A Socio-Cultural Insight into
Francophone Africa’s Market
Economies
September 2014 │ Marie-Lilas Onanga & Nichole McCulloch
INTRODUCTION
At any given point in time Africa is synonymous with war, disease, hunger, and political instability.
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Today, the African continent is home to some of the fastest growing economies in the world . In 2013,
Africa’s share in new global foreign direct investment projects grew to 5.6 per cent, up from 3.5 per
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cent in 2003 . Moreover, Africa’s rate of return on foreign investment is higher than in any other
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developing region .
Though promising, these indicators are not indicative of a homogeneous “African” path to growth.
The Ashton Partnership recognises the importance of distinguishing between the varying patterns of
development specific to each African nation, and we find the case of Sub-Saharan Africa (SSA)
particularly interesting.
According to Ernst & Young’s latest attractiveness survey on Africa (2014), the main drivers of SubSaharan African growth are the economies of South Africa, Nigeria and Kenya, followed by Ghana,
Zambia, Tanzania, Mozambique and Uganda. In 2012, Anglophone countries (except South Africa)
accounted for 47 per cent of SSA’s average GDP, compared to 19 per cent for Francophone
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countries . On average, Anglophone Sub-Saharan countries also receive higher rankings in the World
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Bank’s “Ease of Doing Business” index .
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French-speaking Sub-Saharan African countries are lagging behind their Anglophone neighbours .
The purpose of this report is (a) to identify the factors responsible for the existing economic divide; (b)
produce insight into the specificities of SSA’s Francophone market economies. Our industry focus for
this research project is around highly regulated and high-risk industries such as energy, natural
resources, and financial services.
Previous reports have tended to focus on internal issues such as infrastructure, regulation and
legislation. This paper will set a new direction by assessing the issues at hand within the context of
society and culture. The Ashton Partnership will be taking a closer look at community relations in
order to identify when corporations lack a full understanding of the Francophone Sub-Saharan nations
in which they operate.
Our research ultimately seeks to give companies already operating in Francophone countries or
planning on entering the market, the additional knowledge to effectively manage doing business in
French-speaking SSA.
1
African Development Bank, (2014). Africa is Now the Fastest Growing Continent in the World.
Ernst & Young, (2014). EY's Attractiveness Survey, Africa 2014: Executing Growth. Ernst & Young.
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McKinsey & Company, (2010). What’s driving Africa’s growth. McKinsey & Company.
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Faujas, A. (2012). Africa: Why Francophones are lagging behind Anglophones. The Africa Report.
5 Doing Business: Measuring Business Regulations, (2014). Ranking of economies - Doing Business - World Bank Group.
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Faujas, A. (2012). Africa: Why Francophones are lagging behind Anglophones. The Africa Report.
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BACKGROUND
Natural Resources & Energy: Due to its abundance in natural resources, Africa has benefited from
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the surge in commodity prices over the past ten years .
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Oil & Gas — There are approximately 500 oil companies participating in African crude oil exploration .
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By 2015, Africa is set to produce 13 per cent of the world’s oil . In SSA oil production is led by Nigeria
and Angola, roughly 75 per cent of total liquid fuels produced; followed by Congo, Gabon and
Equatorial Guinea (the region’s mature producers), and newcomers Ghana and Uganda.
International oil and gas companies tend to do well in SSA due to an increase in acreage licensing,
M&A, sizeable financial means, and senior operating capabilities. Oil and gas projects also receive
increasingly substantial investment as a result of their cost competitiveness. However, sustained
growth continues to elude those operating in more mature fields or in countries subject to geopolitical
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issues, security risks, and stricter investment laws .
Mining — The mining industry represents Africa’s second largest economic activity after
hydrocarbons. In terms of value, more than 80% of these minerals originate in South Africa,
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Botswana, Ghana, Burkina Faso and Tanzania . However, given its vast mineral resources SSA has
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failed to attract proportional levels of global mining investment .
Financial Services: As a result of a growing middle class, an urbanising population, rising demand
for consumer goods, and better political governance, the financial services sector has become one of
the continent’s most promising prospects.
Banking — Retail banking in SSA especially is expected to grow at a compound annual rate of 15 per
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cent between 2014 and 2020 . In order to meet these projections banking institutions already based
in SSA, or planning to, will need to tailor their strategies to the needs of a predominantly unbanked
population. This will also mean expanding out of South Africa and Nigeria where SSA’s banking
sector remains heavily concentrated.
Insurance — Outside of South Africa, Namibia and Kenya, where financial markets are well
developed, most people in SSA cannot afford insurance.
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Private Equity — Private Equity (PE) investments in Africa are trending upwards . In 2011, PE
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investors closed $3bn worth of deals in Africa, up from $890m in 2010 . Avanz Capital estimates that
115 general partners manage 158 PE funds dedicated to the continent mostly directed at agriculture,
infrastructure, and natural resources. However, PE investments only account for 0.1 per cent of SSA’s
GDP, with South African targets attracting the majority of funds.
7
McKinsey & Company, (2010). Africa’s path to growth: Sector by sector. McKinsey & Company.
KPMG, (2013). Oil and Gas in Africa. KPMG.
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McKinsey & Company, (2010). Africa’s path to growth: Sector by sector. McKinsey & Company.
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McKinsey & Company, (2010). Africa’s path to growth: Sector by sector. McKinsey & Company.
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KPMG, (2013). Oil and Gas in Africa. KPMG.
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Central and Southern Africa combined hold 88, 60, and 40 per cent of the world’s platinum, diamond, and gold reserves.
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KPMG, (2013). Financial Services in Africa. KPMG.
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KPMG, (2013). Financial Services in Africa. KPMG.
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KPMG, (2013). Financial Services in Africa. KPMG.
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THESIS
Companies operating in Sub-Saharan Africa find it easier to expand and grow their businesses
in Anglophone countries as opposed to Francophone countries.
Hypothesis: Risk perceptions increase in the case of Francophone Sub-Saharan
African countries due to prominent socio-cultural indicators.
 French is widely spoken in all Francophone SSA countries, along with a slew of other ethnic
tongues depending on the country. This can present an obstacle in the way of attracting
regional and international businesses. Likewise, implementing new business strategies and
garnering support from local populations and government can be difficult through the
intermediary of an interpreter. Investors may prefer countries where French and a multitude of
ethnic tongues is not a factor.
 Most Sub-Saharan Africa countries were colonised by either Britain or France. While both
systems were equally brutal and damaging, British rule had greater levels of indirect rule and
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granting autonomy to local chiefs, while the French model involved more forced labour . This
could explain why Anglophone SSA countries are more market-oriented and driven by
corporate culture, compared to Francophone SSA countries. Actors may prefer investing in
countries with a more developed or like-minded sense of entrepreneurship.
 Francophone Sub-Saharan countries are often associated with a history of ethnic and
religious conflict. While many of these violent conflicts are over, they leave their mark on the
communities and governing bodies in question. These tensions present a potential security
risk for businesses and leave investors unconvinced as to the question of long term stability.
Religious and ethnic tensions can also act as an obstacle when it comes to building corporate
culture and establishing relations with local communities and individuals at government level.
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Lee, A. and Schultz, K. (2011). Comparing British and French Colonial Legacies: A Discontinuity Analysis of Cameroon.
Stanford University.
SCOPE OF ANALYSIS
This report is based on qualitative analysis. The information compiled does not imply causation;
however it proved instrumental in distinguishing overall themes and identifying common patterns.
The research for this report was compiled over the course of three months, during in person and on
the phone interviews with a number of business professionals and experts. These experts come from
companies operating in the financial services, natural resources, and energy sectors. These
companies ranged from large oil companies and established professional services, to small advisory
firms.
The business professionals and experts we interviewed wished to remain anonymous throughout the
completion.
We asked the following questions:
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What types of companies – i.e. industry, size, country of origin – were operating in and around
your area prior to your company’s arrival?
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How do you foresee the future of your industry in Francophone Sub-Saharan Africa?
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What role do you believe your company will play in that future?
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What common obstacles do you encounter whilst conducting business in Francophone SubSaharan countries?
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To what extent do you believe cultural differences in the socio-cultural space have hindered upon
your return on investment rates and your ability to manage effectively?
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Following from that, how would you describe your style of management?
KEY FINDINGS
Our thesis statement and hypothesis focused essentially on the internal issues associated with the
conduct of business in Francophone Sub-Saharan Africa, within the context of society and culture.
Our hypothesis addressed the following indicators: language; the legacy of colonial rule; and history
of ethnic and religious conflict. Here is what we found:
 Knowledge of French and other ethnic tongues is necessary in most cases for investors and
companies in order to establish trust and cooperation. However, investors and company
leaders usually deal with local elites and returning members of the brain drain who are
proficient in the world’s business languages. As such, language is less of a barrier today.
 The legacy of colonialism affects the ease of doing business in Francophone SSA insofar that
it shaped its accountancy and legal framework. The influence of the French Napoleonic code
does worry investors, particularly those coming from a system based on the commonwealth
system.
 Awareness of existing ethnic and religious conflicts or tensions is especially important when it
comes to establishing leadership within a company or expanding your business. In Cameroon
for example, the Bamileke people are in power but the president is Bulu. Whereas in Ivory
Coast, which has a majority of Muslim people, it is better to do business with the Muslim as
opposed to the Christian community. This is a puzzle investors have to take into consideration
when conducting business in certain Francophone SSA countries. This however is not the
case everywhere: in Gabon ethnic and religious issues never factor in – people consider
themselves as being Gabonese first; in Burundi ethnic tensions have improved significantly
despite a very bloody past.
The most widely cited points however, were the following:
Political instability • In the case of Francophone SSA political risk is almost always an issue. In
countries like Cameroon and Congo you have presidents who have been in power for thirty odd
years, and who are showing no signs of wanting to leave. In countries with younger heads of state as
in the case of Burkina Faso and the DRC, presidents often make a point to change the constitution in
their favour; while in Ivory Coast, Niger and Guinea, democratic institutions are notoriously weak.
Anglophone SSA countries have generally stronger democratic institutions, as in the case of Ghana
for example, but that doesn’t mean political parties agree to give up power when their term ends. If
the rule of law is weak and ambiguous, investors and companies run the risk of losing out on their
stakes and costly projects. Additionally, contentions surrounding political succession pose a potential
security risk.
Time • When it comes to the West and certain Francophone SSA countries especially, notions of time
are very different: 10 am may very well translate to 12 or 13 pm. Alternatively, the case is that
meetings with local authorities for example will continuously be rescheduled. This process can make
projects drag on or potentially never materialise. It is important to note that this is not a criticism or a
generalisation of Francophone SSA, but it remains nonetheless a valid observation.
Regional integration • Compared to Anglophone SSA countries, Francophone SSA is still far too
focused on national boundaries. There is a serious lack of regional cooperation. Francophone SSA
countries need to make it easier for people and goods to cross borders; they need to collaborate on
projects (drilling, exploration, infrastructure etc.); they need to work towards developing the region as
a whole, as opposed to their own economies. This lack of regional integration also explains the
tendency for Francophone SSA countries to exercise protectionist policies, as opposed to their more
market driven Anglophone neighbours.
Skills • In the case of Francophone SSA countries it is more often the case that the skills of the
workforce does not match market demand. In the case of Gabon for example where the extractive
industries is so important, there are not enough trained plumbers, electricians etc. This ‘skilled’
workforce tends to come from outside the country. As a result of this companies and investors have to
spend more money developing these skills locally or bringing in people from the outside. The lack of
these skills and training also means that information about a terrain or a particular market is not
always readily available or correct. More formal education will help promote a much needed
entrepreneurial spirit and give Francophone SSA’s emerging middle class the desire to create
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wealth .
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Faujas, A. (2012). Africa: Why Francophones are lagging behind Anglophones. The Africa Report.
SOLUTIONS
In order to bypass the majority of the issues associated with conducting business in certain
Francophone SSA countries, our interviewees suggested the following:
a) It is important to maintain a relative level of neutrality with local authorities whilst staying
connected. The balance between the two is very delicate, and not always achieved.
Therefore, investors and companies operating in Francophone SSA should establish their
contribution within the society in question, and work towards building a common
understanding.
b) Companies and investors working in Francophone SSA need to do so with an outlook looking
10 to 15 years into the future. Change for the better. They should also seek out the help of
people who have succeeded in Francophone Africa. Finally, it is important to take time to
understand the situation on the ground, to be present where it counts and even when it
doesn’t.
c) Finally, companies and investors should spend more time developing their cultural sensitivity
skills. In Francophone SSA, and generally speaking Africa, competence is not just about
having an MBA. However, hiring managers often make the mistake of looking out exclusively
for technical competence without taking into account whether he/she is the right socio-cultural
fit. Hiring managers need to hire bilingual expats and/or motivated professionals from the
surrounding elite in order to counter-balance socio-cultural issues on the ground.
FINAL REMARKS
Our research focused on identifying the specificities of conducting business in Francophone SSA
within the socio-cultural space. We found common trends occurring in various Francophone SSA
countries, but extending to Anglophone SSA countries and North Africa as well. Those most
commonly cited where Francophone SSA is concerned were: political instability, lack of skills, lack of
regional integration and language.
It is important to remember that Francophone Africa is incredibly diverse, that these indicators are
only indicative of certain trends, and that they do not imply causation. Like anywhere else on the
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planet, Francophone SSA countries have their own business cultures . Ultimately, the consensus is
that Francophone SSA is, and will remain, an incredibly relevant and attractive market.
Socio-cultural factors only become blockers if you really want them to. The key for Francophone SSA
countries is to work towards making their countries, their region and their workforce more attractive to
investors. Likewise, investors and companies operating in Francophone SSA countries need to invest
more time when it comes to engaging with the local communities and developing their cultural
sensitivity. If trust is not a possibility, the most realistic thing to do is to establish a common
understanding in order to deal with socio-cultural barriers — even if that means months or years of
negotiation.
If you would like more information or to know more about The Ashton Partnership please contact
Nichole McCulloch.
Marie-Lilas Onanga - Summer Intern
Marie is a graduate from UCL with a degree in European Social and Political Studies. She has also
held internships roles at The Economist, PoverUp and the International Peace Institute.
Nichole McCulloch - Managing Partner, Head of Energy and Natural Resources
Nichole specialises in placing individuals in both board and executive roles globally across all
corporate functions, having completed searches and sourced candidates in over 30 countries.
She focuses on identifying and placing candidates both as expatriates as well as sourcing national
candidates and assisting in the repatriation of nationals, in businesses across developed, emerging
and frontier markets. Nichole is a strong advocate for diversity and inclusion and sits on the executive
committee for Women in Mining (UK), chairing their international committee.
[email protected]
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Maritz, J. (2013). Demystifying doing business in Francophone Africa. How We Made it in Africa.