Poland’s richest man Jan Kulczyk, talks to WBJ Observer about his business plans for the future, his investments in Africa, Europe’s economic perspectives and what advice he would give foreign entrepreneurs who want to invest in Poland
WBJ Observer: Your investments in African countries such as Nigeria, Tunisia, Morocco and Mozambique have grabbed a lot of attention lately. Polish investors see Africa as a continent of possibilities but also as one which involves significant risk. What are the greatest challenges for investors who want to function in Africa?
Jan Kulczyk: Risk is always calculated in an investment process. The point is to minimalize it by, for example, sector and geographical diversification. My companies are involved in projects in 30 countries on four continents. However, I don’t have any particular concerns regarding my African investments. Quite the opposite. I started investing in Africa in 2006. The next year saw the financial crisis erupt in the US. In the following years, southern European countries almost went bankrupt and the European Union became mired in recession.
So you tell me, is Africa less predictable than well-developed economies? It definitely has a brighter future. In the next decade, Africa will be one of the fastest-developing regions in the world. According to the IMF, 10 out of the 20 countries with the highest GDP growth in the next five years will be in Sub-Saharan Africa.
Africa is currently in an economic situation similar to the one in our region 25 years ago. Before it lies a great civilizational leap and an increase in its speed of transformation. But it cannot go it alone because it lacks the needed infrastructure, technology and know-how. That is why it needs partners to help it in its development while also benefiting from it.
However, it needs partners it can trust. And this is where Poland’s advantage comes in. It has very good experience in economic transformation without any of the historical anchors that some other European countries have with the continent.
For years, I have been trying to convince Polish and European entrepreneurs that Africa is a big opportunity for Europe to develop. Today, interest in the African market is growing and an increasing number of firms are investing there. It is just a pity they waited so long, because right now the biggest economic powers are waiting in line to enter African markets.
So how do you see Europe’s perspectives for growth in the next 5-10 years?
Europe still has huge economic potential based on its well-developed infrastructure, advanced technology and developed industry. But to exploit this, we have to start thinking globally. The biggest challenge is international competition. The financial crisis showed that Europe is not self-sufficient and must seek new markets to develop further. That is why I so often point to Africa. For the EU it is one of the most important destinations for expansion.
It needs to be well-prepared, however. A good example is the EU’s energy policy, which results in very high energy prices, so European producers have a tough position compared to their competitors in the US and Asia who pay less for energy. Putting it simply, in today’s world, an economy which has access to cheaper energy is by definition more competitive.
In Poland, you are involved in many sectors: energy, infrastructure and real estate. These sectors were hit hard by the crisis. Which of them is currently the best placed to win back the confidence of investors?
There was no economic crisis in Poland. There was a slowdown, but no crisis. The crisis affected Greece and Spain, where unemployment is over 26 percent. So we can’t talk of winning back confidence in Poland. For investors, an economic slowdown is an opportunity to buy at a good price.
Does Poland have the chance to achieve “energy safety”? Is it at risk of an energy shortage in the short term (for example due to the Ukraine crisis), or in the long run due to higher energy demand and the long-drawn out process of Poland’s nuclear energy project?
All of Europe is facing an energy challenge. The EU will not be competitive, having energy prices twice as high as in the US or Asia. That is why, thinking about energy policy we must take into consideration cost as well as ecology. There is no ideal solution for all countries, as geographical and geopolitical considerations must always be taken into account.
From Poland’s point of view, what is most important is the most effective exploitation of its own resources. That’s why the Polish energy mix should be based on coal, wind and gas.
Let’s talk about real estate. In the past decade, several million square meters of office and retail space have been built. Where do you see opportunities for investors and are you not worried about oversupply in Poland’s major cities?
Even if oversupply becomes a problem, it will not affect the best locations offering the highest quality. There is always only a limited supply of such real estate in every big city. And it is in these types of projects that KSP, which I founded with Larry Silverstein, invest. Buildings like Ufficio Primo or Ethos in Warsaw will not have much competition, no matter how many office buildings are built.
You are the first Pole who made it onto the Forbes World’s 500-richest list. Do you think Polish entrepreneurs and investors are too risk-averse and lack courage when making business decisions?
I have a very good opinion about Polish entrepreneurship. I believe we are a hardworking, talented and determined nation. SMEs are much more important for the economy than the wealthiest people. A bigger problem is the fact that it is still not easy to use one’s potential in Poland.
The think tank I created – the CEED Institute – just published a report on economic migration in the EU. Almost 2 million Poles are currently in the countries of “old” Europe. The Polish economy needs those young people who want to, and are able to, work hard. That is why we have to find a way to encourage them to return to Poland.
You are a Polish businessman who invests abroad. What advice do you have for foreign businessmen who would like to invest in Poland? Is investing in Poland a good idea?
Poland is still an emerging economy with good potential for growth. It is the leader in its region and wants to play an increasing role in the European Union. The problem is that there is still too much bureaucracy and an imperfect and unstable law. But it is still a good place for investment, although as with other countries in the region, one has to know the local reality.
When I invest in foreign markets, I always try to secure a local partner who helps me understand the specifics of a certain country. I recommend foreign investors this model of action.
What advice would you give a young Polish entrepreneur who has already made his first million and has the ambition of becoming the next Rockerfeller or Warren Buffet?
The road to success in business is similar to that in sports. You need talent, a lot of hard work, determination and a bit of luck.
If someone asked me for a quick and simple tip, I would recommend he invest in my companies. This is the best advice I can give. Since I invest in them myself, it means I believe in their potential.