Struggle for Influence over Africa (II)

BERLIN |

BERLIN (Own report) - With today's Africa Conference in Berlin, the German government is seeking to induce German companies to make investments on the African continent. The conference is taking place within the framework of the "Compact with Africa" project, launched more than two years ago during the G20 Summit in Hamburg. Hailed as a breakthrough for Africa's economic development at the time, the heralded expansion of investments has, so far, fallen short of expectations, according to experts. Berlin's efforts must be seen in the context of the growing global competition for a share in the African market that is no longer limited to China. Whereas the People's Republic of China is already Africa's leading trading partner and is catching up on investments, India has also been expanding its activities on the continent and has surpassed Germany. Meanwhile, Russia has also succeeded in reinforcing its influence in Africa. Like the other western powers, Germany is steadily losing ground.

India's Rise

Today's G20 Compact with Africa (CwA) conference is taking place in Berlin within the context of the increasingly global competition for influence on the African continent, which is no longer limited to China's rapidly growing influence. With a trade volume of US $204 billion, the People's Republic has become Africa’s leading trading partner and with investments of around US $40 billion in 2016, it had already ranked fourth behind the USA (US $57 billion), Great Britain (US $55 billion) and France (US $49 billion). At the tri-annual Forum on China-Africa Cooperation (FOCAC) last year, Beijing pledged to invest around US $60 billion on the continent in just three years. Largely unnoticed in Europe, other countries have been significantly strengthening their position in Africa. India, for example, which is about to become the world's fifth largest economy, has increased its annual trade volume with the continent to more than US $62 billion and had already invested around US $15 billion in 2014. Last year, the Indian government also decided to establish 18 new diplomatic missions in African countries. If it succeeds, New Delhi would have more presence in African countries than Berlin.

Russia's Re-Entry

The Arab Gulf States, focusing mainly on the east of the continent,[1] and Turkey primarily focusing on countries with a significant Islamic population,[2] are also seeking to increase their influence. Since last year, Russia has increased its involvement in Africa, noted a specialist of Britain's Chatham House think tank in January.[3] This first became apparent when Moscow supplied arms and mercenaries to the Central African Republic. In October it organized the first Russia-Africa Summit ever to be held. The fact that 43 of the 55 African countries were represented by their heads of states and governments in the two-day conference demonstrates the continent's interest in cooperation with Russia.[4] Only 25 African states were represented at the EU-Africa Forum in Vienna in December 2018. At the Russia-Africa Summit deals valued at US $12.5 billion were struck, particularly for supplies of arms and grains, as well as the construction of nuclear power plants. These are the relatively few fields on which the Russian economy is currently playing a significant role on the world market. Moscow is planning to redouble Russia’s trade with Africa - presently at US $20 billion - over the next few years.[5] If it succeeds, it would be approaching the German-Africa trade volume.

In Decline

In light of the growing external rivalries on the African continent, the German government has been seeking for years to strengthen Germany's position. Germany's economic influence has been declining lately. For example, last year, Germany's exports to Africa declined by eleven percent in comparison to the previous year, reaching about €22.5 million, which, in spite of a clear import increase of raw materials, has caused a decline in commerce with Africa by 1.6 percent.[6] Germany is making no progress in the field of investments either. In 2017, German direct investments on the African continent were around €10 billion. Its investments have stagnated at this amount for years. Yesterday, business circles claimed that there had been an increase last year and that they expect one again this year. Concrete details have yet to be provided. Not only does this show Germany to be clearly behind China, but also to have fallen behind India, despite the years of Berlin's loud solicitations for an expansion of Germany's business with Africa. (german-foreign-policy.com reported.[7]) One of its most recent attempts was made within the framework of the G20 "Compact with Africa" initiative to induce countries on the continent to pledge their economic framework's adaptation to German enterprises' wishes. This is to be facilitated by both today's Africa Conference in Berlin and by the preceding investors' conference also held in the German capital within the context of the Compact with Africa. Until now, only twelve African countries have joined the initiative. The German government has entered so-called reform partnerships with three countries - with Tunisia, Ghana, and the Ivory Coast - and with another three (Morocco, Senegal and Ethiopia) is negotiating a reform partnership.

The Continent's Nutritional Basis

Two years after "Compact with Africa" was officially launched at the G20 Summit in Hamburg, experts are soberly evaluating the results. The authors of a recent study, published by the SPD-affiliated Friedrich Ebert Foundation find that although the twelve participating African countries have adapted their economic framework also to Germany's demands, western investments are still stagnant.[8] In fact, only around 800 German-capital enterprises are still active on the African continent. Only around five percent of the other businesses are contemplating activities in Africa, according to a study.[9] Now Chancellor Angela Merkel announces her intentions to promote Africa's profitable agricultural activities. It should be assured that "the nutritional basis for Africa must come from Africa, including the processing industry and the food products."[10] However, Merkel did not mention the fact that agriculture in many African countries is badly impaired, due particularly to the subsidized low-cost products from European agricultural corporations. (german-foreign-policy.com reported.[11]) At the same time, Merkel claims "We do not want to make the decisions for the Africans themselves."[12] The fact that this intention must be emphasized, demonstrates, once again, the character of German-African relations.

The Continental Africa Free Trade Agreement

German efforts to keep from falling still further behind in the foreign investment competition in Africa, is occurring at a time when the continental economy is possibly approaching significant transitions. At the beginning of July, the African Union's (AU) Commission President Moussa Faki Mahamat, had launched the operational phase of the African Continental Free Trade Agreement (Afcfta), wherein the final preparations will be made, allowing the Afcfta to take effect on July 1, 2020. Fifty-four of the continent's countries - all except Eritrea - are signatories. Currently, only 16.6 percent of African countries' exports go to other countries on the continent - a persisting long-term consequence of colonial dependency, which had largely confined the colonies' foreign trade to supplying raw materials to the colonial power in exchange for the latter's sale of industrial products. This can be contrasted to intra-European export - 68.1 percent, and intra-Asian - 59.4.[13] Now, the reinforcement of the intra-African export, should stimulate development of the continent's industrialization. Of course, foreign companies, maintaining production sites in Africa - or setting up new ones within the framework of the "Compact with Africa" - will also reap their shares of profit.

 

[1] Jihâd Gillon: Qatar-Arabie saoudite: la bataille pour l'Afrique. jeuneafrique.com 09.05.2019.

[2] See also Brücke in die islamische Welt.

[3] Alex Vines: Global Engagement With Africa Continued to Surge in 2018. chathamhouse.org 08.01.2019.

[4] Henry Foy: Russia turns on the charm at first Africa summit. ft.com 24.10.2019.

[5] Reinhard Lauterbach: Waffen, Dünger, AKW. junge Welt 28.10.2019.

[6] Deutscher Afrikahandel 2018 enttäuscht.gtai.de 18.02.2019.

[7] See also Einflusskampf um Afrika and Catching up in Africa.

[8] Robert Kappel, Helmut Reisen: G20 Compact with Africa. The Audacity of Hope. Berlin, October 2019.

[9] Daniel Pelz: Compact with Africa: Wenig Begeisterung über den "Merkel-Plan". dw.com 15.11.2019.

[10] Kanzlerin Merkel zum Compact with Africa: Wir wollen Partnerländer bei ihrer eigenen Agenda unterstützen. bundesregierung.de 16.11.2019.

[11] See also Mordsgeschäfte (IV) and How to Create Refugees.

[12] Kanzlerin Merkel zum Compact with Africa: Wir wollen Partnerländer bei ihrer eigenen Agenda unterstützen. bundesregierung.de 16.11.2019.

[13] Economic Development in Africa Report 2019: Made in Africa: Rules of origin for enhanced intra-African trade. unctad.org 26.06.2019.