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France wants to remain and influential player in Africa, particularly among its former colonies, but its wishes may surpass its ability. Speaking at the Franco-African economic forum on Dec. 4, French President Francois Hollande said he wants to double trade with Africa within five years. According to the president, such a deal could create some 200,000 jobs in France.
However, Hollande's announcement takes place at a time when French exports are losing ground in Africa as a result of decreased competitiveness at market and increased presence from other players, most notably China. France may keep some of its political and economic prominence in Francophone Africa, where it can offer some of what its former colonies need -- namely, security and investment -- but its economic problems may prevent it from exerting its power across the continent.
France's colonial ventures date back to the 16th century, when French explorers arrived in North America, the Caribbean and the northern tip of South America. Over the following four centuries, France conquered territories in North, West and Central Africa and, to a lesser extent, East Asia. Because of its key geographical position, northern Africa became particularly important for France. Taking advantage of the decline of the Ottoman Empire, the French captured Algiers in 1830 and used it as a platform for regional expansion.
By the early 20th century, France had expanded its dominions in Central and West Africa to the modern states of Tunisia, Morocco, Mauritania, Senegal, Guinea, Mali, Ivory Coast, Benin, Niger, Chad, the Central African Republic and the Republic of the Congo. France's presence also extended to the coastal enclave of Djibouti, the island of Madagascar and other islands on the Indian Ocean. Along with the establishment of trade networks and secure access to strategic industrial commodities, France saw itself as a civilizing force in Africa. Paris set out to introduce the French language as well as its customs to its colonies, with varying degrees of success.
After World War II, France lost control of some of its colonies. Recognizing its need for strategic commodities, Paris sought to maintain strong economic, political and military ties with its former colonies in Africa. France was motivated by three broad goals. First, it wanted privileged access to raw materials such as oil and uranium, mainly through French multinational companies that expanded their business in the region. Second, France was interested in preserving its role as an international actor by keeping a network of allied countries that could side with Paris in the international arena. Third, France was interested in keeping a military presence in its former colonies to support its economic and political interests.
Mindful of its original goals, France has sought to maintain a permanent military presence in countries such as Cote d'Ivoire, Chad, Senegal, Gabon and Djibouti as well as on the islands of Mayotte and Reunion (which are actually French territories). In addition, Paris has defense partnership agreements with eight countries (Cameroon, the Central African Republic, Comoros, Cote d'Ivoire, Djibouti, Gabon, Senegal and Togo) and 16 technical cooperation agreements. According to the French Ministry of Defense, the majority of French military personnel currently deployed overseas are in Africa.
Being the first source of development aid to its former colonies, France also has an extensive network of embassies and consulates. Although not a single African country is a top-10 export destination for France, the continent is still a very important trade partner. France is Algeria's top source for imports and the fourth largest destination for exports. Algeria ranks number 14 on France's export list. Even for smaller economies such as Mali and the Central African Republic -- two countries that have recently seen French military interventions -- France is the first or second point of origin for imports. The West African CFA franc and the Central African CFA franc (two currencies that are guaranteed by the French treasury, sharing a fixed exchange rate with the euro) are used today in 14 African countries by more than 135 million people.
Enter the European Crisis
In the context of the European crisis, French companies are looking to expand their operations in non-European markets. Former African colonies are a natural choice for this expansion, but France is losing ground to other powers, including China, the United States and Germany. According to a recent report by the French Ministry of Economy, the share of French exports to sub-Saharan Africa fell from 10.1 percent in 2000 to 4.7 percent in 2011 (though they doubled in volume during that period). A decade ago, France was the main exporter to the region. Now, it is currently in the fifth place after China, India, the United States and Germany. French banks currently account for around 16 percent of the credit supply in West Africa, compared to 37 percent a decade ago.
This decrease is explained by several factors. Since the introduction of the euro a decade ago, French companies have been less competitive. Labor costs have increased and exports have become more expensive. Most of the internationalization of French companies has relied on large enterprises, with small and medium-sized companies lagging behind. Tightened loan conditions in Europe have also complicated access to credit for French corporations. Fear over the rule of law, compounded by poor infrastructure, also discourages firms outside the energy and raw material sectors from investing in Africa. In addition, former Francophone colonies have sought non-French investment partners to reduce their dependence on Paris. France can no longer depend on its former colonies as closed systems for the benefit of French companies, the way it once could.
Enter China
Because China needs natural resources and new markets to exploit, its presence in Africa has grown significantly over the past decade. China is now Africa's largest trading partner, providing a cue for other emerging economies, including India and Brazil, which have also scaled up their diplomatic and economic presence in the continent. For example, France used to be the exclusive recipient of uranium from Niger, until Niamey decided to open the uranium fields up to other parties, awarding a license to the Chinese.
Even if its trade presence is dropping, France will remain a significant political and economic player in Africa. France has strong cultural ties with the continent; there are some 100 million French speakers in Africa. Roughly four of 10 immigrants in France come from African nations, most prominently from the Maghreb, and France is still a key destination for African students abroad. French companies such as Total, Alstom and Schneider Electric are key players in the energy markets of countries such as South Africa, Egypt and Algeria. Companies such as L'Oreal and Pernod Ricard are also strong in the consumer sector, while telecommunications firm Orange is present in countries including Kenya, Niger, Cameroon, Mauritius, the Democratic Republic of the Congo and Senegal. Several French companies also operate in air, land and maritime transportation.
France's Constraints and Opportunities
Paris can offer some of what Africa needs, but because of its languishing economy, France may not always have enough money to maintain the strong influence to which it aspires. To some extent, the fate of French companies in Africa will be similar to the fate of French companies elsewhere. These companies will have a hard time expanding their operations to other countries so long as French competitiveness is low and credit insufficient. Africa will remain an attractive destination for investment in energy and raw materials, but French companies will not be as successful in other areas, particularly in selling consumer products.
In addition, France's political and economic ties with its former colonies do not necessarily mean that it is always willing to support military interventions. Since the 1990s, structural changes to the armed forces, including sharp reductions in the size of the military and its overall capability, have reduced France's ability to intervene abroad. France's recent interventions in Mali and the Central African Republic reveal that Paris is still interested in keeping its military commitment on the continent to back its economic interests. But the interventions also reveal that France is willing to commit only on a limited scale, when its strategic interests are at stake, and only under the umbrella of international authorization and legitimacy. As recently as November, the Elysee legitimized its intervention in the Central African Republic with a resolution by the U.N. Security Council and the backing of regional nations.
France's attempts to increase its market share in Africa will place it in direct competition with other countries, including China, that are also trying to expand their influence across the continent. France will probably offer security cooperation as an added benefit to the weaker African states it deals with. For its part, China has been reluctant to commit to direct military involvement in Africa, though it has provided some combat engineers and medics to U.N. missions. In some fields where French technology has advanced, French companies could also find some common ground for cooperation with Chinese companies. Nuclear power is one such area.
Paris is also likely to try to develop deeper commercial trade with larger, non-Francophone economies such as South Africa and Nigeria. But this will prove difficult because Paris lacks the cultural, economic and political connections it has with its former colonies. The ties that bound Francophone client governments to Paris during the four decades following independence are absent in Anglophone and Lusophone Africa.
Africa needs massive foreign direct investment, especially in its infrastructure, to reach sustainable economic growth. If its economy continues to flounder, Paris will face the challenge of competing with other nations, ones that will probably be better suited than France to provide the assistance Africa needs.
Courtesy : Stratfor (www.stratfor.com)