres and schools across the country. The PPP approach is appreciated because it has positive impact on government debt but it’s also a way for African countries to have companies committed for the long term – exactly what I mentioned earlier about the long-term vs one-shot approach. All in all, PPPs increase investor involvement and commitment, while optimizing state debt, so it’s a great route for African governments.

Mr. Tauvel was interviewed by Daniel Libertin

Photo credits: Nicolas Tauvel