Interview: Isabel dos Santos «It's not Africans who are taking money out of Africa»
July 16, 2019
Andrey Maslov and Isabel dos Santos. SPIEF-2019, June, 2019.
Photo: RA Vision
On the SPIEF-2019 co-chairman of the Editorial Board of the Report Andrey Maslov spoke to one of the most famous business women in Africa. What is the constraint that stops Russians from investing in Africa? What can be done for boosting the Russia-Africa cooperation and what does Russia mean for her personally? Answering Isabel dos Santos.
Andrey Maslov: What is your first impression after today's meetings and SPIEF sessions? What is the outcome for you personally?
Isabel dos Santos: When I first arrived, I wasn't quite sure what I would find. But what I found was a great deal of positive energy. The people I met were very keen to do business, on coming together and forging connections. Moreover, the people present were very eager to listen and take in what others had to say; they wanted to hear and pay close attention to the different cultures and different companies they wanted to work with.

I also found the Russian private sector to be very dynamic. I didn't have a great deal of knowledge about it until now. For example, I have come to understand the full extent of the large-scale projects that are underway in Russia. There are some really impressive projects in areas such as infrastructure, housing, real estate, industrial projects, as well as projects in the development of minerals.

I therefore found it to be immensely profitable to see firsthand how the Russian economy and Russian businesses have grown in ambition and scale, and dynamism. Not to mention the quality of businesses being built. Russian businesses are evidently operating at world-class level, using the best technologies on offer. Everything I've seen and heard has had ambition at its core.
What have you noted for yourself at SPIEF?
Today I was here to observe and to listen. There was a debate held over the breakfast meeting this morning during which I got to hear about the ambitions being set for both internal Russian business and internal Russian investment. There is clearly a real push forward for a larger Russian economy with more jobs being created. The debate was very open.

It was very interesting to see that people were engaging fully in an open dialogue, allowing space for criticism and discussion. People were not afraid to say: "Look, it isn't working; I feel that government should address this policy, for example in the region where I work, they failed to do this." There was a healthy atmosphere wherein people were able to express themselves directly to the government members present. What was also impressive was the fact that these debates were held in front of the public too. These weren't happening behind closed doors. I think that this level of transparency in general, is very positive.

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It was very interesting to see that people were engaging fully in an open dialogue, allowing space for criticism and discussion

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Are you thinking of Russia as the investments destination for yourself?
Yes, absolutely. I recently had the chance to have a dinner with President Putin, where there were other top leading business and CEOs of the world present. I heard from individuals representing companies such as Huawei, Ericsson, Philips and Siemens about their experiences of conducting business and investment here in Russia. I think one thing that they all acknowledged was that once an issue or a problem has been raised, the matter is dealt with; people actually address it. It might take some time: maybe three to six months. But the issues are identified and they are addressed, and the business moves forward.

So overall, I think the track record for business investment in Russia is strong, on top of which Russia recognizes and values these investments. My feeling is that there's a high level of support available to business here. There is equally a good level of support to foreign investors, who want to come and invest.

I am also aware that Russia is opening its investment to all of its sectors, from health to industry, and to real estate development. I really felt that there was a great number of different sectors that expressed serious interest to open, foreign investment.
Are you aware of how South Africans have explored ventures here in Russia?
No, I wasn't aware. Is this in mining?
More so in ICT. For example, Mail.ru, and others of this kind.
Oh yes, this makes sense. They are very into IT.
As well as food, agriculture especially, and breweries. Is it possible that one day we will see Angolan holdings coming here with investments, for example, in the health sector?
Yes maybe, it's possible.
What advice can you give to Russians going to do business with Angola and what might they be currently doing wrong? Because as you know, the opportunities available there are much greater than the actual holdings presently in operation.
Yes, that's true. For me this is principally a matter of relationships. The key piece of advice I can give on business is that it is a relationship between two people. Or in this case, two countries. So if you and I can get along and we have a good connection, we will go far in business together.

Yet sometimes people going into Africa or into Angola specifically looking to do business expect that their counterpart isn't going to be a business so much as it is that country's government. Well actually, governments are there to create policy, to monitor regulation, and to create an environment that is conducive to business, rather than actually conducting the business themselves. Sometimes governments can be your business partner but they are not necessarily the ideal one.

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Sometimes governments can be your business partner but they are not necessarily the ideal one

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So really the big issue or question for me would be: can you find a company, or a business partner, or entrepreneur, or set of investors that are present in Angola or any other African country that you are able to do business with, which you can forge those connections with and who can help you better understand the environment you're working in and help you to succeed?
That's a great point, one should have an agreement between two people.
Well I say two people, or two companies, but it depends of course on the types of companies or people, because if you think about it, it is much easier for two banks to agree because they are likeminded. They have the same objectives and interests. For instance, let's say the objective is to create a mortgage fund. It will be a lot easier for two banks to go into a mortgage fund together than to get a government which is not necessarily focused or interested in doing this and is focused more on delivering public health and education services to their citizens, or general security.

And so you need to find the right partner. I think sometimes when people come to Africa they think that their right partner is going to be government. But if they went to France or to Belgium or the Netherlands, they would look for a specific company to be their partner. So this is a new approach to bear in mind. Entrepreneurship in Africa is rather new and having business people in Africa is still relatively new — it has probably only been two decades, or maybe two and a half decades, since its early beginnings.

It is also as a result a little difficult still to recognize who are the actors, major players, who actually make a difference, who can be your interlocutory. There is still some development and understanding and promotion of knowledge needed on both sides. That is why these kinds of events are essential: they bring together key business people, key actors from Africa to Russia, as well as facilitating key actors from Russia to go to Africa.

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It is still difficult to recognize who are the actors, major players, who actually make a difference, who can be your interlocutory

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And the private sector is still emerging in Africa.
Absolutely. There have been a lot of success stories so far. Unfortunately, these success stories often remain untold. If you go to Ghana, for example, there are a huge amount of success stories in banking; if you go to Nigeria, you will see fabulous industries being built; and if you go to Angola, there have been serious strides made in retail, in banking, and in industry. So all across Africa, you have a lot of success taking place that are not always known on a global scale.

But we Africans could still be doing better. We're not good marketers. We don't sell ourselves very well. We have to pull a lot of our marketing skills because we are already doing so much of the heavy-lifting, and so there are a lot of opportunities in this area. If we can get the marketing right and people become more aware of what we're doing, I believe it would attract a lot more investment.
There's still a great capital outflow. Africa exports a lot of money to the world.
Yes.
High-Level Panel on Illicit Financial Flows estimates the average illicit financial flow from Africa as $50 billion per year. So some tend to look at Africa as global investors. How do you explain to people that investment in Africa is safe whilst Africans themselves are taking and investing their money outside of the continent?
It's not Africans who are taking their money out. I think this is an incorrect assumption. I think what we have to look at here is an unbalanced deficit of trade, which means that we actually import more than we export. But it doesn't mean that these are Africans themselves who are withdrawing the money.

The people who are taking money out of Africa are the companies, who work in Africa and make their profits and take those profits back to wherever their headquarters are. For example, we have a number of French companies that have ports and logistics that run a great deal of our ports and logistics in Africa. And these are amazing businesses that make millions of dollars in profit per year. But of course, this money leaves the continent and goes back to the headquarters, which are in Europe.

Similarly, it's the same thing when you look at breweries. That's a very good example. Well, we have ASBC which is a South African brewery. But the second largest brewery group is actually a French group based in Switzerland. So let's say they control half of the beer sold in Africa. And obviously, when they declare their profits, those profits leave Africa because their group is not a local group. So a lot of the numbers that you see that might suggest Africans are taking profits out of Africa are simply untrue.

Unfortunately, there are also a lot of clichés about Africa and these clichés tend to stick. People find it hard to see beyond the stereotype and see how things have progressed. So often you hear people say, "forget, I'm not going there!" This is why creating a platform, where you actually get the people who are working on the ground to meet people who are working in other countries, is so crucial. It helps to dissolve these old assumptions and create more of an anonymous workforce and business environment.
We also need to upgrade our assessment skills as the majority of big Russian investors still rely on imported standards and foreign ratings in their risk assessment.
It's funny because if I was Russian and I wanted to conduct a risk assessment on another country, I would probably call a Russian company working there and ask them: "How are you doing? How have you been treated?" Because a Russian company who is working there probably knows better than any foreign one.

I'll give you an example, you have ALROSA. ALROSA has been working in Angola for 20 years. They have an extremely profitable mine in operation. They experienced no political risk, no military risk, no security risk. I don't recall any major incidents affecting their work. It's a mine that makes 200 million dollars [profit] every year. That's a lot of money also leaving Africa.

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Because a Russian company who is working there probably knows better than any foreign one

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Can you tell me a little bit about your personal attitude towards Russia? What does Russia mean for you?
So Russia is obviously a country that I hold close to my heart because obviously I'm half Russian and I was born in Russia. So I grew up with 'russkie skazki' [Russian fairytales]. In my house, we eat 'pelmeni' and 'pirazhki' [patties] every day. So I know both Russian culture and history very well. I think it's a country with a lot of culture, a country of highly educated people. I couldn't be more proud of having that heritage.
Here is the demo fragment of the RA Vision Report, our very preliminary draft — the first copy is going to Africa with you, it was printed out yesterday.
Thank you, I think it's a useful tool. This Report will certainly be a very good tool for investors, such as our companies or our people in general, who simply want access to more information.
In our RA Vision Report we wanted to illustrate some of the opportunities available to Africa to help solve some of the problems they face by dealing with Russian companies. As Russian companies are still not yet open enough to global markets there may be some more opportunities still hidden to Africans here in Russia.
When you come to Africa it is always going to be slightly challenging because it is a collection of new countries, and everything is different across the continent: the languages are different, the currencies, laws, legal systems, governments, everything. So coming to Africa is a good start but it isn't in itself enough.

You have to be specific about the country within the continent, and what kind of project and what kind of industry you want to specialize in. That's why it's very useful for the Vision Report to be produced, and that you are providing a clearer picture that is much more focused on each country. Thus people can get information on the specific countries they are interested in, or in the commodities that they are interested in or in the areas or sectors. I am assuming that the Report will only be developed further?

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It's very useful for the Vision Report to be produced, and that you are providing a clearer picture that is much more focused on each country

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Yes. This is the Version 0.1 but it will get bigger and bigger and by the Sochi events we'll have the final one.
I see you're covering different areas too: sustainability, water, environment, health, education, telecommunications, energy, and space.
And at present, petroleum has not been looked at. The Report's focus is on all new creative industries.
Isabel dos Santos was born to the second President of Angola (in office 1979-2017) Jose Eduardo dos Santos and Soviet Citizen Tatiana Kukanova in Baku, USSR on 1 of April 1973. According to Forbes, she is Africa's first billionaire woman and ranked 8th richest amongst all Africans (1008 worldwide), with assets value estimated to be around $2.3 Billion as at 2019.

The main source of her income has been in the start and development of companies in Africa. During the period from June 2016 to November 2017 dos Santos was in charge of restructuring the national oil company and held the office of Chairwoman of Sonangol (the Angolan state oil company).

Isabel dos Santos's companies are predominantly concentrated in Angola and Portugal.
Her company Unitel International is a shareholder of Portuguese media holding NOS.
In 2013 Unitel International acquired the mobile operator T+ in Cape Verde.
Unitel is a major shareholder in the capital of BFA (Banco Fomento de Angola) to 51,9%.
Nova Cimangola, is an industrial cement factory of which Isabel dos Santos has purchased shares.

She previously owned a 20% stake in BPI bank (Banco Português de Investimento).