Donald Kaberuka, the former President of the African Development Bank (AfDB), is now back in a big way with Southbridge, a merchant bank that he jointly manages with French-Beninese Lionel Zinsou who was Prime Minister of Benin from 2015-16. In this interview, Kaberuka reaffirms his belief in a bright future for Africa.
Can you explain why you have now moved into private banking?
In fact, it’s really a continuation of what I was doing before. Whether you are a development or merchant banker, it’s all about raising capital for the development of Africa and African businesses. The majority of capital is currently to be found in the private sector. When I was running the AfDB, we made the effort to considerably increase the funding potential of the private sector, taking it from 300m to 2.5bn per year. What I’m doing now is therefore a continuation of what I did there.
What are the objectives of Southgate from the pan-African perspective?
We believed that Africa, in its current state of development, needed a group like ours – a pan-African champion of the economy – as much in the area of traditional financial advice, strategic advice and investment capital, as in that of merchant banking. These four objectives must always be looked at from a pan- African point of view. African companies that work outside their own borders and international businesses that set up in Africa are of interest to us, whether in terms of raising funds or structuring. We have just completed our first year in business and we can already see that Africa really did need a group like ours, which combines overall excellence with a profound knowledge of local African realities.
Who is your focus – government or the private sector?
In terms of promoting investment in Africa, it has never been a good idea to distinguish between the state and business. The two must always be looked at together, because we are dealing with Public Private Partnerships (PPPs) or Build Operate Transfers (BOTs). Players in the private sector need governments that are capable of executing these plans. We also need para-statal bodies in order to reach our objectives. For example, many of our countries have excellent 10, 20 or 30 year plans. They contain what the state needs in order to achieve its intermediate revenue objectives 25 years out.
But the real problem is not so much the vision contained in the plan as its implementation and execution. It also involves availing the means to help governments that want to bridge the gap between this excellent vision and its execution.
How do you expect to close the current gap between plan and execution?
We most commonly encounter two types of problems. Firstly, there is a real lack of capacity that can only be resolved over time. But there is also a lack of organisation and coordination of the available expertise between the various public and private bodies. It is these two types of problems that we intend to address in the immediate future.
The multinationals are ahead of the game in Africa, what makes you different from them in terms of providing advice?
I would start by answering that the multinationals are very welcome, as Africa needs capital, technologies. There is room for everybody. But what we specially provide is what I call the combination of overall excellence and the knowledge of African realities acquired through management experience in the field, whether at government level, with businesses or with pan-African bodies.
There is room for everybody. But what we specially provide is what I call the combination of overall excellence and the knowledge of African realities acquired through management experience in the field, whether at government level, with businesses or with pan-African bodies. My partners and I believe in all modesty that we have acquired considerable experience in this area, which combines precisely this overall excellence in terms of management and organisation with knowledge of local realities. Not everybody has this experience. That is why we decided it was a good idea to make it available to our businesses and our governments.
Does this experience and the vision that it gives you of the realities in Africa place you in the group of emerging Afro Champions?
The same question could have been asked 25 years ago about the Asian Champions. Africa stands at a major crossroads. Since the beginning of the 2000s, something on the continent has changed that not even the economic crisis of 2008 could stop it: a new energy driven by the dynamic of demographics, by new technologies, a better educated young population, the diaspora that is increasingly integrated into the world of business in Africa.
To me, the Champions are not necessarily very big companies. Some big companies are not pan-African Champions. On the other hand, the true future role to be played by small companies and start-ups is to be present on a continental and international scale. We have the capacity to support them in terms of funding, structuring and access to technologies and skills. It is fundamental for us.
But can the Afro Champions succeed without the industrialisation of Africa?
I think that we need to gradually move away from this sort of reasoning, which dates from the ‘90s. Africa is currently undergoing profound changes. The situation is not the same in every region, some countries are making considerable progress. Afro Champions are emerging; the lack of infrastructure is gradually being resolved.
This piece was first run in the African Business Magazine, a pan-african business magazine featuring the latest trends in business.