“We have 10 times more direct investment in the European Union than we have in the whole of Africa,” Chancellor Angela Merkel told leaders at the G20 summit. So could African countries benefit from the G20 meeting?
Economic growth and international trade were the main talking points of the gathering of the world’s 20 strongest economies in Hangzhou, China. While South Africa is the only African member of the G20, German Chancellor Angela Merkel spoke out on the topic of investment in Africa. “There is an urgent need for direct investment in African countries because this cannot be shouldered by official development aid alone,” she said. DW talked to Robert Kappel, a researcher at the Global Institute of Global and Area Studies (GIGA), about Germany’s economic interests in Africa.
DW: Why hasn’t there been enough foreign direct investment for Africa?
Robert Kappel: First of all, the European Union’s investment in Africa is really strong but in recent years, China is getting much more important and so are other countries. There is a hesitation on the European side regarding investment in Africa because of civil unrest, because of fragility and wars and in the past yearsonly a few countries benefited from stronger investment through enterprises. For instance, Ethiopia or Kenya and some countries in East Africa benefited more. The growth rates in some parts of the African continent are quite high, so it’s beneficial for European investors to be on the ground and invest in those countries.
What do you make of the timing of Chancellor Merkel’s calls for more foreign direct investment in Africa and the need to revise the rules?
Do you think the Chancellor’s message was aimed at the German manufacturers, association which in recent years have been reluctant to invest in other parts of Africa apart from South Africa due to concerns like security and taxes?
It’s somehow a wake up call. She’s calling on the German industry to take a lead again and there is a certain idea in German industry and government circles, that Germany needs more investors in Africa. But there is also a certain idea of solidarity and of corporation with Africa because Africa needs much more investment. It needs money from industrialized countries and Germany as a major power in Europe could be one of the main actors on the African continent, without starting another scramble for Africa.
How significant is the African continent at the G20 summit. Will leaders be able to tackle some issues that affect both Africa and the rest of the world?
No, the G20 summit is very disappointing. The summit has not tackled the problems of sustainable development, it has no ideas on how to solve the refugee crisis in Africa, it has no ideas of moderating the problems of the climate change and it has no ideas on how to support Africa’s structural transformation. All the measures taken at the G20 summit were just oriented towards the development of the G20 nations, the OECD countries and some other countries. For example, they talk about more growth because the growth rates in European countries, in OECD countries are very sluggish. They try to boost growth by organizing more cheap money for the investors – but cheap money without any interest rates for European countries is against investors in Africa who have to pay much higher interest rates to organize their industrial development. And there are many, many other topicsvwhich are not in favor of Africa.
Robert Kappel is President Emeritus and a senior researcher at the German Institute of Global and Area Studies (GIGA).
Interview: Isaac Mugabi