A Word with Guillaume Fonkenell

Posted 16 February 2021 in EMpower News   |   Share

Guillaume is a longtime supporter of EMpower and is a mover and shaker in the world of EM Finance. This month, EMpower President and CEO Cynthia Steele spoke with him to get more insight into the values that drive his philanthropy.

CS: You’ve been a leader in EM Finance for many years. What changes do you see in how firms think about their role as corporate citizens?

GF: This is a good question and a fascinating topic, especially in EM. The ESG revolution that is in full swing among DM investors is now starting to reach EM, with promising opportunities. At Pharo we are studying the possibility of getting our funds rated on ESG criteria, but it is a complex issue. EM investors are, by nature, in the business of providing financing to countries whose track record of good governance is often questionable. How to reconcile the desire to be a good world citizen with the purchase of government debt in countries that extract massive amounts of oil or where corruption is rampant? My view is that it is not inconsistent. Cutting off funding to poorly run countries would penalise the populations more than the leaders, as numerous examples of US-imposed sanctions on EM countries have shown. It would put a sudden stop to the development of the middle class that has blossomed in recent years in many EM countries. This emerging middle class is the biggest threat to autocratic and incompetent rule. One could argue that the best way to promote positive change in EM is to help the development of the middle class through economic growth, which itself cannot happen without financing.

CS: 2020 was a rough year for the world. What gives you hope as we lean into 2021?

GF: The Covid crisis has killed and hurt many. As often when disaster strikes, the worst hit are those who are already at the bottom of the economic ladder. But mankind is resilient. Humanity has experienced much more painful episodes in the past 120 years and has always recovered. The massive ongoing global vaccination campaign gives me hope that life will eventually return to normal. Even in poor countries, thanks to the cheaper Chinese and Russian vaccines, one can hope that most of the populations will eventually be protected. The human and economic scars will take some time to heal but within three years I expect most countries to have recovered, socially and economically.

CS: I know you and the Pharo Foundation have a passion for education and Africa. What inspires that?

GF: Pharo and Africa are inextricably linked. The Pharo Foundation’s vision is an inclusive and economically vibrant Africa. Pharo Management – the investment firm – is the funding engine for the Pharo Foundation and eventually the two organizations – the investment firm and the foundation – will be merged into one. Why Africa? Because the continent deserves everyone’s help. It is full of possibilities. Unfortunately, it has been traumatised by its history, and the western world is responsible for a large part of this trauma. One of the consequences is that it has not benefited from the EM development miracle of the past 30 years. Africa is lagging far behind Asia and Latin America in terms of GDP-per-capita. But there are hopeful signs. Many more African countries now qualify as “democracies”, albeit imperfect ones. In many of those, a growing middle class is demanding better public services and less corrupt leaders. Increasingly, Africa’s diaspora is choosing to return to their homeland, the best sign in my view that things are moving in the right direction.

At the Pharo Foundation, we firmly believe that investing in human capital, i.e. in education, is one of the most effective ways to help a country emerge. The “fixed assets” (more macroeconomic jargon!) that Pharo builds in East Africa need constant maintenance and rehabilitation. Our water reservoirs become silted after a few years, our dispensaries decay quickly without maintenance, but the young people who are educated in our 25 schools will never need to rehabilitate their knowledge. They will know English, Maths and many other subjects forever. Their critical thinking will only grow stronger as they become dynamic members of society. This is why we are passionate about education.

CS: You have been an amazingly generous supporter of EMpower for nearly 10 years. What is it that you like or gives you confidence?

GF: Over the past 12 years, since the first fundraising meeting in London in the midst of the Lehman debacle, EMpower has grown into an impressive organization. It is a testament to the great work that you, Cynthia, have done with your colleagues. EMpower is run very efficiently thanks to sponsors who underwrite the administrative costs. I am impressed by the strong partnerships that you’ve built with so many organizations in the developing world. I like the fact that you’ve grown to become a sizeable charity in terms of annual fundraising whilst still keeping a low profile. Last but not least, I very much enjoy seeing all my EM counterparties and friendly competitors generously pitch in year after year during the annual gala dinner.

CS: Anything else you would like to add that I didn’t ask?

GF: Keep up the good work at EMpower. Stay safe and I look forward to seeing you in person after we’ve vanquished Covid.