Wednesday, March 26, 2014

A Major Polish Investor Makes New Investments In Africa

March 26, 2014 9:40 am

Kulczyk looks to Africa for new frontier in transformation

Poland is forecast to have one of the EU’s strongest economic recoveries but growth of 2.9 per cent this year and 3.1 per cent in 2015 is not enough to excite Jan Kulczyk, the country’s wealthiest businessman.
Instead, Mr Kulczyk – worth about $3.7bn according to Forbes magazine – is looking to Africa, a fast-growing market where he feels that Polish companies can benefit from the country’s quarter-century of experience with economic transformation.





Mr Kulczyk’s investment firm is looking for gas off the east and west coasts of Africa through Ophir Energy, in which his Kulczyk Investments holds a 9.6 per cent stake.
In all he has invested $1.1bn in Africa, also buying a gold mine in Namibia, a coal mine in Mozambique, fertiliser production in Nigeria, iron ore in Congo-Brazzaville and gasfields in Tanzania. Kulczyk Investments says the African investments are profitable, but will not reveal figures.
“It’s not going to be easy, but the greatest successes are where the challenges are the greatest and where a lot of work is to be done,” he says. “That’s where you can dream of double-digit returns, while today the European economy is only growing at about 1 per cent.”
Sub-Saharan Africa is expected to grow by 6.1 per cent this year and by 5.8 per cent in 2015, according to the IMF.
Mr Kulczyk has roped several other Polish tycoons into an initiative aimed at boosting Poland’s presence in Africa which, aside from Mr Kulczyk, is marginal. Trade between Poland and the whole continent came to only 1 per cent of Poland’s trade turnover, although it did grow at a 16 per cent pace in 2012.
Mr Kulczyk made the bulk of his fortune by acting as an intermediary in some of the largest privatisations of Polish state-owned companies in the early 1990s.
However, he ran into controversy in the early part of the last decade. First he was called as a witness before a parliamentary investigation into management practices at PKN Orlen, the state-controlled refiner. He then fell out of favour with the rightwing Law and Justice government in 2005-2007, which remains suspicious of powerful businessmen.
Mr Kulczyk retreated to his London offices, and now plays a significantly smaller role in the Polish economy. The majority of his wealth is tied to his 3 per cent stake in UK brewer SABMiller, worth $2.3bn.
He is looking beyond central Europe, hoping to leverage Poland’s experience in building a modern economy on the ruins of communism by supplying Africa with investment and knowhow.
His early business in Poland included setting up one of the country’s first mobile telephone networks, investing in banking and insurance, power infrastructure and highway construction.
“This is experience in areas that they really need there. This is broadly understood infrastructure, energy sector and telecoms. These are things I have done in Poland,” he says, adding that Poland’s swift rise from poverty to middle income status can serve as a model for Africa. When Poland broke from communism, average wages were only $20 a month, less than the $60 a month now earned in many African countries.
For now, Mr Kulczyk remains largely alone in his enthusiasm for Africa. The Polish foreign ministry does have a programme aimed at increasing interest in the continent, and there have been some small investments by Polish firms, but most Polish companies large enough to look beyond their national market focus on the nearby and very lucrative EU, not on Africa.
That is a mistake, says Mr Kulczyk. “Africa is a continent of poor people and rich countries which have enormous wealth locked up under the ground thanks to a lack of infrastructure,” he says. “But in Europe we have poor countries [with few natural resources] and rich people . . . it’s a win-win.”
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