Linklater's seminar showcased Africa to Dutch firms
Rapid economic development and an improving business climate in sub-Saharan Africa offer great opportunities for Dutch companies.
Specific knowledge and technology in the food and agri sectors and in the infrastructure and energy sectors are in great demand as the region develops its potential.
With the right access and partnerships, Dutch companies can play an increasingly important role in this development as both economic growth and investment are set to accelerate.
Global law firm Linklaters organised Africa: Empowering; a seminar held in Amsterdam bringing together experts from Linklaters’ Africa practice, a number of prominent panellists, South African law firm Webber Wentzel and the Southern African Netherlands Chamber of Commerce (SANEC).
The seminar was attended by 200 business leaders and representatives from African governments.
Professor Rob van Tulder of RSM Erasmus University, said: ‘”Over 2000 Dutch companies are already doing business in Sub-Saharan Africa, mostly in imports and exports and with relatively little investment,”
Van Tulder who is co-author of a strategic guide for Dutch entrepreneurs in Africa, added: “The Netherlands has a lot to offer in the key sectors of development. But it will take more innovative strategies and an inclusive approach for Dutch firms to gain a sustainable competitive position and seize the unmistakable opportunities Africa offers.”
The Dutch government actively supports corporate investment in low and middle-income countries, as its policy focuses on development through trade.
The Ministry of Foreign Affairs has announced the Dutch Good Growth Fund, a €750 million facility for SMEs operating in emerging markets and for financing of local SMEs.
Dutch SMEs that make investments in or export goods to these countries that are relevant to development, can call on the fund.
Activities from local SMEs can also be financially supported. Simon Smits, Director-General for Foreign Economic Relations, explained at the seminar how this new direction in supporting development stimulates both Dutch and African trade and business.
Speakers at the seminar also included Kennedy Bungane, Chief Executive, Barclays Africa Regional Management, Pieter Bootsma, Executive VP Commercial Marketing AirFrance KLM, Dr Vic Prins, Director Aviation at Royal HaskoningDHV, Peter van As, General Manager, DIAGEO Angola, Peter Leon, Partner of Webber Wentzel and Dr Daniella Strik, Linklaters Amsterdam Head of Litigation and Arbitration.
Linklaters’ Africa practice has focused on the African continent for more than 30 years, with experience in over 50 jurisdictions.
In response to increasing demand for its services, the firm has complemented and strengthened its position in Africa recently by entering into a collaborative alliance with Webber Wentzel.
The bond also strengthens this leading South African law firm, says partner Peter Leon. “Cross-border deals and multi-jurisdictional matters require a combination of international experience and know-how and on-the-ground knowledge and resources.”
Doing business in sub-Saharan Africa has its own demands, notes Martijn Koopal, a partner of Linklaters in Amsterdam who advises on an extensive government energy purchase programme in South-Africa.
“It takes an understanding of how these markets work and a network to find your way. As we have a well-established practice focusing on the African continent, we are well positioned to help clients with our specialist knowledge of African legal systems, including English, French and Portuguese-based systems.”
Billionaire Kumar Birla Champions Regional Supply Chains
As the head of the Aditya Birla Group, a US$46bn firm that operates in 36 countries, Kumar Mangalam Birla is no stranger to splashy strategic moves. Yet his recent announcement that he no longer wants to acquire globally distributed supply chains stood out. While many companies have struggled to cope with shipping backlogs, his firm has chosen to pivot and focus on regional networks. Said Birla: ‘We wouldn’t look at a company or a business where you source in one corner of the world and sell in another’.
He cited protectionism, the pandemic, and the limited movement of products and people around the world as ABG’s primary causes of lost profits. And they aren’t alone. Over the past year, 900 of the U.S. and Europe’s biggest IT, defence, and financial services firms have lost an average of US$184mn apiece.
An Era of Global Disruption
Over the past few decades, low shipping rates and rapid delivery times have lulled multinational firms into a false sense of security. In the early 2000s, companies chose to take on significant global supply chain risks in exchange for increased profits. First, it made sense to manufacture higher-value goods, such as electronics, in low-cost regions throughout Southeast Asia, India, and Africa. Second, first-tier suppliers started to outsource the manufacturing of specific components to second-, third-, and even fourth-tiers—leaving supply chains with extremely limited visibility.
So when COVID-19 disruptions struck certain regions, companies were caught unprepared. Usually, these events come few and far between. But over the past ten years, we’ve seen a number of ‘black swan’ events that have thrown the supply chain industry into chaos. Here’s a quick history of the most significant events in recent years, thanks to the MIT Sloan Management Review:
- 2010. China creates export quotas for rare earth elements.
- 2011. The Tōhoku Earthquake hits East Japan; flooding sweeps throughout Thailand.
- 2016-present. Trade wars between the U.S. and China hurt suppliers.
- 2020-present. COVID-19 pandemic shuts down international shipping ports.
Now, Kumar Birla is one of many who want to re-evaluate how we run our supply chains. Though his company has acquired 40+ companies in the last quarter decade, Birla intends to build up local hubs rather than expand operations.
Why Pursue Regionalisation?
Combine Chinese economic dominance, global supply chain vulnerabilities, and major government policy shifts around the world, and you have a storm brewing on the horizon for big multinational firms. As Brookings noted, ‘the biggest risk for trading opportunities in the developing world is growing protectionism in more advanced economies, often dressed up as national security protection’.
Altogether, from the U.S. to the European Union, governments are trying to protect their domestic supply chains, secure adequate stockpiles of materials, and build world-class local networks. Consider Biden’s recent executive order, which seeks to bring semiconductor manufacturing back to home soil, or Japan’s bid to open more memory chip fabrication factories near Tokyo. The Aditya Birla Group intends to react in kind. Said Birla: ‘We’re looking at regionalism as a very big theme’.
Will Others Follow Suit?
In the post-pandemic economy, global businesses must decide whether to expand or contract. On one hand, the Alibaba Group’s Cainiao Smart Logistics Network recently launched a direct flight between Hong Kong, China, and Lagos, Nigeria. On the other, the Japanese government is desperate to make its chip manufacturing domestic. Indeed, as two supply chain strategies diverge in a post-pandemic world, the one businesses take may make all the difference.
Yet Birla is confident that regionalisation is the right call. According to his words at the Qatar Economic Forum, even necessary cross-border transactions should be smaller in scope. And as the Bloomberg Billionaires Index now lists his net wealth at US$10.4bn, up 52% from 2020, he may have the cash to test his theories out. ‘Regional hubs, regional presence, regional employment, catering to regional demand’, he stated. ‘We’re a global company rooted in local economics’.