How Germany forced a rethink of Africa
Just this year alone, an estimated 400,000 African migrants will flee to Germany, escaping either war or poverty, or both. If nothing is done, officials warn, millions more could arrive in coming years. Yet rather than simply seek solutions in Africa to this flood of humanity, Germany decided last year to first tally up its own indifference toward the continent.
Among the 400,000 companies in Germany, fewer than 1,000 invest in Africa, officials found. And Germany’s trade with Africa amounts to only 2 percent of its total foreign trade.
“That has to change!” declared Gerd Müller, Germany’s development minister, in February.
This humble introspection may help explain why German Chancellor Angela Merkel was so successful at the Group of 20 summit on July 7-8 in winning support from most of the world’s wealthiest nations for a major boost in private investment for Africa. Dubbed the “Merkel Plan” (a play on America’s Marshall Plan that revived postwar Germany), the initiative aims to shift global thinking about the business opportunities in Africa. Only then can investment in both entrepreneurs and infrastructure rise, helping to create jobs and discourage migration.
“We must change the lenses with which we look at Africa, from the traditional development mind-set to an investment mind-set,” says Akinwumi Adesina, president of the African Development Bank.
Germany’s approach is to have G20 countries set a few models for Africa by partnering with the most reform-minded countries, such as Ghana, Ivory Coast, Rwanda, and Tunisia. Money will be given to fight corruption, curb capital flight, and improve tax systems – all necessary to reduce business risk in Africa. “We’re trying to put the spirit of partnership into the foreground,” said Ms. Merkel.
For all its troubles, from famine to dictatorships, Africa remains a gold mine as a potential workforce. By 2050, it will be home to more than one-quarter of the global population. Half of its 54 countries have reached middle-income status. And compared with Asia and Latin America, Africa has the largest share of adults running or starting a new business.
Such opportunities explain why Germany calls its plan “Compact with Africa.” Both sides must be responsible to act. Mass migration may have pushed Germany to focus on the continent’s crises. But it also looked at its past neglect of Africa – and the potential for investment.
