Berlin, 29/04/2020 (Märkte-Weltweit): German African Business Association presents plan for Afr(ca
„BERLIN (NfA) – While Germany is trying to cope with the rampant coronavirus and decides to provide aid packages worth billions, in another part of the world a development is only just beginning that will still have a massive impact on us in Germany. Most African countries have long managed to avoid corona cases and have successfully tried to identify infected people at the borders. Against the background of the experience with Ebola a few years ago, this seems to have worked well for a long time. But now the virus has reached most of the countries on our southern neighboring continent and it is difficult to avoid a dam break. With generally poorly organized administrations and inadequate health systems, a much faster spread and greater impact on people can be expected than in more developed regions of the world.
In Africa, the pandemic could undermine many of the past years’ efforts to successfully develop the continent. Even more than in Germany, with its reserves and social systems, the crisis will almost inevitably lead to an economic shrinking process. Ultimately, the continent will clearly feel the effects of the global recession. This could result in rising poverty and unemployment figures, and a new wave of migration could occur.
From the perspective of German-African economic relations, the pandemic is coming at an extremely unfavorable time: First successes of the federal initiatives can be seen, which should lead to more investments and thus to more jobs in Africa. After the Chancellor made a big? Compact with Africa? During the German G20 presidency. German investments on the continent had increased significantly in 2018 and 2019. African economies that are shrinking due to the crisis will eat up these small successes in just a few weeks. To mitigate the consequences, several steps are now quickly necessary.
First: The federal government has provided 300 million euros for humanitarian aid measures, including for African countries, in order to combat the pandemic on the continent in the best possible way. This is a start, but it will not be enough to solve the problem. The economy is ready for cooperation and support, as far as this is possible in the current situation. It is about preventing a humanitarian disaster. The pension and control systems are comparatively well developed in Africa. The care of sick people, on the other hand, is completely inadequate and will only be humanely possible with international help.
Secondly, it is also in our interest that growth on the continent be affected as little as possible. Africa needs a surge of growth immediately after the end of the crisis, which will compensate for declining economic output as quickly as possible. This is in the interest of our African partners, but also in our own. That is why development funds must be massively redeployed and as much money as possible must be used to support job creation in Africa. The Federal Ministry for Economic Cooperation and Development has announced the first changes to its instruments for companies. That is good, but it should only be a start. Jobs are created primarily through private investments. In times when German small and medium-sized companies will find it more difficult to do new projects in Africa because of their own crisis-related difficulties, cheaper financing options, risk protection and guarantees are needed. The German foreign trade and development policy, which has so far been reoriented in this direction, must now focus even more decisively on this aspect. That means: creating jobs for young people in Africa must be an absolute priority.
Thirdly, African countries have already asked for debt relief and more funds due to the crisis. The government of Ethiopia has proposed to the G20 countries that loan repayments of over EUR 150 billion be waived. This is neither expedient nor necessary and should therefore be rejected. Debt accumulated by governments before the crisis should not go into a package. We should not borrow money from current households in Africa out of misunderstood solidarity, but rather better promote economic development.
Only by taking decisive action today will we be able to cushion the massive effects of the pandemic that are expected in the medium term. Africa also needs a rescue package. We should not overlook this in all urgent domestic political debates – in our own interest.“
Authors:
Prof. Dr. Stefan Liebing, Chairman of the Africa Association of German Business
Christoph Kannengießer, General Manager of the Africa Association of German Business
Source Märkte-Weltweit: Afrika: Schutzschirm für den Kontinent