ITALY CALLS FOR WORKING TOGETHER



Riccardo Monti is president of the Italian Trade Promotion Agency, a government agency mandated to promote help the internationalization of Italian companies. With the major purpose of informing Italian companies about the investment climate in various countries across the world and helping them succeed, the Agency has over 65 offices around the world. These offices gather and compile information, disseminating it to Italian companies as relevant to their needs. On the occasion of the opening of an office in Addis Abeba, the President sat with GETACHEW T. ALEMU, FORTUNE OP-ED EDITOR, to discuss what the opening of the office means for the investment relationship between Italy and Ethiopia. Excerpts of that interview follow.


Riccardo Monti is president of the Italian Trade Promotion Agency, a government agency mandated to promote help the internationalization of Italian companies. With the major purpose of informing Italian companies about the investment climate in various countries across the world and helping them succeed, the Agency has over 65 offices around the world. These offices gather and compile information, disseminating it to Italian companies as relevant to their needs. On the occasion of the opening of an office in Addis Abeba, the President sat with GETACHEW T. ALEMU, FORTUNE OP-ED EDITOR, to discuss what the opening of the office means for the investment relationship between Italy and Ethiopia. Excerpts of that interview follow.

Fortune: Congratulations on the opening of your new full-fledged office in Addis Abeba. Why do you want to open the Addis office at this point in time?

Riccardo Monti: If you look at the big picture, three years ago, our organisation, which has 65 offices, had only one in sub-Saharan Africa. But this part of the world is important. So we decided that we have to make a much bigger effort in sub-Saharan African and we started to open a number of other offices.

It was immediately clear that Ethiopia was one of the priorities; we have been working on opening offices in Angola, in Mozambique, in Congo, now we will be open in Ghana. Ethiopia was already basically operational one year ago, but we are now setting up a new office – it takes time to build the team, to find the people to get into the local business community. It is a long effort, but we are very happy and very excited about our presence here.

Q.The main objective of your agency basically, is to help the internationalisation of Italian companies. Where do you actually want to see Italian companies in terms of a global value chain?

Italy is a traditionally strong manufacturing country. Many industries have been created through the global value chain. Italian companies have been very good at building a strong position in the middle to high value added sector, but it depends on the sector. One example is textiles, which comprise a lot of the local production in European countries.  Of course, Ethiopia has been doing an excellent job in building up a textile industry. In this industry, Italian companies are interested in coming here to produce finished goods and semi-finished goods to be finished in Italy. This is an example of how in a global value chain, a country like Ethiopia can play a very important role.

Q. For the government of Ethiopia, they want to actually bring the high end of manufacturing in the country. But you are saying Italian companies want to do the final production process in their country. Don’t you see some inconsistency?

Well, building an industrial base is a very long process. It takes years, if not generations.

Why the interest in Ethiopia? Ethiopia is of interest because of its demographics, because of its political stability, because of its geographic position.  Basically, this is the only office in East Africa for the time being and we believe that we can use this as a regional hub. It is of interest because there is a lot of skilled labour.

We also believe that the country is on a very clear and strong growth path. So we are here for the long-term. Of course, I am sure that in the next 10 years, Ethiopia will build a lot of local industries.

I know the government is trying to build, for example, a pharmaceutical industry. Italy has a very strong pharmaceutical industry. We are not yet exporting pharmaceuticals, except for some that probably go through Egypt, but I am sure that in a few years we will have a local pharmaceutical industry.  Again, this is a long process.

We, as a government agency, do not enter into the decision of an individual private company – what to do, where. We help them because I know the companies that create the global value chain, are stronger and better and richer. And the experience says that those companies that invest abroad are also those companies that grow. So we are very happy when Italian companies decide to invest abroad and most of the effort here will be in finding counterparts, to create somehow, a local presence.

Q. But some of the services that your agency provides, for example, finding partners, trying to arrange business to business relationships and also organising forums and conferences – these are basically services that host country agencies like for example, the Ethiopian Investment Commission (EIC), actually do. Host countries are interested in providing these types of services for foreign investors. Why a duplication of effort?

Well, it is not a duplication. For us it is very important to have a good relationship with a counterpart in every country. We are in 70 countries – the first thing we need is a good relationship with a counterpart because trade is a win-win. It’s not a zero sum game.

For example, when I worked in Italy, in finding business opportunities abroad, I needed a very strong and deep understanding of the different industries. So I needed to know the 2,000 or 3,000 good shoe producers in Italy.

Of course, the Ethiopian Agency, they do not know them, so our effort is to identify and help those who can make a good business abroad, give them the basic information about interest in the market, provide them the platform of assistance because when they arrive, they need to know someone who can speak their language, who can guide them.  And then, the counterpart helps us find the business partners. So, it is team work and we need a lot of interaction with the local government. Here we work with the government and the Chamber of Commerce, and this is a very vital part of our work.

Q. Where do you see the competitive edge of your agency in terms of helping Italian companies to invest in Ethiopia?

Our work is very diverse. A lot of what we have been doing, especially in the first phase when we enter a country, is making sure that a number of businesspeople from the country, in this case, Ethiopia, come and participate in all the trade fairs in Italy. This is a very important effort. We invite them but we have to select them – because you do not want to invite someone who just wants a trip to Italy.

You want someone who will go there, who has opportunity to buy or to find partners.  So the first year, we are involved in that effort which nobody else can do because we work very closely with the Association and organise trade fairs – the leather trade fair, the stone trade fair, the building material trade fair, the furniture trade fair and know exactly the profile of the people we want to invite. We invite at our own expense, taxpayers expense.  So it is very important work and we have a very thorough selection process. This is one example of what we are doing. We are building and we have a few very strong trade fair platforms that are becoming more and more global.  We want Ethopian operators in these events. In order to make sure, our office is very engaged in every one of these big events to find the right Ethiopian delegation. We invite the Ethiopian delegation.

Outbound, we are doing a trade fair here at the end of February. We have a lot of interest. Already, there are over 50 Italian companies signed up. We have to get more space because there is a lot of interest. Again, this is not only about, who wants to come to Ethiopia. It is about selecting them, managing their expectations and preparing them for what they will find here.  What kinds of products, what kinds of price range, what kinds of interface they must look for.  Again, it is a lot of work. It involves training, it involves a lot of analysis of basic information, it involves keeping and updating the mailing list of the right counterpart.

Q. As you might know, the competition, especially in trade – in merchandise trade and also in manufacturing investment in Africa at this point in time, is becoming extremely fierce. Everyone is trying to have a slice of the cake. The Chinese are here, the Turkish are here and the Indians are here. I would imagine that Italy has its own competitive advantage when it comes to penetrating African markets. But do you think that Italian investors understand the competitive sphere widely and are trying to position themselves rightly?

I think only a small number of them have a good understanding of the eastern Africa competitive scenario. That is why a lot of our work is really information and education. We hosted a very important forum for Minister Tedros Adhanom (PhD) in Milan, and hundreds of companies – for many of them it was the first time they were even thinking about Ethiopia.  Some of those companies decided to come to the trade fair this year. So again, it is an education process.  A huge number of companies came to the forum we organised – a lot of them were just saying, ‘well let’s see what’s going on in Ethiopia.’ They had no clue. They came, we gave them information. They started calling us. We provided them with more information, they come here, they see.

So again, it is an education process. But Italian entrepreneurs are a community of very good entrepreneurs. They are very courageous, they are very determined, they are very, very aggressive in going into new countries, and again. We would not have exported 120 billion euro of stuff had it not been for our competitive advantage – the capability to design items, to produce items and the capability of our entrepreneurs to penetrate markets, even though very often they are small. I meet companies that have five or 10 million [euro] of revenue, 95pc earned in exports.  It is very difficult to find that kind of size and that level of exports in other countries.  So, Italian entrepreneurs are part of the competitive advantage of our country.

Q. Prime Minister Matteo Renzi of Italy was here and Fortune interviewed him. During the interview he told us that at this point in time, Africa is opportunity for Italy and for Italian investors. But when you see the investment climate, on the side of the host countries, it is not as conducive for investors like high end Italian manufacturers. What do you suggest for policy makers like Ethiopia’s?

I think Ethiopia has been really focusing on attracting manufacturing investment.  This is the right policy – a large country, a large corporation like this cannot prosper without industry. So I think that is the right choice. We still see, of course, some issues that our Ethiopian friends should help solve, on the more functioning customer administration, bureaucracy.  Also in Italy we have a big fight against bureaucracy so we totally understand.

Italian entrepreneurs are particularly resilient because very often they have to fight in a business environment that is not very easy. Of course, Ethiopia is at a different stage of development than Italy.  Italian companies feel at home in Ethiopia. There is a very strong traditional link.

My own grandfather was here for five years so again, this is something of value. Of course, Italy is still small in terms of presence and exports but we are still the first in Europe. We know we can do much more but in relative terms, this is a country in Africa that Italian companies know with the local presence of Italian entrepreneurs who have been here for the last 50, 60, 70, 80 years. And this too is part of the competitive advantage of Italy.

On the Ethiopian side, we feel this issue of the lack of hard currency as we say, is becoming a problem because every transaction is made in international currency. We are trying to identify solutions which our export financial facility can help in this country because at the end of the day, without the Letter of Credit, without the availability of hard currency, every transaction             is very difficult.

Q. As you know, Europe is struggling in its own way when it comes to economics. It is still struggling to get out of the impacts of the global financial crisis. Italy is also facing its own challenge, in its own terms. In addition to that, the migration crisis and the crisis in Syria are also putting pressure on policy makers in Europe – or Italy. Where do you actually see the place for trade in helping Europe get out of this scenario and in helping Africa?

Trade, as I said is a win-win game. Italy is a trading country, Europe has a large trade surplus for the last few years – though the back of this trade surplus depends on Germany and then on a second level, with Italy. I see trade as a very important boost for our economies. The increasing value of the euro is a healthy factor but I think in the next few years we will see more process of globalization from European companies, especially Italian companies, which on an average, is of smaller size than the European size. We have to make a bigger effort. That’s why we are pushing a lot for Italian companies to invest abroad.

Q. I know that you are meeting Ethiopian policy makers including Prime Minister Hailemariam. What is the main message you want to send to him and other Ethiopian policymakers?

The message is let’s work together to make sure that Italian companies can invest substantially in this country – to make sure that Italian companies will be in a position to invest in this country’s manufacturing [sector].



Published on Dec 14,2015 [ Vol 16 ,No 815]


SHARE :
               


Editorial

It was refreshing to see Berhanu Nega (Prof.), leader of an opposition...


Agenda

Ethiopia’s high potential to deliver animal skins to local and intern...


Fineline

The Revolutionary Democrats concluded their council...


Commentary

A country needs to develop effective methods of evaluating projects and...


Viewpoint

When we take a step back, we can see clearly how to advance. Change age...


Opinion

There seems to be an improvement on the macroeconomic side. The Ethiopi...


View From Arada

Following the olive branch afforded opposition parties by the ruling co...


Editors Pick
















MEMBERS' LOGIN


ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 

SUBSCRIBE TO ADDISFORTUNE