- The alliance aims to act as a pipeline for businesses in Europe and Africa to leverage investment opportunities across the two regions.
- Deal modelled to capitalize on Africa’s untapped potential and Europe’s advanced entrepreneurial and tech ability to drive investments.
- The two parties have identified demography, decarbonization, digitization, and derisking as reasons for Europe’s growing interest in Africa.
Financial services giant ODDO BHF from Germany has taken a step forward in fostering cross-continental economic collaboration by signing a memorandum of understanding (MOU) with regional lender Equity Group.
This alliance, which was formalized during the German-Africa Business Summit in Nairobi, aims to act as a pipeline for businesses in Europe and Africa to leverage investment opportunities across the two regions.
Dr. James Mwangi, Managing Director and CEO of Equity Group, alongside Florian Witt, Head of Corporate Banking at ODDO BHF, signed the agreement that is modelled to capitalize on Africa’s untapped potential and Europe’s advanced entrepreneurial and technological resources to drive investments.
“We are looking for a strategic partnership that bridges Africa and Europe, enabling businesses from both continents to work together and expand opportunities,” said Dr. Mwangi. He cited Africa’s vast resources—human capital, arable land, renewable energy potential, and strategic minerals—paired with Europe’s technological and entrepreneurial expertise as vital ingredients that can power industrialization at scale.
This synergy could fast-track Africa’s development and enhance the quality of life for its roughly 1.4 billion people.
Changing the investment perceptions about Africa
Florian Witt of ODDO BHF countered traditional misconceptions about the risk of doing business in Africa. “We have operated in Africa for decades and found it to be sustainable, stable, and profitable,” he said, adding that the perceived risks are far from the reality.
Witt highlighted four key drivers—demography, decarbonization, digitization, and derisking—as reasons for Europe’s growing interest in Africa.
The Four ‘D’s: Why Africa?
Demography: Africa’s youthful population offers significant human capital, which the aging populations of Europe need. “Europe is capital-rich, and financing value chains in Africa is critical to achieving higher yields to support our retirement systems,” Witt explained.
Decarbonization: Africa’s renewable energy potential aligns with Europe’s push for a greener economy.
Digitization: “What Equity can do for retail customers, most European banks cannot,” Witt remarked. Africa’s innovation in telecom-based payment systems, such as Kenya’s mobile money solutions, offers valuable lessons for Europe, where legislation often slows digital adoption.
Derisking: Witt pointed out Europe’s over-reliance on supply chains in China and Russia. “We are now reaching out to Africa. This can be an opportunity for all if we operate on equal terms,” he said.
Addressing global geopolitical challenges
Dr. Mwangi framed the alliance as a response to shifting global dynamics. “The challenge of world geopolitics presents an opportunity to redefine economic models. Businesses like ODDO and Equity can choose to collaborate and shape a new future,” he said.
The agreement aims to establish equal partnerships that transcend historical imbalances, ensuring mutual benefits for both continents. Equity is prepared to take on the risk of European businesses entering African markets by providing local currency debt to mitigate currency mismatch risks.
Impact Investing: Equity-ODDO BHF shared vision
Beyond commercial interests, the partnership focuses on impact investment. Equity Group Foundation (EGF) and ODDO’s foundation will collaborate on initiatives in reforestation, education, renewable energy, and agriculture.
Witt lauded Equity Group Foundation’s work, calling it a role model in corporate social responsibility. “Equity’s foundation is among the largest globally per capita. This collaboration will place Equity among global financial giants,” he said.
A foundation for sustainable growth
The MOU builds on previous collaborations between Equity Group and German institutions. Notably, the recent establishment of a German Desk at Equity Bank highlights the deepening ties between the two entities. This platform, supported by the German Development Finance Institution (DEG), positions Equity as a bridge for European businesses to tap into African markets.
Dr. Mwangi underscored the similarities between Germany and Africa’s economic structures. “Germany’s economy is built on small and medium enterprises (SMEs), much like Africa’s micro, small, and medium enterprises (MSMEs). Equity brings the passion to see a transformed Africa, which ultimately contributes to a sustainable world,” he said.
ODDO BHF’s role in the partnership
ODDO BHF, a leading European financial group specializing in private banking, asset management, and corporate banking, brings extensive expertise to the alliance. Its commitment to sustainable investments and trade financing is expected to unlock significant opportunities across Africa, including regions like the Democratic Republic of Congo (DRC).
The Equity-ODDO BHF alliance represents a strategic move to reshape the Europe-Africa economic relationship, fostering sustainable growth and innovation. By leveraging their strengths, Equity and ODDO are paving the way for a future where cross-continental partnerships could drive prosperity for all stakeholders.
As Dr. Mwangi aptly put it, “A transformed Africa means a sustainable world. This is the inheritance we want to leave for future generations.”
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