France moves to strengthen economic relations with Nigeria

In April 2021, the French minister of foreign trade and economic attractiveness, Franck Riester, was in Nigeria on a two-day bilateral mission. At a meeting with the Nigeria Governors’ Forum (NGF), he revealed that the volume of trade between France and Nigeria dropped to $2.3bn in 2020 from $4.5bn in 2019.

Riester highlighted Covid-19 as a primary reason for the drastic fall in trade between the partners, and met with industry heads in the private and public sectors in a bid to restrengthen the economic relationship between the two countries. He reiterated the French government’s desire for the development of Nigeria by investing in both the private and public sectors.

“We are optimistic of the future when the crisis will end because we have many companies that have settled here. We want a win-win partnership between the two countries. We have 100 companies that are settled in Nigeria, representing 10,000 people working in these companies, and we want to increase our investments in Nigeria,” he said.

He said a summit was being organised in France between Nigerian business leaders in the private sector and the French government to develop ideas to improve trade between both countries. 

At the Business France Summit in June, President Emmanuel Macron, who has been keen to boost relations with Anglophone partners across the continent including Kenya, inaugurated the France-Nigeria Business Council, a private sector-driven initiative to enhance relations peopled by senior business leaders from both nations.

Abdulsamad Rabiu, founder and chairman of multi-industry conglomerate BUA Group was named the inaugural president. Gilbert Chagoury of Chagoury Group, Mike Adenuga of Globacom and Conoil, Aliko Dangote of Dangote Industries, Tony Elumelu, chairman of UBA and Heirs Holdings and Herbert Wigwe, CEO of Access Bank, constitute the Nigerian council members while the French council members included senior representatives of major French corporates including Dassault, Danone, Axens, Ponticelli, and Total.

Time to kickstart relations

Nigeria has been France’s leading trading partner in sub-Saharan Africa and the fourth in Africa behind Morocco, Algeria, and Tunisia, with oil and gas at the heart of the economic relationship.

Nigeria mainly exports natural hydrocarbons and other extractive industries products to France and French companies are active in its oil sector – in 2018, for example, French oil giant Total’s Egina platform began oil production at a 200,000 barrelper-day facility – while France exports refined petroleum products, pharmaceuticals, metal products, and mechanical equipment to Nigeria.

Other French companies have a strong presence in Nigeria’s banking, infrastructure and logistics sectors.

In 2019, natural hydrocarbons and other extractive industries products accounted for 97% of Nigeria’s exports to France, which made up the lion’s share of trade ($3.9bn). Development aid also plays a crucial role in the relationship. France is Nigeria’s second-largest bilateral creditor after China through the Agence Française de Développement, which has invested more than $2.4bn in the past 10 years. 

In 2019, the French government launched the Choose Africa initiative to support tech startups in Africa. The initiative dedicated €3.5bn ($4.1bn) to finance and support 10,000 African startups, micro-businesses and SMEs by 2022. Some 240,000 jobs are reported to have been created or retained in Nigeria by the initiative so far.

Multiple sectors could benefit from greater cooperation, according to Rabiu. At the meeting in France he said that Nigeria is rich in potential for French businesses across solid minerals, mining, manufacturing, agriculture, associated equipment, power, food processing, infrastructure and other sectors. 

Yet he reiterated that a partnership was needed to forge a more effective enabling environment for French companies to invest in Nigerian businesses. Nigeria ranked 131st on the World Bank’s Ease of Doing Business index, with getting electricity, registering property and starting a business all significant challenges. France meanwhile ranked 32nd, with companies struggling to access credit and register property among other challenges. Rabiu said that investors from both countries would benefit from the agenda of the new council.

“Where French businesses have formerly been risk-averse or outrightly unable to do business with Africa’s largest economy, they can now be assured of a platform through which they can penetrate and mutually grow the market. Where Nigerian companies had not seen French companies or the French market as a viable destination due to a lack of information, they can now be sure of a platform to facilitate this,” he said.

Strategic decision

Analysts and trade experts in Nigeria have welcomed the trade partnership between France and Nigeria. Sand Mba, executive director of African International Trade, says the creation of the France-Nigeria Business Council was a “strategic decision” that could spark economic growth and reduce Nigeria’s stubbornly high unemployment rate, which rose to 33.3% in March, or around 23.2m people, according to the Nigerian Bureau of Statistics (NBS).  

“Nigeria is blessed with numerous resources for French companies to be able to take advantage of. Those opportunities will enable them to take advantage of the opportunities in the mineral and agricultural industries. The power of food processing is an area they need to focus on because this is a golden opportunity. This is something the business council must deal with. No country can survive now by trading in pre-Covid-19 trade. We need partnership and it must be an equal partnership,” says Mba.

Riester said many French companies desire to do business with Nigeria but unstable security and taxation issues have dissuaded them from doing so. Mba says the council must have a robust discussion with the Nigerian government on the need to create a favourable business environment to encourage French investment.

“We must be a country that is predictable. No company comes here and invests in a business that is not predictable. Today we have access to forex and tomorrow the government says we do not have access to forex,” he says.

Vaulting the language barrier

Energy expert Zaka Bala says the initiative could deepen regional integration between Nigeria and its multiple Francophone neighbours in which France has a historically strong investment and cultural footprint. “It will strengthen the relationship between Nigeria and Francophone countries while enhancing Nigeria’s role in Africa,” he tells African Business.  

But Bala says that the relationship should embrace new opportunities beyond the hydrocarbons trade by facilitating cultural and educational exchanges that will benefit citizens from both countries. More Nigerian students learning French and having access to France would benefit both bilateral ties and Nigeria’s relations with its Francophone neighbours. Meanwhile, strengthened relations with Nigeria would allow France to build on new links with Anglophone Africa after decades of confinement to French-speaking former colonies. 

In 2019, Macron visited Kenya and oversaw the signing of a raft of commercial deals, before hosting President Uhuru Kenyatta in Paris in 2020. Over 100 French companies operate in the East African nation in sectors like hospitality, energy, luxury goods and retail.

Since 2012, the number of French companies in Kenya has increased dramatically from 30 to 110, according to the French Chamber of Commerce Kenya, with major investors including Accor, Peugeot, Décathlon, Carrefour, Société Générale, Air France and France 24. Nigerian pundits hope that cultural exchange can trigger a similar commercial boom. 

“When it comes to educational relationships, there is a need for bilateral exchanges, because for there to be global integration, there is a need to speak more than one or two languages. French is an international language. In the area of bilateral exchanges, it will be very good,” he says.

Agricultural cooperation

Bala also highlights the potential for agricultural cooperation given France’s world-leading role as a centre of fertiliser manufacturing.

“When it comes to agriculture, there is so much for them to share in terms of nutrition. We are yet to have food security and one of the things we need for food security is fertiliser. If we have enough fertiliser, we are going to boost agriculture and have food security. We believe that France is advanced in such areas. France can come in and support us.”

With the new council dominated by influential private sector voices from both nations, Mba and Bala say it could offer a strong lobbying voice to put the Nigerian and French governments under pressure to provide a mutually enriching enabling environment for investors.

“The drivers of every economy are the private sector,” says Mba. “They are the employers of labour. Government makes a decision. Members of the council are the strongest in the business sectors and they are the ones we need to be moving forward. It is the private sector that stimulates the economy.”