Transcript | Stanislas Zeze

Arthur Katalayi (host): Hello, I am Arthur Katalayi, senior partner of A2k Advisory, and today we welcome a great character of the African continent from the economic sector. Mr. Stanislas Zézé, Good morning

Stanislas Zeze (guest): Good morning,

Arthur Katalayi: Thank you for accepting our invitation.

Stanislas Zeze: It’s an honor for me

Arthur Katalayi: We will be able to exchange with you to discuss your journey that inspires many people on the continent in relation to what you have done in your academic and professional career, and also your life. You are an African who has become internationalized by all that you have been able to do, and so here you are? You were born in Ivory Coast?

Stanislas Zeze: Yes, I was born in Ivory Coast and I left it quite young for high school in France. After high school, I went to law school in France (University of Nantes) and then I decided to go to the United States because I felt that my personality was more in line with American culture than European culture.

I realized this when I often went on vacation there…

Arthur Katalayi: In terms of pragmatism…?

Stanislas Zeze: … Yes, in terms of pragmatism, and especially to prove what you are able to do and deserve what you get in life. So actually, it encourages you. It pushes you to be brave; it pushes you to be resilient, to be hardworking because you know you have to deserve what you get in life.

And yes, it was a very interesting American journey. I spent part of my teenage years there. Then I went to Eastern Michigan, and studied Political Science, Economics, and I then went to do a Master in Public Affairs at the University of Michigan. And I then decided to join the army. So I did one year in the army,

Arthur Katalayi: … In Ivory Coast?

Stanislas Zeze: … No in the United States, my father is in the military, and he told me that a real man must go into the army. I told myself that I had to get rid of this story. So I did a year in the U.S. Army.

Arthur Katalayi: Did it help you?

Stanislas Zeze: It’s excellent because the American army is a real school of life. It teaches you discipline, courage, the ability to surpass yourself and absolute resilience, and humility. It teaches you humility and also allows you to control your power. Because human beings are powerful, in reality…

Arthur Katalayi: … Of course.

Stanislas Zeze: … And when you find out, it is extremely important, the army teaches you to control it like martial arts. And so after that, I joined the National Bank of Detroit, as chief risk officer. Then, the International Institute for Economics as program director, the World Bank, and as advisor to the VP, …

Arthur Katalayi: … All this in the United States?

Stanislas Zeze: … Yes, in the United States. And afterwards, I decided to return to Africa, after fifteen years in the United States. I joined the African Development Bank. Then I joined Shell as a regional manager and in 2007 I decided to create Bloomfield Investment. I realized that the development of Africa will go through the private sector, but a private sector created by Africans, because Shell… and others multinationals are there for their own private interests.

Arthur Katalayi: It’s fair game…

Stanislas Zeze: It is fair indeed! Besides, nobody complains about it. What I mean is that today Africans must control their own economy. And the only way to control our economy is for Africans to be more and more entrepreneurs in Africa, for it to be owned by Africans. And that is how we will control our economic environment. It’s quite simple.

Arthur Katalayi: And suddenly, why return to Africa when you have a career in the United States? We can think that life is better in the West because of the facilities that can be found there…

Stanislas Zeze: I don’t think going back to Africa is going on an adventure. I’m coming back to my country, I’m coming back to my continent, I think that’s the thing to do. There are perhaps more advantages in the United States and in Europe than in Africa. But it is up to us to build Africa precisely for generations to come, because the United States has not always been like that, Europe has not always been like that. There have been people who built it precisely for their children, for the decades to come, for the descendants who benefit from it today. There are people who have to sacrifice themselves. Me, I think that today it is our role, as Africans who have had this open-mindedness. And this experience of coming back to the continent and helping to develop it, we may not reap the full benefits of it in our lifetime. But we’re doing it for our descendants, and I think it’s a very noble fight. I am very happy with what I am achieving today because I have created an instrument that can change the situation on the perception of risk in Africa and it is something extraordinary. And so for me, I’m making my contribution. This is why I am sharing my experience to encourage other Africans precisely to create structures to consolidate the image of Africa and above all to put Africa back in orbit. Because Africa is way behind, it is extremely important that Africa and Africans start working together to catch up. Above all, pull each other up. Work together. I think it’s something we don’t know how to do, something you have to learn to do because you don’t have much choice.

Arthur Katalayi: And so, back to the creation of your company in 2007, Bloomfield Corporation, the leading rating agency in French-speaking Africa. Why this direction?

Stanislas Zeze: So, when I was at the World Bank, I realized by visiting different African countries and in collaboration with the French development agencies the African Development Bank; and with all that I realized that there was a very poor perception of risk in Africa. Risk is assessed with prejudices, clichés and preconceived ideas. So obviously, that did not make it possible to have the real risk assessment and therefore it was exaggerated. So we decided to create this tool to adjust this perception. What we have managed to do, moreover, to adjust this perception of Africa to reality, does not mean that there is no risk. But you have to assess the risks in the context and show the real risk.

For me, this is extremely important because we need capital to develop. You have to be able to get them at a reasonable cost. And so, if the risk is exaggerated, capital will be expensive. Today, we have managed to change just that perception around the world and we are going much further.

I believe that today, what we are saying is that African countries must demand that African rating agencies establish credits. In this logic, that is to say that it is necessary, after having developed the African capital market, so that Africans are not obliged to go and borrow money abroad, but borrow capital in Africa

Arthur Katalayi: And suddenly, an international investor who thinks he wants to invest in Côte d’Ivoire or Congo, asks himself/herself the question: But what is the difference between Bloomfield, Fitch Rating and S&P 500?

Stanislas Zeze: The difference is that there is more interest in referring to the Bloomfield rating than the Fitch Rating, because it is a rating that will give a picture that is more correct from the point of view of the economic performance of the country, all the other criteria are looked at; because we do local currency financial rating.

The difference is that they do the financial rating in foreign currencies. So they will assess Ivory Coast’s ability to repay in dollars. However, the currency of Ivory Coast is not the dollar. So Ivory Coast is systematically penalized especially since its currency is in CFA… The foreign exchange reserves of Ivory Coast are in an account at the Central Bank, a Pull account, and it is the Central Bank that controls these currencies. Ivory Coast is a country which for the moment is not an industrialized country and it exports its raw materials in foreign currencies, and therefore uses these same foreign currencies to import finished products.

And finally the finished products are more expensive than the raw materials and therefore they end up with low levels of foreign exchange reserves. So when you have a low flush reserve level, that means you’re not very rich in dollars. So obviously you won’t get a grade which will be a good grade of course, but that doesn’t mean you’re poor. You can be rich in CFA and poor in dollars.

So we will note your real wealth, and your ability to meet your external obligations, you will have the note in currencies of which the investor sees the two notes and sees well that the note in local currency, reflects the true reality of the country while the foreign currency only reflects its ability to meet foreign currency obligations, which does not reflect the country’s real situation.

Arthur Katalayi: So what are the financial ratings that are standardized; are they customized?

Stanislas Zeze: They are customized. Finally, in reality, we use the same evaluation parameters, it is the same methodology. It’s just that this approach is different. The approach is certainly to customize because you have to know the risk, and assess it in a specific context. The perception of risks that you see in France, you take the same situation in the DRC may not represent risks because the environment may have a much greater resilience. So we cannot assess the risks in the same way, even if these are analyzes that are, which are guided by a methodology that is common.

We do not reduce the evaluation standards. It’s just that the approach is completely different and the approach makes sense. Just because you’re poor in dollars doesn’t mean you’re poor. You can be very rich in Congolese francs and very poor in dollars, but that does not mean that you are poor, because in your environment, you manage to satisfy your needs.

So, and what we are saying today is that following this logic, African countries must understand that if they feel that they are in a biased logic with the outside, they should create their own capital market and content themselves with ratings from Pan-African agencies that better understand the environment. And that’s how they will also precisely impose their own rules.

Arthur Katalayi: Of course. You talked about raw materials a little earlier, necessarily the mining sector. How can this kind of rating affect a sector that is predominant on the African continent in terms of production?

Stanislas Zeze: In fact, the rating, finally, can reveal the strength of a country because of its mining sector, but its weakness; and if the mining sector remains in the primary sector, that is to say, just exploitation and sale of raw materials? Because for us today, the real problem of African countries, finally, is to diversify their economy and the second is to transform their minerals.

It is extremely important to understand that the crude products that we export come back to us but are 50 times more expensive because you need this product finished. So maybe it’s time to think about finishing it on the spot. Not only would it create value locally, create jobs but create wealth locally.

Arthur Katalayi: Ok, but for that, it is necessary in any case for all that is transformation of raw materials, there needs to be a transfer of skills. I think I heard you say that…

Stanislas Zeze: … No, invest in your research, invest in your own technology, finding your own technology it’s not rocket science.

They are the same human beings, the same thinking and same researchers. You just have to invest in research and development, which Africans don’t do. Unfortunately, you should not expect people to transfer technology to you in order to move forward. It is not in their interest, but it is to putting yourself in a position of weakness.

When you ask a guy to lend you their Porsche while you’re hitting on the same girl, they won’t do it. No, of course, if you take his Porsche, you earn points. They will have to find one for themselves like grown-ups. If you go to these research institutes and multinationals that creates this technology, you will see Africans. Don’t wait for people to do it; come back and do it.

Arthur Katalayi: Talking about Bloomfield Investment, do you also do analysis on enterprises or is it much more directed towards States?

Stanislas Zeze: We make assessments in the five risk categories. We assess public companies, local authorities, commercial and industrial companies and financial institutions, financial instruments and sovereigns. So obviously, it’s the whole panoply that we note. And on top of that, we do business intelligence. So we do country sector risk assessments. We have created ad hoc assessment tools. For example, we created the Bloomfield Index, which is an index that assesses the performance of private sectors, monthly data. We have implemented a tool called forecast, which allows us to calculate the growth rate on a monthly basis, whereas people generally calculate it on an annual basis or on a six-month basis. But we are able to calculate it in real time on a monthly basis. What is extraordinary, moreover, because it’s brand new and unheard of.

Arthur Katalayi: Very interesting, let’s go back to your career in the United States. What did you change during your stay there in terms of knowledge, but especially in terms of mentality because it’s really a big problem, often it’s not skill and intelligence the issue but the appropriate state of mind that we lack in many respects in French-speaking Africa.

Stanislas Zeze: In any case, one of the things that the United States taught me is to count only on myself and if Africa integrates this mindset we will be extremely far because the potential that we have is extraordinary, except that we rely on others to transform this potential into opportunities. We must begin to realize that it is only us who will be able to transform this potential into opportunities for Africans. And I think what I remember from that, from this wonderful stay in the United States, is learning to fight for yourself. Everything that comes from outside is a bonus and you can’t plan on a bonus, you only plan on the asset that you have. The bonus is random. Even in companies, you are only given a bonus based on the performance of the company and yours. But your salary is given to you every month. You are not given that based on performance. That is to say that relying on yourself and if you have outside support, it can be a bonus, knowing that it is not necessary in reality.

Arthur Katalayi: There is a global energy transition underway. There is a strong demand for African and Congolese raw materials… How do you think Africans can seize these opportunities in a crisis that may go crescendo…

Stanislas Zeze: … Everyone talks about ecological and social transition, we need to get serious. Because the war in Ukraine has clearly shown us that Westerners are not that serious about this environmental issue, they are ready to go back to coal and nuclear power when their interests are threatened within a moment, so you have to be serious; either we are in this logic until the end, or we are in this logic when it suits us, and when it does not suit us, we change. Africans need to consider their own reality and their own development. Obviously, Africans want to have an environment that evolves in a healthy way, so obviously they must be involved in an energy mix, but we cannot abandon fossil fuels. It’s just not possible, of course. And I believe it is extremely important to reflect on the energy mix strategy. To continue to develop with fossil fuels and renewable energies are to be taken into consideration for the environment.

But it’s almost impossible. At this stage of development for Africans to completely abandon fossil fuels, it’s just not possible; it’s not a reality, it’s utopia. And Africans will have to stop looking at what others are doing and look at what they want to do. We get in touch with their reality and we make the decision based on their realities, their interests, not those of others. It is extremely important. That does not mean that Africa should exclude itself from the concert of nations or from this globalization. But it is extremely important that Africa understands that all these Western countries which are globalizing are thinking of their interests.

First, and this is exactly what Africa must do, everyone must think of their interests. Look at many African countries and this is what accentuates this kind of complex toward Westerners since it is estimated that all that is good comes from there. But no, instead of telling ourselves that they have good things, let’s create good things for ourselves. Ok we don’t need to borrow what they have created, it can inspire us, but let’s create things ourselves that are adequate to our environment and allow us to emancipate our people.

This independence, for me, is fundamental. This independence and this independent thought, this independent stature, this self-sufficiency, it is and is obligatory for Africans; it is a matter of survival. Because otherwise we’ll find ourselves in another form of colonization which says it’s happening to people and which will certainly happen in another form, in a much more intelligent form, less physically violent, altogether much more intelligent.

You see that there is a big economic war of Western countries in Africa, it is not for the good of Africa, no it is for their own interests,

Arthur Katalayi: And it always has been.

Stanislas Zeze: But you unfortunately have countries that think they are coming to help them. We have to save them, and love them. Nope? No one will love you; it is a relationship of interest.

Arthur Katalayi: You emphasized the private sector earlier. A country like the Democratic Republic of Congo which has everything but does not produce much, and that always goes to the International Monetary Fund and the World Bank for capital when there are places like Wall Street and other places like the middle east, where you can get a lot of private capital, it’s not often that we have those conversations in DRC. Should we go in that direction and diversify the opportunities?

Stanislas Zeze: Every day I encourage countries to go for private capital, on the capital market or in terms of borrowing criteria that are linked to your credibility; and your ability to repay, not political conditions that its backers always impose. And that really bothers me. But I believe that a country like DRC, which has extraordinary potential, certainly needs to organize itself better. I believe that there is a beginning of organization because we work with the Congolese government; there is a beginning of organization, a beginning of structuring, a political will precisely, to better structure the administration so as to be able to harness all that potential and turn it into opportunity.

Arthur Katalayi: Absolutely.

Stanislas Zeze: So DRC comes from very far away. There are efforts that have been made; there are some victories that have been achieved. But taking into account where DRC comes from, it doesn’t seem like it’s very visible. And yet it exists because we have seen it from the inside, we have seen the figures, but there are great efforts to make this administration effective and efficient, so that we can have all the capacity to control its resources and turn them into opportunities. A country like DRC does not need to get the money anywhere else; today it is the least indebted country in the world with a stock of GDP debt which is around 13% and a debt service that is around 11% of revenue.

So it is the least indebted country in the world and DRC has an extraordinary potential in terms of internal market, its 100 million inhabitants, and in terms of geographical spaces, it is a mini continent. So it’s a question of organization, anticipation strategy and planning. I think they are working on that, it will take time, that’s for sure. But the most important thing is that they started.

Arthur Katalayi: Exactly. We are arriving towards the end of our exchange, the show is called The Right Advice, what would be the advice that you would give from your background, to an individual, an entrepreneur, a company or an African State; especially in this increasingly globalized context?

Stanislas Zeze: Yes, but what I would give as an advice to States is that globalization should not be a kind of renunciation of internal production capacity, internal development capacity and above all self-sufficiency; because we tend to outsource everything in globalization. And when there is a shock like COVID and the borders close, we find ourselves in a situation of helplessness because we are super dependent. You have to be able to embrace globalization, but also be self-sufficient, and that’s extremely important.

The role that Africa should have is a role of more and more exporters, not importers. So for that, it would be necessary to have better than the exported raw materials. So Africa will have to be self-sufficient in its needs, and be a net exporter because it has raw materials, which precisely allows it to be so if it enters into a logic of economic transformation for young Africans because Africa is increasingly young and I believe that it is to encourage them all to enter into this logic of entrepreneurship to create businesses because it is the private sector that will develop our countries.

It must be local, solid, strong companies that have the capacity to boost the economy, absorb external shocks and allow countries to be resilient. The majority of African countries have economic fabrics which are made up of roughly between 80% and 98% of SMEs but which only produce between 15% and 20% of GDP. It’s not normal; the trend has to be reversed. Local African businesses must produce 80% of the GDP, as is the case in the United States.

Arthur Katalayi: Absolutely.

Stanislas Zeze: 80% of GDP and that’s what it’s all about. So entrepreneurship is essential. And it is up to the government to create the framework that makes this entrepreneurship possible. That doesn’t mean we have to infantilize entrepreneurs and young people, we have to make them more responsible. We have to create a framework, that is to say have administrations that are efficient and effective and that allow us to move quickly. We must stop thinking that African economies must put all liberal economies without protection and that they must accept anything that comes from outside.

I believe that we will have to give priority to local businesses. Now it is important that African countries work to ensure that this is put in place.

Barriers must fall between African countries, visa barriers, currencies must be convertible. Markets must not be fragmented. Markets need to be consolidated to have large regional markets and then a single continental capital market, which will make an African country have fifty three other countries to do business with. A company in Kinshasa will have 54 countries in which it can trade and that is what Africa should be aiming for.

Arthur Katalayi: Alright. In any case, thank you for your shared expertise, I hope we will have the opportunity to exchange again in the future.

Stanislas Zeze: Absolutely thank you very much for this exchange and it was a pleasant moment and I am happy to be in the DRC to work, it is Africa that wins. Thanks.