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Mar 11, 2019 | 20:41 GMT

4 mins read

France: Macron Looks to Drum Up Business in the Horn of Africa

(Stratfor)
The Big Picture

Over the past year, the Horn of Africa has experienced profound change. Since coming into office in April 2018, Ethiopian Prime Minister Abiy Ahmed has pushed for substantial reforms to improve Ethiopia's political and economic structures as well as internal security. What's more, Abiy's peace deal with neighboring Eritrea ended decades of hostility and opened coastal supply chains to landlocked Ethiopia. With all the changes occurring, outside investors are taking note of the emerging business opportunities. It is no coincidence that French President Emmanuel Macron will be accompanied on his regional visit by representatives of more than 50 French businesses. 

What Happened

Seeking business opportunities, French President Emmanuel Macron has beaten a path to the Horn of Africa. The French leader kicked off a regional tour with a visit to the tiny but geostrategically important country of Djibouti on March 11. Following Djibouti, Macron will visit regional heavyweight Ethiopia on March 12. Joining the president for his tour are a slew of representatives from more than 50 French companies. After Ethiopia, Macron will head to Kenya for the last leg of his trip, becoming the first French president to visit the East African powerhouse. While in Nairobi, Macron will preside over a conference as French companies ink a reported $3 billion worth of contracts.

Why It Matters

Macron will try to accomplish a number of goals during his trip. Djibouti, a former French colony that is home to Paris' largest overseas military base, has expressed disappointment in recent years at France's diminishing interest in it. Macron is hoping to woo back Djibouti at a time when China is making inroads into the country, which is strategically located at the entrance to the Red Sea, by becoming the first French president to spend any significant amount of time there since 1987. 

Macron's subsequent destinations, Ethiopia and Kenya, are regional economic giants, yet France's economic footprint in either country is quite limited. In Addis Ababa, representatives from dozens of French companies will hope to take advantage of Ethiopia's massive economy, which is slowly maturing under the new leadership of Abiy. Sectors such as energy, shipping, logistics and water are of particular interest to many French firms. The timing of Macron's trip is notable: Ethiopia recently signaled its intent to open its financial and telecommunications sectors, which foreign companies previously were barred from entering. And multinational telecommunications corporation Orange S.A. and various French banks are particularly eager to jump into the market. 

Beyond political and security partnerships, France sees real business opportunities in Africa and is keen to get in early.

Indeed, under Macron, France has sought to significantly broaden its relations with non-Francophone African countries such as Ghana, Nigeria, Ethiopia and Kenya. Ethiopia is especially inviting thanks to its recent political transition, successful (at least at present) peace deal with Eritrea and positive economic outlook. For Macron and French businesses, now is the time to get in on the ground floor and jockey for deals.

What to Watch For

As Ethiopia eventually opens up key sectors like telecommunications, finance and others, all eyes will be on the winning companies, especially as fundamental questions such as transparency could affect the fate of tenders. While Ethio Telecom is an extremely attractive target for foreign investment, for example, it has shared few details about its financials or the nature of its operations. If Ethiopia wishes to partner with Western firms — which demand large amounts of transparency — it will have to shed light on the inner workings of Ethio Telecom. But if Addis Ababa chooses to avoid opening up to Western multinationals or investors such as Orange, firms from other countries that demand less insight will be more than willing to jump at the opportunity.

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