Tuesday, October 22, 2019

Nordic firms supply ‘next to nothing’ to AfDB

A delegation from the African Development Bank has been on a road trip in Copenhagen, Helsinki and Oslo in an effort to drum up Nordic interest in doing business with the bank.

A procurement overview shows that Denmark, Sweden, Finland and Norway have sold goods and services amounting to only EUR 178 million to the African Development Bank (AfDB) during the period 2004 -2014, Denmark providing the lion’s share. That is less than half the value of contracts landed by companies from China, AfDB’s leading country supplier, last year. (See Tables Below)

 Heikki Tuunanen, Executive Director for the Nordic countries and India at the African Development Bank, says that if you look at the last five to ten years the Nordic firms have delivered “next to nothing” in services, equipment and knowhow to the bank.

The only exception is Denmark’s Siemens Wind Power AS which in 2013 won UA 62 million (DKK 607 million) contract related to Eskom’s Sere Wind Farm in Western Cape Province of South Africa. 

Tuunanen says it looks like many Nordic companies are still living in the past regarding the opportunities in African markets. He says businesses that operate on the continent have to be “country-specific”. 

He also links the low Nordic business performance at the bank to historically high levels of Nordic aid to Africa. Tuunanen notes that some Nordic firms might “suffer a little bit” from the huge development assistance that Norway, Sweden, Denmark and Finland have given to Africa over the last 40 years. Companies have got used to doing business with Nordic aid money.

“They have not had to look for other financial means. To some extent Nordic companies have learned that if you want to do business in Africa, you can just go to an [aid agency],” he says.

Big Nordic companies with global strategies can pretty much manage on their own, but small and medium-sized firms need to have a real strategy for operating on the continent, Tuunanen says.

“If they want to do business in a country or region in Africa, they have to create partnerships with local companies, establish networks and then start to do business.”

Tuunanen says the AfDB’s procurement rules are quite transparent. Companies can be lucky and win contracts by following up on tenders announced on the internet. But the real key to doing business in Africa is having a local presence, he says. “You have to be there, you have to know companies and be present. It also makes you a more relevant and useful company,” he says.

NORDIC ROAD TRIP

Development Today interviewed Tuunanen during his tour of Copenhagen, Oslo and Helsinki where a delegation from the bank presented the AfDB market to Nordic companies. They also plan to make a separate visit to Stockholm later on.

The Nordic countries are important donors to the bank’s concessional window, the Africa Development Fund, providing 15 per cent of its donor grants.

However, Nordic suppliers are not doing much business with the regional development bank. Firms from Denmark are the only significant Nordic suppliers to AfDB.

Procurement statistics from the period 2004 to 2014 show that Danish firms won contracts amounting to DKK 830 million. That is more than all the other Nordics together. The number of contracts adds up to 128. The value of Finnish and Swedish contracts over the same period amounted to just EUR 33 million and SEK 290 million, respectively.

The last time Norwegian companies did business with the African bank was in 2010. The two contracts won that year amounted to NOK 6.6 million. Total Norwegian sales to the bank during the last 11 years were worth only NOK 25 million spread over six contracts. 

NORDIC CONTRACT AMOUNTS WITH AFDB (UAm):*

   Country

2013

2014

2003-14

   Denmark

63.74

1.56

87.18  (DKK 830m)

   Finland

0.07

0

25.57 (EUR 33m)

   Sweden

13.11

1.39

24.28 (SEK 290m)

   Norway

0

0

2.27 (NOK 25m)

* The AfDB conducts its operations in the currencies of its member countries, but reports activities in the Unit of Account (UA), which is equivalent to Special Drawing Rights (SDR) used by the International Monetary Fund.

Source: African Development Bank

 

NORDIC CONTRACTS WITH AFDB:

   Country

2013

2014

2004-14

   Denmark

12

8

128

   Sweden

1

3

17

   Finland

1

0

8

   Norway

0

0

6

Source: African Development Bank

 

AFDB # OF CONTRACTS BY COUNTRY (2014):

   Country

(UAm)

# contracts

   China

300

36

   Tunisia

137.06

149

   Spain

96.03

7

   Italy

66.55

18

   Morocco

66.24

15

   France

60.5

55

   Ghana

50.56

83

   Tanzania

43.42

61

   Uganda

41.38

130

   Germany

38.15

15

Source: African Development Bank