Germany slow to start its African ventures

Comment on this story
br merkel Reuters Chancellor Angela Merkel sees a role for Germany as an honest broker with less colonial baggage in Africa. Photo: Reuters

German industry’s representative in Angola, Ricardo Gerigk, has a tough job drumming up business in Luanda, where contracts tend to go to firms from China, Portugal and other countries with a bigger presence.

Only about 15 German companies have taken what Gerigk calls the “leap of faith” to set up business in Angola. “None has any regrets,” he adds.

The world’s second-biggest exporter has woken up late to the potential of Africa’s fast-growing economies and is scrambling to catch up. German trade with Africa totalled $60 billion (R624bn) last year, while China achieved $200bn.

German firms do only 2 percent of their overseas business on the continent. Of its e9 billion (R128bn) investment in Africa, e8bn is concentrated in South Africa and on energy deals in Algeria and Nigeria.

“Germans still find the continent challenging and perhaps overwhelming to deal with,” says Vera Songwe, an economist at the World Bank and country director for west Africa.

At the African Development Solutions consultancy in Berlin, Saschsa Meyer says the attitude so far has been: “South Africa and Nigeria are where the money is, but where is Ivory Coast? Where is Togo? They are just blank spots on the map.”

Now – from industrial giants to start-ups – Germans are overcoming their caution.

Small and medium-sized enterprises are also starting to show an interest, says Meyer, seeing special potential in the burgeoning middle classes, who need goods and services like “decent housing, modified for African needs”.

The African market is expected to take 5 percent more German exports this year.

This has prompted Germany to review what experts say remains basically a “donor-recipient” relationship.

New policy

With the foreign ministry drawing up new African policy guidelines, the armed forces playing a bigger role in French-led missions and industry bodies urging members to venture into new territory, Germany is jostling for its “place in the sun”, a phrase coined by statesman Bernhard von Buelow in 1897.

The Berlin Conference of 1884 launched the first “Scramble for Africa”, and Kaiser Wilhelm’s “Weltpolitik” began a colonial experiment that led to the genocide of the Hereros in what was then South West Africa, now Namibia.

Even so, it has relatively little colonial baggage compared with some other European countries, which could be an advantage as Chancellor Angela Merkel looks for a geo-political role to match German economic might.

Denying any interest in “Germanising” a continent that has seen too much outside interference, Merkel said in a podcast at the end of March – ahead of an EU-African summit – that Germany could play a useful role as an “honest broker” in the region.

Alex Vines, the head of the Africa Programme at Chatham House, says Germany, like all foreign powers, wants to get its hands on natural resources.

“But there is growing awareness of another narrative: the emerging African middle class, rising consumerism and growth of between 6 percent and 7 percent – which Germany shouldn’t miss out on,” says Vines.

One German firm that has been quick to spot this trend is Rocket Internet, which with MTN and Swedish-listed Millicom has launched ventures in Africa such as e-commerce outfit Jumia and delivery service Hellofood.

Muhereza Kyamutetera, a 34-year-old advertising executive in Kampala, says that with Hellofood “you spend a few minutes on your computer and, bang, food finds you on your desk”. Germany’s traditional industrial exports face tough competition from China, Kyamutetera says, but they may find a niche in what he calls “offbeat areas” like this.

Value chain

The hope is that Germany’s late arrival will not just boost its own exports but signal that Africa’s economy can “move up the value chain to do some industrialisation”, the World Bank’s Songwe says.

“There are huge opportunities in energy, not just solar but hydro and other forms of renewables. That is a market the Germans can competitively get into and benefit both German and African businesses.”

Engineering giant Siemens, which entered the African market in 1857, sees a demographic “tipping point” in 2035, when more than half the population will live in cities. This will boost demand for energy, water, transportation and health care, sectors in which Siemens is already well positioned.

“Africa’s rising consumption will create more demand for local products, sparking a cycle of increasing domestic growth,” says Sabine Dall’Omo, the chief financial officer of Siemens South Africa, adding that Siemens’s technology can help “make Africa’s manufacturing sector globally competitive”.

In this context, the Germans’ proverbial caution is seen as a guarantee of the commitment needed to develop local industry.

“Germans are very cautious and take lots of time to plan. Our country is in a different situation and we need solutions now, now, now. It’s a problem, when you work with the Germans,” says South Africa’s ambassador to Berlin, Makhenkesi Stofile.

“But when they have done their planning and decided on an investment, then they come to stay,” Stofile says.

“They are not ‘hello-goodbye’ investors.” - Reuters


sign up
 
 

Comment Guidelines



  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.