The objective of the Compact with Africa initiative is a classic win-win situation: the African Compact states are reforming their economies, promoting good governance and are thus becoming attractive targets for international investments. Investments by companies from Germany and other G20 states are meanwhile boosting the economy of these countries, while benefiting from enormous growth markets, the gigantic potential of renewable energy and access to key raw materials.
“Enormous economic potential”
Federal Chancellor Olaf Scholz referred to Africa as “the partner of our choice” when it came to intensifying economic relations and pursuing a joint path towards a climate-neutral future. “The enormous economic potential can only be realised through large-scale private investments,” said Scholz at the start of the Compact with Africa Conference in the Chancellery on Monday.
Europe and Africa are inseparably linked
Scholz pointed out that Europe’s future was inseparably linked to our neighbouring continent’s future, and that it was now key to develop this partnership further, including through business. The G20’s Compact with Africa initiative provided the framework for business cooperation of this kind, as well as creating an opportunity for the meeting in the Chancellery, he said.
What is Compact with Africa all about?
The initiative was started during the German G20 Presidency in 2017. It is a partnership-based format in which the G20 cooperates with reform-focused African states in order to boost investment in the 13 current CwA states. “Boosting private investment” and “cooperation in the area of renewable energy supplies” are the topics at the top of the conference agenda. In addition to the CwA states and those interested in joining, the Federal Chancellor also invited all other African G20 participants to the 2023 conference. The meeting is also attended by the international organisations involved and further close G20 partners. Questions and answers on Compact with Africa: A partnership for the future.
Three examples of support from Germany
Scholz stressed the great interest that German businesses have in Africa. This is also explicitly encouraged by the Federal Government, as can be seen from these three examples:
- Private investments are facilitated through favourable guaranteed conditions. By providing these, the Federal Government promotes diversification in order to be better prepared for crises.
- African countries are to benefit more strongly from their wealth of natural resources, and the first step of processing is to take place locally, creating jobs and prosperity. At the same time, German industry is gaining reliable suppliers. The Federal Government is currently developing specific funding instruments.
- In addition, planning provides for more funding for start-ups in Compact countries, in particular for those managed by women.
Strong cooperation in the area of hydrogen
The cooperation in the area of energy and hydrogen in particular is an outstanding example of a classic win-win situation. Scholz highlighted the excellent potential offered by many African countries with regard to renewable energy that allows for hydrogen production under competitive conditions. “Today’s conference is the starting signal for stronger, reliable cooperation between Africa and Europe to realise climate-friendly energy supply based on green hydrogen,” the Federal Chancellor said. Up to 2030, the Federal Government will provide four billion euros for the joint EU-Africa initiative for green energy.
The Chancellor’s message to the Compact states: “Produce green hydrogen and you can rely on us as buyers.” To facilitate export is, however, not the only goal. The Federal Chancellor is also committed to ensuring access to sustainable and affordable energy for all Africans.
G20 Investment Summit
In the morning, Federal Chancellor Scholz had attended the 4th G20 Investment Summit, which was held by the Sub-Saharan Africa Initiative of German Business. The meeting focussed on the goal to deepen mutual economic relations. In his speech, the Federal Chancellor praised the partnership between the G20 states and Africa that is beneficial for both sides and that can help to reach global goals, for example with regard to climate neutrality, sustainability and resilience of national economies.
Scholz said that Africa had huge potential for growth and that our neighbouring continent was indispensable when it came to solving problems on a global scale. “For us, bringing Africa onside and strengthening our partnership for a sustainable economy for the future is not only an aspiration but an imperative.”