Poverty Business (I)

BERLIN (Own report) - The German ministry of development plans to extend its activities to develop foreign markets for German businesses, according to a competent state secretary. The covert subsidy policy, which, over the past few years, has provided sums in the billions, is operating under the name "Public Private Partnership" (PPP). It is explicitly aimed at opening "growth markets" that have been neglected by the private sector, because of profit perspectives being dim without state subventions. The attention has been particularly focused on impoverished populations in the countries of the southern hemisphere because of the global financial and economic crisis. Because of their high percentage of the world's population and in spite of their low income, they are being considered as potential consumers of metropolitan goods and services, such as so-called "micro-insurances" against the sequels of natural catastrophes. The German Allianz Insurance Co. can expect considerable profits from these cheap "micro-insurances" that are subsidized by the ministry of development, because of the large number of insured.

Model PPP

When the cement factory in Otavi (Namibia) was commissioned at the beginning of February, the German Minister of Development, Dirk Niebel (FDP), called the factory a "model and example for more Public Private Development Partnership projects."[1] The factory was built under the auspices of the German Schwenk Zement KG enterprise, which had received public funding from the German investment and development institution DEG (Deutsche Investitions- und Entwicklungsgesellschaft). According to the Ministry of Economic Cooperation and Development (BMZ), over the past ten years German businesses have received a total of 6 billions Euros from various budgets for "development aid".[2]

Micro-Insurances

During his visit to Namibia, Dirk Niebel explained that German insurance companies' "micro-lending projects" in countries of the southern hemisphere, constitute an "important motor" for the so-called development cooperation.[3] The Allianz AG, for example, is selling "micro-insurance" policies to the poor in Southern India and Indonesia. If the head of a family dies, these policies would enable the survivors to pay off pending loans. The Allianz AG started its engagement in the immediate aftermath of the tsunami in 2004, when hundreds of thousands died in those countries.

Mass Market

A pilot study carried out at the beginning of 2005 in cooperation with the United Nations' Development Program (UNDP) and the German Association for Technical Cooperation (GTZ) forms the basis of the Allianz AG's business activities. As was announced by Allianz at the time, the objective of the study was "to discern the demand for micro-insurances in India, Indonesia and Laos." The Allianz is hoping to "open" a "potential mass market" of several 100 million customers [4] - an undertaking, whose significance must have been immensely enhanced, in light of the current economic and financial crisis. The prospective profit for the private sector is based on the start-up funding out of the "development policy" budget.

Accessible to the Poor

The Anilin and Soda factory (BASF) in Ludwigshafen, Germany, knows that the people living in poverty-stricken zones of the southern hemisphere can by all means be profitable customers. The chemical company, in cooperation with the GTZ, sells synthetic produced vitamin A in numerous developing countries, which supposedly prevents symptoms of deficiency. With this vitamin - normally provided by the consummation of meat, fish or milk - staple foods such as oil, corn, rice and flour are being enriched. These foodstuffs are "accessible even to poor families," reasons the BASF.[5] No consideration is being given to finding ways of providing the poor with meat, fish or milk.

Vitamin Deficiency Market

The statistics of the World Health Organization's (WHO) gives an idea of the size of the market for the company's vitamin products. According to the WHO, in the developing countries alone, 140 - 250 million children, under the age of 5, are suffering from vitamin A deficiency. Besides the large quantity of potential customers, the BASF's production of vitamins evidently provides it with the possibility of making lucrative added profits. In November 2001, the EU Commission fined the company more than 200 million Euros for making illicit cartel arrangements between producers of synthetic vitamins.

Business Case

Inversely, leading German textile trading companies have - completely officially - forged a cartel for purchasing African cotton. This project also operates under the heading "Public Private Partnership" project. According to those involved, under the trade name "Cotton made in Africa," the participating companies, along with the government agencies GTZ and DEG, have "signed contracts" with "entire village communities" in Burkina Faso, Benin and Zambia, who have committed themselves to produce exclusively along the guidelines set by the cartel. Although, according to the BMZ, the PPP project serves to "fight poverty," according to the textile companies involved, they do not consider this "development aid," but rather a "genuine business case." (german-foreign-policy.com reported.[6])

Displacement of Peasants

The DEG has installed another PPP project in East Africa. With just half a million Euros, the development agency is supporting the cultivation of at eleven experimental plantations in Kenya, Tanzania and Uganda. German companies are interested in the agro fuel that can be made from the fruit of the plant, which is inedible for both man and beast.[7] As the DEG has announced, it had already supported a "jatropha project" of the Daimler AG in India, and is hoping that "the positive results can be continued" with the "research in East Africa."[8] Opponents criticize that large-scale cultivation of jatropha will lead to the massive displacement and impoverishment of peasants, who so far had remained independent. To survive they will be forced to seek work as poorly paid agricultural laborers for the transnational automobile and energy companies.[9]

Five Billion US Dollars per Year

The PPP projects to sell "micro-insurances" and vitamin enrichment of staple foods, described above, show that poverty-stricken populations of the southern hemisphere enhance German profits not only as cheap labor but also as customers. The BMZ is wooing German companies accordingly. Even though seven billion people would have to live off less than eight US dollars per day, they would still be taken into consideration as customers. "Their aggregate buying power amounts to (...) 5 billion US dollars annually."[10]

[1] Niebel bei Richtfest von namibisch-deutschem Zementwerk; Pressemitteilung des Bundesministeriums für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) 04.02.2010
[2] BMZ: Entwicklungspartnerschaften mit der Wirtschaft - Public Private Partnerships (PPP). Jahresbericht 2008. Bonn/Berlin 2009
[3] Niebel bei Richtfest von namibisch-deutschem Zementwerk; Pressemitteilung des Bundesministeriums für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) 04.02.2010
[4] Allianz erkundet Markt für Kleinstversicherungen in Asien. Pressemitteilung der Allianz-Gruppe 08.02.2005
[5] Mit Mikrokapseln gegen Mangelernährung; www.basf.com
[6] see also Cotton Club
[7] see also Grüner Goldrausch
[8] DEG fördert Jatropha-Forschung in Ostafrika; www.deginvest.de
[9] "Wunderpflanze" mit Tücken; Neues Deutschland 09.02.2009
[10] BMZ: Geschäfte für Entwicklung - Bewertung des BoP-Ansatzes aus entwicklungspolitischer Sicht. Bonn/Berlin 2009


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