German Businesses To Focus More On Africa
News reaching the ecosystem divulges that German companies have plans to ramp up their investments in Africa in the coming years, as said by the President of the German-African Business Association, Stefan Liebing, yesterday.
According to the information, Liebing says he and his associates can bear witness to the testaments of the substantial increase in the investment and trading activity with Africa. From an estimate done by the association, it is revealed that new investments by German companies in Africa will scale up by more than 10 percent to a total of over USD 1.5 Bn.
Liebing explained that at least a fraction of the increase reflected recent changes in the German regulatory landscape. Sometime in June, the German Government made a public announcement that it had plans to ease the conditions which must be met for domestic small and mid-sized enterprises (SMEs) to access export guarantees in the trade with certain African countries.
Secretary of State in the Ministry for the Economy, Thomas Bareiss, said that closer economic ties between Germany and African nations were a key priority of the governing cabinet of Chancellor Angela Merkel. Based on this, Berlin has taken steps to lower the insurance access borne by these forms or the banks with whom they work in an international trade between Germany and African states.
These new regulations are applicable to countries that have affiliated with a G20 initiative for more international investment, and where SMEs previously were battling relatively steep deductible rates of up to 5 percent. Among others, German exporters who are operating in the African markets of Senegal, Ivory Coast, Ghana, Ethiopia, and Rwanda stand to be beneficiaries of the expansion of government guarantees.
While commenting on the development, Liebing expressed assuredness that the change would boost trade as well as capital flow between Germany and Africa. He said the initiative is working, and that so far many projects have been successfully realized as a consequence of the new policy regime. Liebing also noted that the export volume guarantees for Africa more than double during the first six months of 2018 to USD 1.26 Bn, and had hence already offset the total annual level of 2017.
Liebing pointed to the opening of a Volkswagen plant in the Rwandan capital of Kigali, as well as an ongoing cooperation between German Gauff Engineering and a Chinese partner to erect what will be Africa’s longest suspension bridge in Mozambique. While Germany is still relatively in the small player stages in Africa, China on the, on the other hand, has emerged as one of the continent’s largest trading and investment partners.
According to Liebing, German companies should make the most of the development to partner with Chinese counterparts rather than seeing them as business rivals. He explained that the expansion of infrastructure in Africa is the key to raising productivity and promoting sustainable growth and better international cooperation, revealing that Chinese-offered “package solutions” in this context gave Germans an exemplary model to follow in boosting economic growth in Africa.
The German-African Business Association was founded in 1934 to assist German firms in their commercial operations in Africa. The country’s exports to Africa currently account for around 2 percent of its total volume of international trade.
This development was first reported by Xinhuanet.