Compact with Africa

Encouraging investors - enhancing conditions

Trust-based cooperation between twelve African states and representatives of Europe and international financial institutions is "a sign of genuine, vibrant multilateralism" declared Chancellor Angela Merkel. She looked forward to frank discussion that bears fruit, she said, at the conference held at the Federal Chancellery.

"Compact with Africa" conference at the Federal Chancellery

Compact with Africa conference in Berlin: Africa and Europe face many common challenges

Photo: Bundesregierung/Bergmann

It was the second time that Chancellor Angela Merkel had welcomed the heads of state and government of the twelve African partner states of the G20 Compact with Africa to Berlin. South Africa has joined the Compact as a G20 partner. An Investment Summit earlier in the day helped establish closer relations to the private sector. Angela Merkel reported that at the afternoon session politicians would be discussing "the political framework and the terms of the Compact".

Courageous steps called for

"Honest analyses" are called for, said the Chancellor. "What progress have we made? What are the handicaps still in place, the barriers we still need to surmount?" It should, she said, be a "learning process". "We don’t need to hold public speeches here." Rather, the discussions within the Compact aim to help us "genuinely achieve something" said Angela Merkel succinctly. A "young generation that is making its demands known" in Africa expects politicians to take action, and expects to see tangible results. That is why the high-level conference is "firstly a sign of genuine, vibrant multilateralism" and secondly "is something that bears fruit and generates results".

In this context, Angela Merkel congratulated the participating states on the "courageous steps" taken by Africa, including the establishment of an African free trade area. Another important joint action is the "Smart Africa Initiative", which is advancing digitalisation and the African single market.

Angela Merkel explained that it is not only German businesses, but European businesses as a whole that must still be encouraged to invest in Africa. There are a large number of African countries and many potential investors are "not yet sufficiently familiar with the conditions on the ground".

Reliable financial and fiscal system

German businesses are to invest more in Africa. That was also the aim of the G20 Investment Summit 2019 – German Business and the CwA Countries held earlier in the day. Chancellor Angela Merkel pointed to the importance of good relations between Germany and Africa at the opening. "Africans and Europeans are facing many common challenges," she said.

The aim of the Compact with Africa, she declared, is to achieve a "self-sustaining economic upswing". German businesses are to be encouraged to invest in African states. In return, however, the financial and fiscal system in Africa must be reliable for German investors. Greater transparency would also attract more investors to these countries. "We know that African states have set themselves a highly ambitious agenda in recent years," stressed Angela Merkel. "The last major highlight was the meeting of the African Union, where the resolution was adopted to establish a free trade area." The Chancellor deems this to be a ground-breaking resolution.

Group photo of participants at the "Compact with Africa" conference

Participants at the Compact with Africa conference in Berlin hosted by the Chancellor: representatives of the twelve participating African states, the G20 states and international organisations

Photo: Bundesregierung/Bergmann

Investment fund built on three pillars

"We want to provide incentives," said the Chancellor. "That is why we have established an investment fund, built on three pillars:

  • The AfricaConnec programme, which aims to encourage European businesses to invest in African countries with the help of targeted financing services. More than 220 applications have been received since June. The first applications are to be approved soon.
  • The Africa Business Network provides German companies with individual advice on assistance available and on the economic and legal framework in place in African states.
  • The Africa Grow development investment fund "offers small and medium enterprises and start-ups in Africa a chance of accessing finance more easily," stressed Angela Merkel. "In addition, we have made the terms governing export and investment guarantees more attractive." Since 2018, the German government has provided guarantees covering 330 million euros worth of exports to Compact states alone. "We currently have applications relating to one billion euros worth. So we are seeing an upward trend. And we know that foreign trade is often the first step towards local engagement in the form of investment – the figures are thus very promising," said Angela Merkel.

    New cooperation offerings in the field of the digital economy and vocational training have also been established for businesses. 100,000 jobs and 30,000 traineeships are planned.