Equity partners with ODDO BHF to stimulate investments between Europe and Africa. The alliance aims to serve as a pipeline for companies in Europe and Africa to leverage investment opportunities in both regions. The agreement seeks to capitalize on Africa’s untapped potential and Europe’s advanced entrepreneurial and technological capacity to boost investments. The two parties have identified demographics, decarbonization, digitization, and risk reduction as reasons for Europe’s growing interest in Africa.
ODDO BHF – Equity Group : Transcontinental economic collaboration
The German financial services giant ODDO BHF is taking a step forward in promoting transcontinental economic collaboration by signing a memorandum of understanding with regional lender Equity Group. This alliance, formalized at the German-African Business Summit in Nairobi, aims to serve as a communication channel for companies in Europe and Africa to leverage investment opportunities in both regions.
Dr. James Mwangi, CEO and Managing Director of Equity Group, alongside Florian Witt, Head of Corporate Banking at ODDO BHF, signed the agreement. This partnership aims to capitalize on Africa’s untapped potential and Europe’s advanced entrepreneurial and technological resources to stimulate investments.
“We seek a strategic partnership that connects Africa and Europe, allowing companies from both continents to work together and expand their opportunities,” said Dr. Mwangi. He cited Africa’s vast resources—human capital, arable land, renewable energy potential, and strategic minerals—coupled with Europe’s technological and entrepreneurial expertise as essential ingredients that can fuel large-scale industrialization.
This synergy could accelerate development and improve the quality of life for Africans.
How are African subregions faring ?
In North Africa, foreign investments decreased by 12 %. Mergers and acquisitions in Egypt declined from the record levels reached in 2022. Morocco also saw a decline in foreign direct investments but managed to attract new projects.
Foreign direct investments in West Africa decreased by 1 %, with mixed results across countries. The announcement of a 34 billion USD investment in a green hydrogen project in Mauritania significantly impacted the value of new investments.
FDI in Central Africa saw a 17 % decline. Although the number of new projects increased by 56 % and their value rose by 119%, the region was affected by the slowdown in international project financing operations.
FDI inflows in East Africa declined by 3 %, mainly due to an 11% decrease in Ethiopia. However, the increase in new projects and international project financing operations was over 30 %, suggesting better prospects for anticipation.
Trends continue to be influenced by fluctuations in Angola in Southern Africa. Despite an increase in merger and acquisition activity, incoming flows to South Africa decreased by 43 %.
Changing the perception of investments in Africa
Florian Witt refuted misconceptions about the risks associated with business activities in Africa. “We have operated in Africa for decades and found it to be sustainable, stable, and profitable,” adding that the perceived risks are far from reality.
Witt highlighted four key factors: demographics, decarbonization, digitization, and risk reduction, to explain Europe’s growing interest in Africa.
Four economic challenges in Africa
- Demographics : The youth of Africa’s population offers significant human capital, which Europe’s aging populations need. “Europe is rich in capital, and financing value chains in Africa is essential to achieve higher returns to support our pension systems,” Witt explained.
- Decarbonization : Africa’s renewable energy potential aligns with Europe’s efforts towards a greener economy.
- Digitization : “What Equity can do for individual customers, most European banks cannot,” Witt remarked. African innovation in telecommunication-based payment systems offers valuable lessons to Europe, where legislation often slows digital adoption.
- Risk Reduction : Witt highlighted Europe’s overreliance on supply chains from China and Russia. “We are now reaching out to Africa. This can be an opportunity for all if we operate on equal footing,” he said.
Addressing global geopolitical challenges
Dr. Mwangi presented the alliance as a response to evolving global dynamics. “The challenge of global geopolitics offers the opportunity to redefine economic models. Companies like ODDO and Equity can choose to collaborate and shape a new future,” he said.
The agreement aims to establish equitable partnerships that transcend historical imbalances, ensuring mutual benefits for both continents. Equity is ready to assume the risk associated with European companies entering African markets by providing local currency debt to mitigate currency mismatch risks.
Beyond commercial interests, the partnership focuses on impact investing. Equity Group Foundation (EGF) and the ODDO Foundation will collaborate on initiatives in reforestation, education, renewable energy, and agriculture.
Witt praised the work of the Equity Group Foundation, calling it a model for corporate social responsibility. “The Equity Foundation is one of the largest in the world per capita. This collaboration will place Equity among the global financial giants,” he said.
Foundation for sustainable growth
The memorandum of understanding builds on previous collaborations between Equity Group and German institutions. Notably, the recent creation of a German Desk within Equity Bank underscores the deepening ties between the two entities. This platform, supported by the German Development Finance Institution (DEG), positions Equity as a bridge enabling European companies to access African markets.
Dr. Mwangi highlighted the similarities between the economic structures of Germany and Africa. “The German economy is based on small and medium-sized enterprises (SMEs), much like Africa’s micro, small, and medium-sized enterprises (MSMEs). Equity brings the passion to see a transformed Africa, ultimately contributing to a sustainable world,” he said.
The Role of ODDO BHF in the Partnership
ODDO BHF, a leading European financial group specializing in private banking, asset management, and investment banking, brings deep expertise to the alliance. Its commitment to **sustainable investments** and trade finance is expected to open significant opportunities in Africa.
The Equity-ODDO BHF alliance represents a strategic move to reshape economic relations between Europe and Africa, promoting sustainable growth and innovation. By leveraging their strengths, Equity, and ODDO are paving the way for a future where transcontinental partnerships can foster prosperity for all stakeholders.
