Sunday, March 10, 2019

French firms in Kenya facing crisis as President Macron seeks answers

A Total fuel station in Marsabit. A Total fuel station on Limuru Road, Nairobi. The French oil marketer has seen its market shrink over the years. FILE PHOTO | NMG 
President Emmanuel Macron is set to start a two-day State visit to Kenya next week at a time French companies in the country are facing a challenging environment in decades.
The visit comes as French firms in Kenya battle headwinds arising from increased competition from Chinese firms as well as corporate governance and integrity issues.
Some of the French firms in the crosshairs of market-related or corporate governance challenges include multinational group Idemia, oil marketer Total Kenya, Bolloré Group, NAS Servair, Amethis Finance and automaker Peugeot S.A.
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“Though French companies like Total, Areva, and Bolloré have been household names in Africa for decades and contributed to energy development and infrastructure growth, they have received criticism from local non-governmental organisations for reported corporate governance and social responsibility issues, corruption scandals, and monopolistic behaviour,” wrote Landry Signé of the Stanford University’s Centre for African Studies in a recent commentary.
Foreign relations experts said on Friday that Mr Macron, an ex-banker and former economic adviser for former French President François Hollande, who is battling political headwinds at home, is “desperate for recognition as a world leader,” and his upcoming trip is important to him in this aspect.
“He has problems of acceptability even within France. The yellow jacket movement has eroded his standing,” said Macharia Munene, a professor of history and international relations at United States International University.
“He is determined to push French interests to as many countries in Africa as possible. He wants to join China in being felt in Africa, which seems like an easy geopolitical target,” added Prof Macharia.
Mr Macron, since his election as French president in 2017, has openly stated his hope to boost France’s trade volume with Africa by placing the continent at the cornerstone of France’s foreign relations policy.
French-African relations
Mr Macron is on record saying he desires to partner with, not dominate, African states. In 2013, the French Senate published a report, titled “Africa is our Future” (L’Afrique est notre avenir), highlighting 10 priorities and 70 measures to improve French-African relations.
Prof Macharia, however, said Mr Macron has an uphill task in Kenya to “penetrate a supposed British zone of influence,” referring to Kenya’s relations with Britain. Kenya has lately become a key ally for the Chinese, whose firms have firmed their grip on cash-rich infrastructure contracts including various roads and the multibillion Standard Gauge Railway (SGR).
“Macron is a corporate operator and would likely have a similar business attitude as President Uhuru Kenyatta, looking for convergence of interests,” he said. “His views on Africans are not flattering (however), asserting that Africans suffer civilisation deficits.”
President Kenyatta said last month he looks forward to hosting his French counterpart and that he expects the visit “to break new ground” in the two country's relations.
Foreign Affairs principal secretary Macharia Kamau reinforced this view Friday revealing that the French President will be accompanied by a high-powered delegation of ministers and businessmen to Kenya during which “extensive discussions on bilateral matters, including trade, manufacturing, infrastructure support, and peace and security,” will be conducted.
“We are looking forward to the visit of the French President. It is his first visit to Kenya. And the visit comes at a time when Kenya-French relations are at an all-time high,” said Mr Kamau in interview.
“During the visit, the French President will also inspect the area of work where the commuter train service that the French are intending to work on. President Macron, together with President Kenyatta, will also launch a new line of vehicles to be manufactured here in Kenya.”
French automaker Peugeot S.A, once a household name, has struggled to retain its market share amid cheap imports of second-hand cars and competition from local assemblers.
French multinational Idemia is embroiled in a dispute over the Kenya government’s plan to build a central identification platform.
The plan has alarmed digital advocates and civil libertarians who say it raises questions over human rights, ethics, and possible breaches of privacy.
The French firm gained public attention after the Independent Electoral and Boundaries Commission awarded it a Sh6 billion tender to supply voter identification and results transmission kits (Kiems) ahead of the 2017 polls.
Stiff competition
Total Kenya has come under stiff competition which has seen it lose its edge to rivals while the successful takeover of Nairobi Securities Exchange (NSE)-listed oil marketer KenolKobil by French company Rubis Energie was also marred by claims of insider trading.
NAS Servair — the French owned in-flight catering facility — has seen its deeply rooted monopoly tested by new entrants.
Last April’s holding in custody and charging of French billionaire businessman Vincent Bolloré for alleged corruption received attention in Kenya, given the hundreds of millions his firm has been investing in the local logistics business.
It was alleged that his company undercharged election publicity work to win public contracts in Africa. His holding company, the Bolloré Group, denied any irregularities.
In 2016, a lavish holiday ranch located in Kenya’s Laikipia plains owned by French tycoon Guy Wildenstein was at the heart of a multimillion Euro tax evasion battle.
French authorities accused the owners of Ol Jogi Ranch — the setting for award-winning film Out of Africa — of hatching a tax fraud scheme that has cost the European nation millions of Euros in uncollected taxes.
Earlier in 2014, the Kenyan pharmaceutical industry was thrust at the centre of an international probe ordered by a French drug maker, Sanofi, over claims that some of its employees may have paid bribes to secure sale contracts in the country.
French private equity fund Amethis Finance lost its entire investment in Chase Bank after the lender went under and was later sold to Mauritian group SBM Group.
Two French firms are also battling it out for a lucrative highway contract estimated at Sh180 billion whose winner will be announced soon.
The Kenya National Highways Authority (KeNHA) picked four consortia to design, finance construct, operate, maintain and transfer the concession Nairobi-Nakuru-Mau Summit Highway two years ago.
“The French government recently outlined proposals for restituting African art and cultural objects to their original homes on the African continent; this effort is undoubtedly part of a long-term agenda to remedy historical grievances and become equitable partners,” says Prof Signé.
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