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Suburban investment

April 23, 2012

In the last French presidential election, social issues in the poorer suburbs were a key issue. This time, the politicians have forgotten the suburbs. But investors see their increasing potential.

Image: picture-alliance/maxppp

No matter who wins the second round of the French presidential elections on May 6 - the incumbent Nicolas Sarkozy on the right or Francois Hollande on the left - both sides of the political spectrum are seen as having ignored the social problems in France's poor suburban areas.

During the last election in 2007, tackling the social issues in the poor suburbs of French cities was a key issue. This time, they have been forgotten by both the left and the right.

But while politicians have looked the other way, businesses are starting to invest to give opportunities to those from the banlieues.

A 'pragmatic' vision

A short walk from the world famous Champs Elysees, in a comfortable area of the northwest of Paris, one of the city's many investment funds hums with life.

The investment fund is called "BAC" - Business Angels des Cités. The cités are France's neglected housing estates in the banlieues, the French suburbs, where there is high unemployment and few opportunities.

BAC president, Mathieu Cornieti, says that while his aim is to make money, his company does a different kind of business. 

Stephane Saal in his STS workshop in La Courneuve, Seine-Saint Denis, Paris
The STS workshop is just one of the BAC portfolio companiesImage: Naomi Scherbel-Ball

Cornieti believes there is money to be made in the banlieues and says he has a portfolio of 10 businesses which, he believes, are good investments.

"My vision is not political, it is just pragmatic," says Cornieti. "We are not changing the rules, we are not a foundation, we aim to make money and then speak about the social impact - because we are a private equity fund."

Suburban riots

The deaths of two teenagers in October 2005, in the Paris suburb of Clichy-Sous-Bois, sparked weeks of looting and car burning across France.

The images of rioting attracted media attention from around the world. For many, it was a wakeup call to the serious problems in the French banlieues.

Some investors joined to form BAC, a fund to support entrepreneurs from suburbs. As well as providing financial support, BAC also aims to provide business networks for entrepreneurs, who lack the contacts to develop their businesses to their full potential.

Cornieti says the investors want to reverse the suburban deprivation through business.

"This creates employment and role models for young people. It's less about the money and more about the support than we can provide," says Cornieti.

‘Poster' man

A 15-minute train ride from the centre of Paris is La Courneuve. It's part of Seine-Saint Denis, a neglected suburb that is often referred to simply by its postcode, 93.

Stephane Saal and others in the STS workshop in La Courneuve, Seine-Saint Denis, Paris
From home to large-scale workshopImage: Naomi Scherbel-Ball

It is a world away from the grand boulevards and cafes of central Paris. Unemployment is 11.6 per cent - that's 2.5 per cent above the national average - and youth unemployment is more than double that.

Stephane Saal is one of the entrepreneurs in the BAC portfolio. Driving through the suburb, near the Stade de France, which was built for the French World Cup in 1998, Saal says the area has changed in the past fifteen years.

"There used to be disused factories here, but the stadium completely regenerated the area - It brought jobs to a world that had been forgotten," says Saal.

But a few roads down, Saal points out a group of buildings surrounded by barbed wire. It's where the French military police reside.

"If there's a problem in the centre of Paris, the military police are the ones who are sent to deal with it," says Saal, "but if something happens just outside the barbed wire, like here in La Courneuve, they do nothing. They stay inside."

In the car park of his workshop there is a burnt-out van.

"The situation is as black as can be," he says, "but we see the positives, it can only get better."

Saal's company, STS, specializes in applying adverts to vehicles, trains and shop windows. He founded the company in 2002 and now employs 18 people. His clients include sportswear maker, Nike, the national stadium, Stade de France, St Etienne Football Club and the drinks maker, Coca Cola.

Business and initiative

Christian and Ali are both from the area and have worked for Saal's company for a number of years. They say something has to change, but agree that people need to start to help themselves, as well as looking to the state for support.

Saal built his business from his own home, with his own savings, and wants to keep STS in La Courneuve.

Stephane Saal, owner of the STS workshop in La Courneuve, Seine-Saint Denis, Paris
Saal says business is the solution to poverty in the French suburbsImage: Naomi Scherbel-Ball

His clients, however, are often nervous about coming to see him.

"It's a real problem," says Saal, "people don't want to go outside the gates of Paris, or come to Seine Saint-Denis. It has a very bad reputation."

BAC's Matthieu Cornieti also wants to change the way the banlieues are seen, but admits there is an image problem. He says the banlieues are still in "crisis" and that life, for those who live here, has not improved since the dramatic riots of 2005.

But both he and local businessman, Stephane Saal, say business is the solution. In ten years time, predicts Saal, the developers will have invested more, and people will want to stay.

Author: Naomi Scherbel-Ball, Paris
Editor: Zulfikar Abbany