“Exporting solutions that have worked elsewhere is not necessarily the best way to meet the needs of Africa”

Sonia Essobmadje, Chief Innovative Finance and Capital Markets Section at the Economic Commission for Africa, discussed the significance of the conference in bringing together African pension funds to address industry challenges and align on development goals. She highlighted the infrastructure deficit in Africa and the need for collaborative solutions. Sonia Essobmadje cited examples of pension funds investing in infrastructure and emphasised the continent’s potential market for financial services. Regarding women’s role in finance, she acknowledged the scarcity of female representation, but stressed the importance of mentorship and training programs. 

How is this conference relevant and important in the current context?

The importance lies in bringing together African pension funds to discuss a range of issues, but also opportunities for them to learn from each other and truly align on the direction they want to take this industry in Africa, and the role they wish to play in the continent’s development. The relevance lies in the possibility of discussing with pension funds, multilateral banks, regulators, the public sector, and other institutions. I always say that we need to have an ecosystemic approach to these issues in Africa. Alone, we won’t get far. But if we all come together and work and truly reflect on African solutions, on African problems, then we can go far, and surely succeed. The event is both relevant and important for the continent, especially when discussing infrastructure in Africa and the significant infrastructure deficit we face. I was surprised when talking with pension funds. They have many initiatives; some have significant reserves that they are not using, even though the need; the infrastructure deficit, is still urgent, and our population is set to double. So the opportunities exist, and I believe the continent must also prepare to seize them.

You say that we still have a gap or delay in terms of infrastructure. Can you elaborate on that? 

Yes. For example, the majority of African countries are engaged in a protocol on the common market, the single market, but we realise that one of the main barriers to implementing this protocol is the absence of infrastructure. Absence of energy infrastructure, absence of transport infrastructure, absence of infrastructure to promote telecommunications, access to the Internet… And these are really prerequisites for developing one’s business. Without electricity, there is no access to the Internet. If we don’t have means of transport, we cannot move goods or people. So, when we talk about strengthening regional integration, these questions become so obvious, and then we realise that we are falling behind. So it’s really important to return to the fundamentals. No business can develop if its factories cannot operate, if they don’t have access to electricity. And today, most of them operate with generators that cost them relatively dearly. So it affects the price at which they sell their goods and services, and it is absolutely unaffordable for the population. I think the issue of infrastructure is really important because it is at the heart of the economic and social development of the continent.

Do you see, during the conference, a willingness to work together to go further?

I think so. It’s very interesting because, for example, I moderated this panel with banks, with pension funds, and each one said something important. We are ready to collaborate, we are ready to sit down with you to discuss how we can support you. We are ready to propose solutions to de-risk investments. We are ready to work on solutions to finance projects at an affordable cost. It’s the first time on a panel that I see people who are really ready to work with others. They really took the time to explain the type of solution they have put in place and how it can be replicated in other African countries. There is this willingness to collaborate.

Do you have any examples of pension funds that really impressed you?

The CNPS Côte d’Ivoire has several projects that I found very interesting. Firstly, when we look at their investment portfolio, they already invest 45% in infrastructure. So they have a direct and indirect exposure in this infrastructure field. They are really pioneers in this sub-region of West Africa. There is also MIDA, which talked about the support they have provided for pension funds in Kenya and South Africa, allowing them to really come together as a consortium, learn together, invest together, and really take their first steps together in this investment world. I also found that to be a good idea. It’s something that can be easily replicated, and that can allow those who do not have all the capacity to invest alone – because we are talking about large tickets – to join with others, to pool their resources to be able to invest and finance projects. I think these are very concrete proposals that can be duplicated, and that are relevant, and I hope they were well received by the participants.

It is often said that Africa is an untapped market for pension funds, for insurance. Is Africa ready to welcome pension funds?

I think that’s true in a certain sense. When we look at the potential of this continent, we are talking about a population that will double by 2050. We are talking about a population with growing needs. We are talking about the emergence of a middle class that can afford a number of services. It’s clearly the market of tomorrow. When we look at the continent as a whole, we are talking about potentially billions of people. So, clearly, there is a market. We talk about an ‘untapped market’ because I think exporting solutions that have worked elsewhere is not necessarily the best way to meet the needs of this continent. That’s where the call really is to work, as Africans, on African solutions that work for this continent, and that meet the needs of Africans. It’s really important.

The majority of African countries are engaged in a protocol on the common market, but we realise that one of the main barriers to implementing this protocol is the absence of infrastructure

 

On March 8, we will celebrate International Women’s Day. What is the role of African women in this dynamic field of finance and economic development?

I like this question. I would say that the role of African women is important, but I must acknowledge that when it comes to the investment and finance field, there are still very few women. So, how can we address this? It involves several things. Firstly, when we are students, we need to be in contact with professionals, and understand what a job in investment, market finance, or corporate finance entails. I believe there is not enough support in these areas. And so, we are trying to see to what extent we can implement training programs. If tomorrow, you want to work in finance, what does that mean? What educational path should you follow to be able to work in a pension fund, for example, or to make investments? There is still work to be done. I will still temper my remarks because I worked in France for a long time, and when I arrived in the conference room, there were not even ten women. That was in the early 2000s. It’s a global problem. It’s not unique to Africa, but I’m starting to see the emergence of dynamic women in this field. And there is no doubt that they will encourage other women to take more interest in finance over time.

What do you take away from your time in Mauritius?

Several things. The first is that it’s a beautiful island. The second is that it’s still the country that first welcomed us for this event and that really mobilised for this event. And frankly, we are extremely grateful to them. The Economic Commission for Africa is one of the partners for this seventh edition. We hope to be present next year as well. I also sensed a certain enthusiasm with many services, technological advancements, and innovative financing mechanisms already in place here in Mauritius. I think other countries also have a lot to gain by learning from what has been done here.