The author, Richard Li, is a Singapore-based partner with Steel Advisory Partners, a management consulting firm that serves clients across industries. This article was produced for the NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation.
The Group 20 (G20) is an international forum for the leaders from 19 advanced and emerging economies, as well as the European Union (EU). Germany took over the G20 presidency in December 2016 and it is the first time ever that the African continent has received much attention and focus during a G20 Summit. Even before taking over, German Chancellor Angela Merkel had mentioned, during her visit to Ethiopia, Mali and Niger in October 2016, that Germany would pay special attention to Africa during its G20 presidency in 2017.
At the G20 Summit in Hamburg last month, opportunities and issues faced by Africa were discussed. In the final G20 leaders’ declaration, a large section was devoted to Africa, thereby confirming the support of the G20 nations, as well as the Business 20 (B20) group. Moreover, under Germany’s leadership, the G20 Africa Partnership has been launched and concrete plans will be put in place to sustain and support the economic development of Africa.
The migrant crisis in europe
It was during the 2015 G20 Summit in Turkey that the G20 nations started looking at the issues of migrants and refugees in the world. Over the last few years, Europe has been facing a major crisis in managing the migrants and refugees coming to its shores. Europe has been open in welcoming these refugees, but the scale and number of people moving towards the EU are causing great unease among the European governments with an increasing backlash from the Europeans themselves.
Germany has welcomed millions of migrants and refugees within its territory over the last few years. However, with the rise of populism and anti-migrant sentiments, Chancellor Angela Merkel has to show that something is being done to tackle this issue, especially when she will be seeking another mandate in the coming German elections in September.
According to the United Nations High Commissioner for Refugees (UNHCR), there were more than 22.5 million refugees worldwide in 2016. Africa represents nearly a quarter, with more than five million refugees. In addition, there were more than 40.3 million people internally displaced in 2016, due to armed conflict zones. For Africa, 14.2 million displaced people come from five countries – South Sudan (3.3m), Sudan (2.9m), the Democratic Republic of the Congo (2.9m), Somalia (2.6m) and Nigeria (2.6m). Europe is indeed very wary that these people will potentially move towards its territories, thereby exacerbating the magnitude of the European migrant crisis.
Although all the migrants, desperately scrambling to reach Europe, come from many parts of the world, a significant portion comes from Africa. According to Eurostat, over the last five years nearly a million Africans have reached Europe. In 2016, the top five African countries of origin are Eritrea, Gambia, Guinea, Nigeria and Somalia. The main European countries welcoming them are France, Germany and Italy, settling more than 200,000 in 2016.
Germany, with the biggest economy in the EU, is being viewed as the de facto leader. The other European governments are pressing for a response to this crisis, especially when there are potentially millions more waiting to jump on the next boat towards Europe. It will seem that Germany’s G20 focus on Africa is partly in response to the European migrant crisis, as well as an attempt to deal with the political and economic issues at the source.
Germany’s G20 Africa Partnership
Since Germany took over the G20 presidency, it has leveraged on its influence over the G20 nations to intensify the global engagement towards Africa. In February and March 2017, Chancellor Merkel visited Egypt and Tunisia to build the momentum in engaging with the continent. At the same time, all the G20 finance ministers and central bank governors were convened in March 2017 in Baden-Baden, Germany, where the Compact with Africa initiative was launched.
Compact with Africa was eventually endorsed by the G20 finance ministers and central bank governors, who will get their respective countries to deepen economic and financial cooperation with Africa. This action plan aims to focus on the economic development of African countries by gathering private investments together with the support and participation of international stakeholders like the African Development Bank (AfDB), the International Monetary Fund (IMF) and the World Bank.
The Germany-Africa Business Forum in March 2017 was again an opportunity to further discuss the Compact with Africa initiative. With all African government officials, together with representatives from the German private sector, the focus was on enhancing the German trade and investment relationship with the continent.
During an April meeting in Washington DC under the German G20 presidency, organised by the IMF and the B20, various parties, including African governments, G20 and the private sector, were gathered together to deliberate on the Compact with Africa action plan. The discussions were mainly focused on boosting investment from the private sector towards the African continent with the development of financial markets and the right regulatory frameworks in place.
In June, Germany launched the G20 Africa Partnership by bringing together heads of states and ministers from African countries and the G20 in Berlin. It was an occasion to not only discuss the need to support the development of the African continent, but also to strengthen the engagement and partnership between various parties. During the Hamburg G20 Summit in July, the G20 Africa Partnership was firmly endorsed under the G20 Leaders’ Declaration.
Germany’s four-pronged approach towards Africa
Africa presents many challenges and opportunities for the EU and the world. On the one hand, the migrant crisis is becoming an overwhelming issue for many European governments, but on the other, the EU enjoys significant benefits from its trade and investment relationships with Africa. According to Eurostat, in 2015 and 2016, the EU traded €287.8bn (US$337bn) and €261.4bn ($305.9bn), bringing about a net positive trade balance of €21.7bn ($25.4bn) and €28.4bn ($33.2bn) respectively. As for Germany, it traded €39.5bn ($46.3bn) and €38.5bn ($45.1bn), while benefiting from a positive trade of €8.2bn ($9.6bn) and €10.4bn ($12.2bn) in 2015 and 2016 respectively.
It looks like that while the EU and Germany know that Africa is bringing about great benefits, they cannot continue ignoring the many political and economic issues faced by the continent. Thus, they must support Africa in its economic development. Otherwise, like the migrant crisis, these issues will eventually grow out of control if they are not proactively managed now. Therefore, since last year, Germany has constantly brought Africa into the forefront and has committed itself to enhance the partnership with Africa during its G20 presidency.
Germany, together with the EU, is adopting a four-pronged approach in dealing with Africa. First, in December 2016, the German development minister, Gerd Müller, mentioned a Marshall Plan for Africa that was eventually presented in January 2017. Basically the 10 points within the plan focus on having a stable government and security, empowering the people and economic development. Germany and the EU will spearhead, finance and support several action plans that are in line with these objectives. To support this Marshall Plan, various EU funds will be tapped into in the short-term.
Second, during the meeting of the G20 finance ministers and central bank governors in March, German minister Wolfgang Schäuble launched the Compact with Africa that is open to all African countries. But for now, the focus is on seven countries, namely Cote d’Ivoire, Ethiopia, Ghana, Morocco, Rwanda, Senegal and Tunisia. The main aim is to mobilise and direct private investments to the African continent with the support of the various international financial institutions.
Third, during the May 2017 World Economic Forum in Durban, South Africa, German Economic Affairs and Energy Minister Brigitte Zypries presented the Pro! Africa plan, that aims to have the right economic policies to boost the foundation for economic development. This initiative focuses on creating and finding solutions that will eventually generate more opportunities for Africans. About €100m ($117m) have been allocated to support the various programmes.
Lastly, Chancellor Angela Merkel is using the German G20 presidency to not only tie all these initiatives together, but also to gather all the other G20 members to endorse and even expand these plans for Africa in the future.
Africa and post G20 Summit
Despite the fact that the G20 Summit recently ended, under Germany’s G20 leadership, the engagement with Africa continues with other international meetings; in November 2017, there will be the EU-Africa Summit. Germany has not only put Africa in the limelight, but it is using its global political and economic clout to shift the interests of developed nations and the global business community towards the continent.
However, Africa should not depend solely on Germany’s efforts, but needs to stand up, empower itself and seize all the opportunities from the spill-over effects that the German G20 presidency is bringing around. For too long Africa has been portrayed as a lost cause in the international media. Hence, this high-profile treatment is indeed a golden opportunity to change the negative perceptions of the world about Africa and focus on the long-term positive potential of the continent.
Like any developing economies, as African nations continue their economic development, there will be many obstacles to be overcome along the way. Hence, the German efforts to put Africa in better perspective may be a small step in catalysing the growth of Africa. In return, Africa should not only take advantage of all these opportunities that can spur its development forward, but also be shrewd in building on the German G20 presidency to gather greater momentum in its growth path.
Richard Li is a Singapore-based Partner with Steel Advisory Partners, a management consulting firm that serves clients across industries. Having spent his working career in strategy consulting, he worked with various global clients and covers themes such as Corporate Strategy, Transformation, Digital Innovation and Risk Management. He can be contacted via the Steel Advisory Partners site. This article was written specifically for the NTU-SBF Centre for African Studies.