Italy’s Mattei plan for Africa: a story of Italian political capitalism

Since the Italian government launched the Mattei plan with great fanfare about a year and a half ago, relations between Africa and the West have unfortunately continued to deteriorate. The public debt of countries like Egypt, Kenya, and Nigeria has skyrocketed, while loan and reform packages from the World Bank and the International Monetary Fund have been met with protests and uprisings.

The Mattei plan is the flagship initiative of the Italian government to reset relations with the African continent. It is named after Enrico Mattei, the charismatic leader of Italy’s national oil company ENI, which in the 1950s sought to support African countries’ development of their natural resources to help the continent maximise its economic growth potential and facilitate Italy’s energy independence.

The choice among three paths

More than being about Africa, this plan tells us about Italy and its political capitalism. The Italian government could choose among three possible paths. The first was a strategic one: to design an ‘Italian strategy for Africa’ and allocate spending and interventions based on this strategy. The government could have presented its analysis of the geopolitical and economic context of African nations and defined thematic areas, regions, and tools for intervention. It would have been necessary to consult governments of African countries, international organizations, local economic operators, and the Italian Parliament. Under this path, the Ministry of Foreign Affairs would have been the driving force, and resources would have been mostly allocated as grants or concessional loans to governments of recipient countries. The main criticism of the Mattei plan is precisely the lack of strategy. It is a legitimate criticism, even though in Italy many times more effort has gone into writing a strategy than into implementing it. Grand ambitions have produced bland documents, an example being Italy’s Triennial Strategy for Cooperation. At least in these early stages, Prime Minister Meloni made the opposite choice: projects first, then a strategy.

The second path was to focus on the development of the African private sector. The UK, France, and Germany each invest over two billion euros annually in the private sector in developing countries. They do so through dedicated public financial institutions that provide financing and capital to local companies. The areas of investment are defined by the government, but investment decisions are made by independent market experts. The goal is to ‘create markets,’ demonstrating with results on the ground that it is possible to have social and environmental impact without losing money. These institutions should operate at arm’s length from the government: ministerial structures do not have the expertise to select these types of projects. If these institutions are not independent their purpose disappears. This is no easy objective. Creating markets takes time, the selected projects struggle to become systematic, balancing development and financial returns is more of an art than a science, and not all problems have market solutions. In any case, Italy has not really chosen this road.

The third path was to focus on supporting national champions. This is the path the government has chosen so far. The Mattei plan has so far concluded one major operation: a 2023 World Bank Group loan to ENI (Italy’s national oil and gas company) for a biofuels project, in which Cassa Depositi e Prestiti (Italy’s national development bank) later took a minority stake of 75 million dollars. A valuable project, although ENI has loans exceeding fifteen billion and no difficulty in raising funds without resorting to public resources.

A plan that looks at national champions

The Mattei plan seems, at least in its initial stages, to be primarily economic diplomacy and support for national champions with some additional instruments to support SMEs. An example: two hundred million euros, part of which as grants, distributed by SIMEST (Italy’s export support agency) to Italian SMEs for Africa-related e-commerce, trade fairs, and studies. These are legitimate choices, but not a paradigm shift from the past.

In the current geopolitical context, it is also right to think about strengthening large strategic companies, but is the Mattei plan the right tool to support strategic national companies? When a large company truly wants to expand, it does so with an industrial strategy, not with side projects. There is a successful example in Italy: ENEL (Italy’s national electricity company), which in the last decade became a world leader in renewable energy in Africa, Asia, and Latin America. ENEL’s bet was truly ambitious, and like all strategic choices, it came with a cost: the company’s debts increased, its stock price was affected, and it was the current government itself that called for a change of course with new management that revised ambitions but increased profits.

This is the contradiction of the Mattei plan. It presents itself as a strategic ambition with an African focus but, at least for now, it is a national diplomatic platform that seems to look at Italy’s state-owned enterprises. And when these enterprises try to be truly innovative and take risks, it is the same government that advises caution a pay back dividends to the Italian Treasury.

Tags: Africa, Interinstitutional relations, Italian government, Italy, Capitalism