Politics

Curbing Emigration

Helping Africa to Help Germany

German Finance Minister Wolfgang Schäuble and South African Finance Minister Malusi Gigaba at the World Economic Forum on Africa in Durban. Source: Reuters

Source: Reuters

Siemens boss Joe Kaeser on Thursday signed a declaration of intent with Uganda and Sudan to improve infrastructure as part of a German-led initiative.

Mr. Kaeser, Economy Minister Brigitte Zypries and Finance Minister Wolfgang Schäuble traveled to Durban, South Africa, for the World Economic Forum on Africa. Siemens’ entry into the African market, Ms. Zypries said, was exactly what the German government had in mind when it began its “Pro! Africa” initiative. At the behest of Chancellor Angela Merkel, Berlin is putting a considerable amount of weight behind the effort, which aims to encourage private companies to invest more in Africa, as evidenced by the attendance of two high-ranking German ministers at the conference.

“In Europe, we have come to understand that Africa represents one of the most important issues for the growth and stability of the global economy,” Mr. Schäuble said.

The German government has spearheaded multiple initiatives for Africa and an increasing number of official dignitaries have visited the continent recently. At the root of that attention is Berlin’s hope that German businesses will play a central role in supporting Africa’s economic development.

But there there is another motivation for the series of economic initiatives that Germany is taking on in Africa and that is stemming the flow of economic refugees from Africa. More than 1 million refugees have entered the country since Ms. Merkel opened Germany’s borders to them in 2015. While agreements in place with the Balkan states have stemmed the flow, the government here is still keen to improve conditions in the countries of origin to further reduce the number of people seeking economic asylum in Germany.

We have come to understand that Africa represents one of the most important issues for the growth and stability of the global economy.

Wolfgang Schäuble
Finance Minister

Gerd Müller, Germany’s minister for economic cooperation and development, has been traveling all over Africa recently, promoting his Marshall Plan for Africa. In Durban, Mr. Schäuble presented a new initiative called “Compact with Africa” that will take place in conjunction with Germany’s G20 presidency. Ms. Zypries, also in Durban, touted her own 12-page concept.

The degree and the timing of the German government’s gung-ho attitude toward Africa is no coincidence. As national economies across Africa stagnate and population growth explodes, migration experts expect the number of economic refugees on the continent to rise as well. Many of them will head for Europe. The only way to sustainably mitigate the flow of people, many in Berlin believe, is to fight the cause of that migration and not just the symptoms.

In sub-Saharan Africa alone, the International Monetary Fund (IMF) has said at least 36 million new jobs would be necessary to curb the sky-high rate of youth unemployment. Even in South Africa, the only industrial country on the continent, more than half of all young people are jobless. Idle hands, as experts know, are susceptible to all kinds of negative afflictions, from desperation to petty crime to violent extremism.

Even according to the IMF’s forecasts, which are generally regarded as being overly optimistic, there will be few improvements to Africa’s poor situation in the next four years.

In sub-Saharan Africa, with its 49 countries, economic output is only expected to grow by an average of 3.3 percent annually until 2020. But that won’t be nearly enough to lift anyone on the continent out of their economic misery. Experts have forecast that Africa would need to log steady, double-digit growth to put even a dent in national poverty.

Currently, however, Africa still isn’t producing much of anything the world actually needs. That’s exactly why Germany wants to help build up small industries and institutions the continent desperately needs as a foundation for economic growth. Mr. Schäuble wants to improve on-the-spot investment conditions so that more companies will feel comfortable spending money in Africa. Ms. Zypries, with her concept, is committed to expanding the number of advisory services, especially for small- and medium-sized businesses that wish to invest in Africa.

The only problem is that so far, neither of their efforts have had the desired effect. Ms. Zypries and Mr. Schäuble were only accompanied by a few small business owners in Durban. According to a recent survey by the German Chambers of Commerce and Industry (DIHK), companies in Europe’s largest economy are reluctant to get involved with businesses in Africa.

“This all depends on the initiative and responsibility of companies,” Mr. Kaeser said in Durban. According to data from Siemens, the company employs 3,600 people in Africa, though it plans to have more working there in the future.

“Our goal is to double our order intake in Africa by 2020,” Mr. Kaeser said.

Our goal is to double our order intake in Africa by 2020.

Joe Kaeser
Siemens CEO

According to Handelsblatt sources, Roland Busch, a board member at Siemens, will take over the North Africa Middle East Initiative of German Business (NMI). The group “supports the establishment and expansion of bilateral economic relations” between Germany and the Middle East North Africa region, according to its website.

Mr. Busch, a 52-year-old, former chief technology officer at Siemens will succeed Siegfried Russwurm, another former Siemens board member who gave up his position at the industrial giant in exchange for the job as NMI chairman.

One obstacle that is dogging the German government’s plans – apart from the fact that they are lacking energy – is that they are not properly coordinated.

The initiatives spearheaded by Berlin are good, Eric Schweitzer, the head of the Chambers of Commerce and Industry (DIHK), told Handelsblatt in an interview. “But things need to be better connected,” he said. Mr. Schweitzer was a part of the business delegation that accompanied Ms. Zypries to Durban.

Within the German government, people have begun to realize that their projects lacked the necessary coordination.

“The Chancellery has taken the lead in the development of a common strategy for Africa,” Ms. Zypries said during an interview with Handelsblatt. “Now we need more momentum. A concept needs to be finalized in this legislative session.”

 

Dana Heide is a political correspondent for Handelsblatt in Berlin. Thomas Sigmund is the bureau chief in Berlin, where he directs political coverage. Wolfgang Dreschler is a correspondent in South Africa. To contact the authors: d.heide@vhb.desigmund@handelsblatt.com

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