For German foreign trade, Africa has thus far played much of a role. But that could change. In 2019, imports and exports have risen strongly. And the German government wants to attract more investors to Africa.
“On to Africa, where the future markets are,” said German development Minister Gerd Müller a few weeks ago. The appeal is to the German economy. Muller wants the company to be more active in Africa. And, apparently, the are not averse even so.
In the first five months of this year, the trade with Africa, according to the German chamber of industry and Commerce (DIHK), compared to the same period last year by 12.7 percent. And about half of the German companies want to invest according to the AHK World Business Outlook more in Africa.
Christoph can caster, managing Director of the Africa Association of German business, shares this impression: “We see increasing interest of German companies to engage in Africa.”
In some African countries, it went uphill in the last few years, economically, rapidly. The annual growth rates of around seven per cent are in Ethiopia, Ghana, Rwanda or the ivory coast is normal. The economic situation in the other world is cooling regions, the southern neighbouring continent for German companies in addition to attractive.
So far, Africa plays in German foreign trade has no important role. In 2018, the Federal Republic of imported Goods to the value of € 22.5 billion from Africa. That was just under two percent of total German imports. Conversely, only 1.7 percent of German exports went to the southern neighbouring continent. The total trading volume stood at around 45 billion euros. For comparison Alone, with Hungary, Germany is more.
Cars to South Africa, Oil from Nigeria
Added: The trade with Germany is distributed on the African continent is very uneven. Alone to South Africa accounted for almost half. In addition, Nigeria and North African countries are the main trading partners. This concentration is, according to the foundry can fluctuate also a reason why the trade figures with Africa is relatively strong.
“If South Africa is weak, then the power, of course, is also relatively noticeable. We observe rather weak growth rates in the major economies Nigeria and South Africa economies. In the Maghreb area, it was difficult at times, and the leaves then, of course, also tracks. Even if the trade figures in the other regions, very well.”
After growth in the year 2017, the German exports were down to Africa to 2018 by around eleven percent. Germany and delivers in the African countries, mainly machines and cars, electronics and chemical products. Conversely, oil and natural gas are the main import goods, they make up around a third of the imports from Africa, followed by agricultural products, auto parts and metals. Still, Africa is first and foremost a supplier of raw materials.
“We need to stretch to the ceiling”
The German government wants to strengthen the economic development in Africa – not least of all, to prevent people there from seeking a better life in Europe.
German Chancellor Angela Merkel in 2017, called the Africa year and made the continent the main theme of the German presidency of the G20. From the Ministry of development of the “Marshall plan for Africa came in the same year”. In addition, Merkel has promised a Fund with one billion euros to promote investment in Africa and safeguard, because in the case of direct investment, Germany is lagging behind particularly. Only one percent of German foreign investment is currently – as of April 2019 – to Africa. The first part of the Fund under the name of “Africa connect” is now on the run. Companies can apply for loans of up to four million euros for investments in Africa.
To achieve the policy aims to “Mittelstand” the German. Can caster explains: “For medium-sized German companies in the last years, a mandatory occasion to deal in a special way with the African markets. As the individual markets are relatively small and complicated, and there are also no traditional relationships, as you have, for example, our neighbors in France.” Also the partly negative image painted in the media of Africa, have an impact.
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Rwanda: high-tech forge in Africa
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Rwanda: high-tech forge in Africa
Opportunities for German companies-founders can see in the case of renewable energies and the production of consumer goods, and cars. Also in the information technology and security technology, African governments have a great need. “These are all areas where we, as the German economy, an excellent reputation, and where the African States are very happy to work with German companies.”
Of the policy, he calls for still more financial security. Export guarantees would have to be extended, also even the companies keep to be recognized for many African countries to high. “The Chinese are sometimes very aggressive, especially in the financing of support for large-scale projects. Since we need to stretch to the ceiling.”
Not all investment creates Jobs
Reinhard Palm, head of the Africa Department at the Church’s aid organization “bread for the world,” finds, however, that the funding policy runs partly in a wrong direction. Too much money flow into the pockets of large European corporations.
In his view, African companies should have access to the funding instruments. In the centre is the strengthening of regional economic cycles should be – so companies that produce in Africa, products for the African market. Otherwise, the “economic promotion for German companies, but not strengthening the economy in Africa,” says Palm. “You need to be honest with you.”
Important Palm would be the construction of a food processing industry in Africa. “As the raw products of the farmers to rot on the spot and at the same time, people consume processed products from abroad.” Because, although there are in African countries, many raw materials must be imported, processed foods – from orange juice to chocolate bar usually expensive.
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Nigeria is undermining free trade
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Nigeria is undermining free trade
The EU torpedoed the intra-African trade?
What would give the value-added on the continent really Rise, would be an African free trade zone. Plans and negotiations are already on for several years. 54 member States of the African Union have now ratified a Treaty providing for the establishment of a free trade zone.
Africa expert Palm is, however, of opinion, that the European Union is undermining this development. Because the relies so far on partnership agreements with individual African countries or groups of countries. In the context of this so called EPAs (Economic Partnership Agreements) to commit the countries to open their markets to 80 percent compared to Europe. In return, you get complete freedom from customs duties for the EU.
Many African countries defend themselves against these EPAs. The concern is that the European low-cost competition, for example, in the food sector, the own agriculture is collapsing.
Agreement there has been, among other things, with Namibia, South Africa and the West African States of Ghana and ivory coast. Palm have criticized: “These West African countries, although they are a customs Union, in the future, different external tariffs. And everyone knows: the customs Union is set in Parts, except power.”
Due to such different external tariffs, the plans for a pan-African would have to run the free trade zone. “The future would be set, on a pan-African free trade zone, to support you and to do everything so that it comes to life,” says Palm.