Al-Khaleej interviews Jean-Claude Bastos de Morais on the UAE as a gateway for investments in Africa

Articles 15 February 2018

Could you give us more details about the company and your investments in different sectors?

For a decade, Quantum Global Group has focused on African development, particularly in the fields of corporate finance advisory, asset management, real estate and investment consulting. Our aim is to be internationally recognised as the partner of choice for investment across Africa. We have approximately $8 billion of assets under management. We strive to build on our reputation as a trusted and recognised partner for investment management, private equity and research across Africa.

What the MENA region and UAE mean for your business?

The UAE is a gateway for investments into Africa, and also a hub for African businesses seeking to expand internationally. It is emerging as a hub for Quantum Global, thanks to its advanced financial sector, its close links to Africa and its proximity to Europe.

Do you have; or planning to have, presence in the region or in UAE? If so where and when?

We are expecting soon to receive a license for a representative office of Quantum Global in Dubai International Financial Centre. This is our first step into the region and we expect our presence to grow in line with the growth of our investments in Africa.

What role in your opinion Dubai and UAE could play as a gateway to Africa?
There is a long tradition of Gulf trade with and investments in Africa, from telecoms and airlines to natural resources and agriculture. Dubai has made significant efforts to make Africans feel welcome in the city, and regularly attracts African heads of state and business delegations to its conferences. We regard Dubai as a gateway for trade and thus, investment in Africa, and we plan to open our unique investment opportunities to Gulf investors.

How do you see global economic developments now and how it is impacting economies in Africa?

The global economy is gaining momentum, with economic activity picking up in the first half of 2017, reflecting firmer domestic demand growth in advanced economies and improved performance in large emerging market economies. Advanced economies are largely benefiting from lenient monetary conditions and fiscal support, while emerging economies are supported by recovering commodity prices and policy support. In our view, the global economy is looking more positive and is on course to achieve the 3.6% growth this year given the strong broad-based performance so far this year, which strongly reflects renewed optimism. Growth is expected to strengthen further in 2018 to 3.7%. However, uncertainty about US trade and development policies under the Trump administration persist and the 30% cut in development assistance by the US will likely affect some smaller and fragile African economies. On the other hand, these changes create great opportunities for new Middle Eastern investors and partners on the continent.

Which sectors are more attractive now to invest in Africa?

In general, we invest in major projects that are highly strategic for the countries where they are located.

Agriculture is critical to Africa and its people, with 60% of the world’s arable land situation in Africa, but is still relatively poorly developed. We focus on bringing scale and new technology to the agriculture sector, ensuring that Africa is better able to feed itself and develop the industry from subsistence farming to a more commercial approach.

Healthcare is another under-developed sector where our capital can have a transformative effect on Africa and the well-being of its people. With our co-investors, we are planning to invest $1 billion in African healthcare.
Good hotels in Africa are relatively scarce, and this makes hospitality an excellent sector for private equity. Responding to demands of a rapidly growing middle class and increased international corporations setting up operations in Africa, the hotel sector also creates immediate employment opportunities in construction and maintenance and hotel management, which contributes to the development of the domestic supply chain and drives demand for new goods and services.

African governments have historically failed to invest sufficiently in infrastructure, and this has had negative effects on African living standards. Transport is slow and dangerous, electricity supply is inconsistent and public works often fail to meet expectations. However, the other side of the coin is equally true and some of the most cost-competitive photovoltaic (solar) projects are in Africa. Quantum is investing over a billion dollars in African infrastructure. One notable investment is the multipurpose deep-water port in northern Angola called Porto de Caio (PoC), which is being built under a public private partnership with the Angolan government and will transform the trading landscape in Southern Africa significantly.
There has historically been a lack of investment in mining, so this sector is full of potential. With our co-investors, we are expecting to invest over a billion dollars in mining over the next four years, and this investment will have significant knock-on benefits for the African economy.

Finally, timber represents one of the greatest African resources that offers huge development potential and we have established a partnership with the Angolan Government to develop 80,000 hectares of large-scale wood fibre plantations in the Planalto region of Angola. We place a big emphasis on sustainability and environmental protection in our timber projects, which also promote rural economic development and create jobs outside the big cities.

What are your expectations for economic growth in Africa?

Despite considerable external challenges and the fall in oil prices over the past few years, many of the African nations are demonstrating an increased willingness to achieve sustainable growth by diversifying their economies and introducing favourable policies to attract inward investments.

Botswana is a case in example – its strategic location, skilled workforce and a politically stable environment have attracted the attention of international investors leading to a significant influx of FDI.

Our Research colleagues have analysed the investment attractiveness of the all African countries across a wide range of factors in what we call the Africa Investment Index. The top five African investment destinations attracted an overall FDI of $13.6bn in 2015. Morocco was ranked second on the Index based on its increasing solid economic growth, strategic geographic positioning, increased foreign direct investment, import cover ratio, and an overall favourable business environment. Egypt was ranked third due to an increased foreign direct investment and real interest rates, and a growing urban population. The fourth country on the list, South Africa, scored well on the growth factor of GDP, ease of doing business in the country and significant population. Whilst Zambia, was the fifth country on the list due to its significant domestic investment and access money supply.

With a population of over one billion people and rapidly growing middle class, Africa clearly offers significant opportunities to invest in the continent’s non-commodities sectors such as financial services, construction and manufacturing amongst others. However, structural reforms and greater private sector involvement are crucial to unlocking Africa’s true potential.

Source: Al-Khaleej (Arabic)