Speech by Federal Chancellor Dr Angela Merkel at the Investment Summit of the G20 Compact with Africa in Berlin on 19 November 2019

Prime Ministers and Ministers,
Professor Grosse,
Professor Liebing,
Fellow members of the Cabinet and the German Bundestag,
Ladies and gentlemen,

Let me start with a very special greeting for the President of Egypt, Mr al-Sisi, who is not only the Chairperson of the African Union this year, but is also celebrating his 65th birthday here in Germany today. Many happy returns, Mr President, and all good wishes on your birthday.

I am delighted to be opening this conference with you today, and particularly with the many guests from the Compact with Africa countries. I extend a very warm welcome to Berlin especially to the Heads of State and Government.

I would also like to express my sincere thanks to the organisers, the German-African Business Association and the Sub-Saharan Africa Initiative of German Business. Today we are meeting in the House of German Business, where the German business associations are gathered under one roof. So you could say we are right at the heart of the home of German business.

Be it peace, climate protection, economic development, migration or other major questions of our time – we all agree that Africa, with its more than 50 states and a growing population – indeed an increasingly young population – has an important role to play in tackling global issues. It is clear that Africans and Europeans are facing many shared challenges. This is why we have intensified our cooperation considerably in recent years – because we firmly believe that it is not only in the African interest, but also in the interest of Europe’s biggest economy, in Germany’s interest.

I have been able to visit some countries in Africa, but unfortunately nowhere near all of them, not even half of them. But I am pleased that African Heads of State and Government pay very frequent visits to Germany. I am aware that one always has work to do at home. So I am grateful that you have taken the time to come.

We are agreed that as well as engaging in development assistance, of course we need above all to shape the transition to a self-sustaining upturn. That was one of the reasons why we launched the Compact with Africa Initiative during our G20 Presidency in 2017. The aim is to increase private investment in particular in the participating countries.

We know that in the past few years the African states have set themselves a very ambitious agenda. The most recent highlight, I would say, was the African Union Summit in Niamey, in the Niger, where the final decision was taken on the launch of an African Continental Free Trade Area. I believe this decision, alongside the regional organisations which are already very strong and active on the African continent, was a landmark one. And I congratulate you on it. With the European internal market, we have a bit of an idea just how hard it is to get something like that up and running. There are customs barriers, but above all there are lots of non-tariff trade barriers that you have to wrestle with. We Europeans have to admit that even after many years of the European Union, we still don’t have a perfect single market.

All the issues relating to the single market are coming to the fore again now, not least in relation to the digital transformation. Yesterday the governing coalition was looking at digital issues facing Germany. We were joined by the representative of Smart Africa, who was appointed by the African Union to accelerate digitalisation, and who told us about what you have been doing in this area. It was certainly very encouraging. The yardstick for the initiatives is, in particular, your Agenda 2063, launched with the 100th jubilee of decolonisation as its horizon. Yesterday we also spoke with Mr Koné of Smart Africa about what digital sovereignty means. Because it is possible to become hugely dependent on others again even in the digital age. Data – the “new oil”, as it was called yesterday – might suddenly not belong to us any more. That is a problem that exists in Europe as well as in Africa. So that is a field where cooperation is definitely worthwhile.

Now we have the Compact with Africa. Twelve countries are participating. The idea was, is and will remain a G20 initiative. It is not, in other words, a purely German initiative: it is supported by all G20 states. But because it was launched during our Presidency, we are, if I may put it this way, a sort of patron of this initiative. However, its main supporters now include the World Bank and the International Monetary Fund. And indeed guests from those institutions will be with us this afternoon.

This initiative means, on the one hand, that the African countries themselves are taking steps to improve the transparency of their financial systems, to improve their tax systems and to improve debt management. So overall a lot is being done for better governance. We believe, I am firmly convinced, that greater transparency can also bring more investors into these countries, because it is very important especially for German SMEs or investors from other G20 states that there is confidence, that there is transparency, that it is clear what environment one is investing in.

On the other hand, we want to create incentives for the countries participating in the Compact with Africa, when they see some success, to grant our countries better conditions for investment. To this end, we have set up an investment fund. I would just like to remind you – as the fund was basically designed last year – of the pillars on which it is based.

The first is AfricaConnect. This financing solution is intended to help SMEs from Germany and Europe to finance investment in Compact countries. We launched it in June, and have already received over 220 inquiries. The first commitments will be made soon. And a few of these investment projects will be presented here today.

The second pillar is the Africa Business Network (Wirtschaftsnetzwerk Afrika), which provides German companies with tailormade advice on funding possibilities and on the economic and legal environment in African countries.

The third pillar is the AfricaGrow development investment fund. Through this fund and trusted African funds, we will provide venture capital for African start-ups – another very important element. I spoke only recently with this year’s recipient of the German Africa Award, Juliana Rotich, about the problems in getting loans locally. Now AfricaGrow gives African start-ups the possibility of easier access to funding.

In addition, we have made the conditions for export guarantees and investment guarantees more attractive. Since 2018, exports totalling 330 million euros to Compact countries alone have enjoyed Federal guarantees. Applications have been submitted for a billion euros in guarantees. So we are improving; we started off from a fairly low level, compared to China and other countries. We also know that foreign trade is often the precursor to engagement on the ground, for instance in the form of investment. That’s why these figures are definitely promising.

Furthermore, we have taken a look at how the Compact countries’ ratings in the World Bank’s Ease of Doing Business Index, which is important to many investors, have evolved over the past few years. And we can say that the ratings of the Compact countries in particular have improved greatly. Allow me to congratulate everyone on that.

So we can now point to a host of practical examples, and, should you want to find out more, you can have a look at the information in the atrium.

Of course, the decision to invest in Africa remains one for the private sector. We cannot take the decision for businesses. We can, however, help. We can create confidence, and we can say that conditions in the Compact states are certainly more transparent than they used to be.

In another step, we – in the form of Gerd Müller and his team at the Federal Ministry for Economic Cooperation and Development – have entered into bilateral reform partnerships with some of the Compact countries, namely Ghana, Tunisia, Côte d’Ivoire and now also Senegal and Ethiopia. We can also say that the possibility of a reform partnership is open to all. We are talking about the conditions, and the Minister is speaking to many representatives of the other Compact countries too.

You will realise that there has been a great deal of movement; but I do not wish to paint too positive a picture, because there are still problems that need to be solved. These include the major issue of security, in the Sahel region in particular. Here we have different instruments to try and make security and development compatible. The challenges posed by terrorism are severe.

And then there is the matter of population growth. Africa has a young and incredibly proactive population. Basically the exact opposite from what we have in Germany. We talk a great deal about how many pensioners we are going to have in future. In Africa, though, they talk more about young people. That is why I am pleased about the cross-border special initiative on Training and Employment, which aims to create 100,000 jobs and 30,000 training places.

I would also like to remind you of the Federal Government’s decision to introduce an immigration act for skilled workers. From 1 March 2020, we will for the first time have rules on how skilled workers can move to Germany. As Mr Grosse has already indicated, our Chambers of Commerce Abroad will be the points of contact. We will join with the German business community to organise a large-scale forum before the end of December to consider what countries we want to advertise in for skilled workers, and generally how we are going to go about it.

Ladies and gentlemen, I am glad that my speech is not the main event this morning. Rather, we are going to be learning about concrete projects for individual Compact countries. In other words, of course, we are going to be learning more about your countries. And so I would like to close by quoting an African saying: “If you want to know how business is going at the market, you have to go down there.” It’s as simple as that. True, today the market is being shifted here to Berlin for us, but if we really want to know about it, then, yes, we need to go there.

On that note: thank you very much, particularly to our guests who have travelled a long way. I hope we will all enjoy a successful conference.