Germany pledges more investment for African nations pursuing reforms

Chancellor Angela Merkel encouraged African countries to engage in political, financial and tax reforms on Tuesday, vowing that greater transparency would lead to increased German investment.

Speaking at an investors’ conference in Berlin being held under the auspices of the Compact with Africa initiative of the G20, Merkel said Africa’s more than 50 countries had a major role to play in solving global problems.

Egyptian President Abdel Fattah al-Sissi described Germany as a reliable strategic partner and called for greater investment in his country, noting that the African market had considerable potential.

As al-Sissi met German President Frank-Walter Steimeier on Monday, the German Foreign Ministry called for an improvement in the human rights situation in Egypt.

The Compact with Africa initiative is being conducted by the World Bank and the International Monetary Fund with strong German support. Several African leaders are attending the Berlin conference, along with German business leaders.

Merkel said the more than 50 countries in Africa and the nations of Europe faced many common challenges, including climate change, digitalization and migration.

A decision by African countries to work towards a free trade zone on the continent represented an ambitious agenda, the chancellor said, calling for a transition to self-supporting economic growth in Africa.

While much had improved, there were still many problems to resolve, Merkel said, mentioning the challenges posed by terrorism in the Sahel, as well as rapid population growth.

German business continues to see problems in making greater investment in Africa.

“Bureaucratic obstacles, corruption and security issues often prevent German companies from daring to take the first step into Africa,” Martin Wansleben, the managing director of the German Chamber of Industry and Commerce (DIHK), said.

The aims of the compact include better conditions for trade and investment and a partnership of equals. A development investment fund with up to 1 billion euros (1.1 billion dollars) was set up at the last summit.

The German Development Ministry has signed reform partnerships with three of the Compact with Africa ​​countries: Tunisia, Ghana and Ivory Coast.

“We are banking on individual responsibility, private investment, professional training and employment, so that Africa’s youth has a future in Africa,” Mueller said.

“A precondition is that the countries improve the underlying conditions: good political leadership, improving tax administration and government auditing, legal security, fighting corruption and democracy,” he added.

Mueller signed several contracts, including a water supply contract in Tunisia, constructing a factory for making organic chocolate in Ghana and the expansion of a textile factory, also in Ghana, for producing sustainable fabric.

The latter project will create 1,500 new jobs. In addition, a further 50 projects aim to create 70,000 jobs and 32,000 places for trainees in Africa.

German direct investment in Africa has more than doubled since 2015, according to official government figures.

According to the Development Ministry, about half of the world’s 20 fastest growing economies are in Africa; and the population there is expected to double by 2050 to reach 20 per cent of the global total.

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