Paulo Gomes strikes out with new boutique

Paulo Gomes, formerly an executive director at the World Bank, sets out his plans for his new boutique advisory firm and argues for a reset in how DFIs deploy capital on the continent.

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When Paulo Gomes joined the World Bank, back in 1998, observers were starting to question its policy recommendations of structural adjustments and poverty reduction exercises linked to radical policy reforms.

Debate centred around the conditions imposed on countries wishing to access debt relief programmes. As the youngest executive director at the time, Paulo Gomes called for a different approach: creating a thriving private sector and regional integration.

To its credit, according to Gomes, the president of the World Bank, James Wolfensohn, was amenable to new ideas and organised a retreat alongside ministers of finance to devise a new strategy for the promotion of the private sector in Africa.

At the time, Gomes recalls, the IFC, the private sector arm of the World Bank, was lending less than $200m a year to Africa, and colleagues at the IFC were complaining about the lack of deals in Africa. Gomes lobbied to have a special team assigned to Africa and for a South African office to be opened. Today, the IFC is investing, through debt and equity, nearly $5bnn a year.

Gomes left the World Bank in 2006 and held a number of board positions, including at Ecobank and Asky Airlines. On leaving the World Bank, he was frustrated that too little capital was going to greenfield projects. He was an important participant in the creation of what is today the Africa Finance Corporation (AFC). With the government of Nigeria and the participation of newly capitalised Nigerian banks, it managed to raise $1bn in capital.

Gomes, from Guinea Bissau, managed to convince his country to sign up as an inaugural member of the AFC, setting the way for others to follow suit. Today, the AFC has a balance sheet of over $7bn, with 30 countries as members.

New boutique

Since leaving the bank, Gomes has collaborated with a number of trusted partners. Three of these trusted partners are former bankers and a reputed lawyer: Austine Ometoruwa, a Citi veteran and founding CEO of AFC, Eric Guichard, a former World Bank colleague, and George Rubagumya, an international lawyer who was on the Founding Board of Directors of the Rwanda Development Board in 2009. They have set up what he refers to as an innovative investment firm, Orango Investments Corporation (OIC). 

OIC is a unique advisory and investment platform with offices in Kigali and London which is designed to bring the African private sector to the centre of Africa’s investment. Gomes describes his firm as “market makers”, in that they help structure greenfield projects, and bring in investors and operators to run them.

They are currently working on a number of key transactions. One of these transactions is in the pharmaceuticals industry, where the firm is establishing a special economic zone in Dakar for the manufacturing of medical equipment and medicines.

The 100-hectare facility will also have a hospital and other facilities. Another key transaction is a blue-fin tuna aquaculture project in Cape Verde, with NORTUNA, a consortium of Norwegian investors, which if successful, will be scaled up to capitalise on the country’s vast water resources and strategic location between Africa, the Americas and Europe. Their current investor is a Norwegian company with the aim of creating a hub of aquaculture in the Atlantic.

Orango are also working on a project for cocoa transformation in Ghana and Côte d’Ivoire and the transformation of cashew nuts in Guinea Bissau. Currently cashew is exported in its raw form, and the firm are aiming to transform a significant amount of Guinea Bissau’s annual production and help create more jobs in the country – Guinea Bissau is the third largest producer of cashew in Africa after Côte d’Ivoire and Tanzania. 

According to UNCTAD, less than 15% of the continent’s nuts are deshelled on African soil. The rest is exported mainly to Asia, where 85% of the world’s cashews are deshelled, adding value to the commodity. Just two Asian nations – India and Vietnam – accounted for about 98% of the world’s raw cashew imports between 2014 and 2018.

Gomes is also currently co-chairman of the AfroChampions initiative, which is designed to champion the African private sector and to ensure it benefits from theAfrican Continental Free Trade Area (AfCFTA).

“Now we have designed the AfCFTA and many countries have signed up, the key now is implementation. Through AfroChampions we play an important advocacy role. Orango is focusing on transactions because transactions are the building blocks of the AfCFTA. We are working to originate projects, crowd in investors and companies, and help create champions in several verticals of the economy.”

As market makers, they have created a pool of capital from a number of family offices who are looking for investment opportunities. But they are also working on a fund of funds focusing on sustainability and climate finance. They will be looking to crowd in more capital using new instruments. There is talk of a special purpose acquisition company (SPAC) as well as discussions with a number of sovereigns.

Need for change in mindset

Gomes says that governments have a much greater role to play in helping prepare projects. Too many resources are focused on promoting their countries as investible and on improving the ease of doing business and not enough is put towards feasibility studies and making projects investible, he argues. There is a need for a mindset change, he adds, so that governments understand the value of investing in properly preparing projects.

One project that has stalled is the Inga Dams in DR Congo, an example of a project which could have a transformational impact. The facility has been under review for decades. Gomes says that Orango are in discussions with the Congolese government about bringing a consortium of African players to invest in the project, but progress is slow. The hesitation from the government, he suggests, lies in a reluctance to hand the project to one entity.

But Gomes, who says there are still $100m of costs linked to feasibility studies and preparation costs to make the project fully bankable, says the project must be African-led.

“Many of the successful projects I was involved in were the result of proper project preparation, knowing your market and choosing the right partner. When I recall what we did with Mr Djondo, one of the founding members of Asky [a regional airline headquartered in Lomé], we had several options on the table including partnering with South African Airways. 

“In the end we managed to convince Ethiopian Airlines to take a 30% stake, and we benefited from their expertise. That’s why we chose them, for their operational knowhow and their understanding of the African market. That partnership is arguably the single most important reason for our success today.”

Gomes, an optimist by nature, predicts that the next few years will be challenging for investors. There are endless opportunities, he says, but he is worried that Africa may become embroiled in the current global geopolitical conflicts.

He says that politicians and institutions will also have to put a lid on conflict prevention. But ultimately, he says, “the trends of demography, urbanisation, youth will play in our favour.”

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