Updated: August 27, 2021 10:46:12 pm
Officially, the event is called the “Compact with Africa Conference.” But in reality, an era is coming to an end this Friday when German Chancellor Angela Merkel meets a good dozen African heads of state, some of whom will be tuned in virtually. The conference would mark an era in which Africa played a greater role in German politics than before.
The most visible sign: the Compact-with-Africa initiative, the prestige project of the German G20 presidency. Private investments of a completely new magnitude were to flow to Africa as a result. But, above all, the German government wanted to inspire German companies to invest in Africa with a whole package of support measures.
Stock-taking: Less enthusiasm
The summit in Berlin is, therefore, an event for taking stock. From the German side, the results look positive. German Chancellor Merkel emphasized in her opening speech: “Compact with Africa is working. In most Compact countries, the business environment has improved as a result of reforms, enabling them to record above-average investment compared with Africa as a whole up to and including 2019, also from German companies.”
“Yes, more German companies are active in Africa, especially more small and medium-sized businesses. We saw significant growth in 2018 and 2019, before the Corona pandemic,” Christoph Kannengiesser, chief executive of the Africa Association of German Business, told DW.
Merkel stated, that all participants will have to continue to think about how to lower remaining trade and investment barriers under Compact. “Africa has so much market potential, but it also needs to be better exploited”, she said.
“There are good reasons to look to the future with confidence. Particular attention is being paid to investments in renewable energies.” Their expansion is of enormous importance in ensuring that we can actually achieve our global climate targets”, Merkel added.
African leaders are also likely to have kind words as they bid farewell to Merkel. One of them is Nicolas Kazadi, Financeminister of the Democratic Republic of Congo: “I would just like to point out that Germany, under the leadership of Chancellor Angela Merkel is leading the way in the energy transition.”
Furthermore he said, the key materials to potential sources of green energy that will enable the world to achieve this energy transition and to achieve the goals that we have set for the planet in 2021 are in Africa. “It is Africa’s wish to build a strategic partnership with Germany in this area, but not just as suppliere of raw materials, but really as a full-fledged partner to Germany.”
But there is not much left of the enthusiasm about the “Merkel Plan” — as Ivorian President Alassane Ouattara dubbed it at the start of 2017. “When I look at African countries today compared to when the chancellor made these statements, I am not sure that German economic activity has increased significantly,” Olumide Abimbola, director of the African think tank APRI (Africa Policy Research Institute) in Berlin, told DW.
Investments rise moderately
In a sense, both sides do have a point. From 2017 to 2019, German investments in Africa grew by about €1.57 billion ($1.84 billion). A rather moderate increase. The continent still only receives 1% of all German investments worldwide. No figures are yet available for 2020, but it is likely to stagnate or, at best, grow slightly due to the pandemic. Moreover, most German companies still do not find Africa attractive. In 2019, just 884 companies were investing there, that’s 42 more than in 2017.
And that’s despite numerous support programs launched by Merkel’s government. These include an investment fund worth billions, more advisory services for companies, and better safeguards and guarantees. The Africa Association of German Business believes that the instruments need to be expanded further: “This is particularly about reducing risks and facilitating financing. But it is also a question of once again significantly strengthening the presence of German policy on the African continent,” says Kannengiesser.
On the African side, other opinions are not always flattering. Behind closed doors, African diplomats complain that German companies are too timid, even though their competitors are doing good business in Africa. But the truth is also that there are not enough customers in many countries for the high-quality but expensive German products. For example, around two-thirds of all German sales and a large proportion of investments are made in South Africa, which is comparatively wealthy.
What happens after the German election?
It is also unclear who will benefit in the end. “We have to make sure that investments in Africa also deliver on their promise: that jobs are created, that the economy grows, that there is sustainable development,” says expert Abimbola. That is also what the German government is promising.
On the other hand, critics say that the many support programs do not commit companies to clear social standards. The selection of the Africa Compact countries is also controversial. Although only so-called reform-oriented countries are supposed to participate, authoritarian states such as Rwanda and Egypt are also included. Ethiopia remains a member as well, despite the bloody conflict in the Tigray region.
At Friday’s meeting, African leaders are likely to ask the incumbent chancellor an important question: What will happen after the German elections? In addition to Angela Merkel, Development Minister Gerd Müller will also be absent from the new government. This means that the two most important architects of Germany’s new Africa policy are getting off the boat.
Merkel has been very involved in Africa, according to business representative Kannengiesser: “We hope that future economic and foreign ministers will again increasingly go to Africa with business delegations, but also support concrete projects with appropriate political flanking.”
However, it is not yet clear who will take over government posts in Berlin in the fall — and how much attention a new German government will pay to Africa in times of climate change and the corona pandemic challenges.
This article was translated from German by Martina Schwikowski.
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