Germany Plans To Invest Over €500m To Boost SMEs In Africa

Posted by Eric Ojo African News, Europe, Latest Headlines, News Around Africa, World News Friday, September 3rd, 2021

(AFRICAN EXAMINER) – The German Government has said that it is currently supporting the AfricaGrow initiative for Small and Medium Enterprises (SMEs) in Africa with over €500 million.

German Chancellor, Angela Merkel disclosed this in her address at G20 Investment Summit in Berlin last week. The meeting was held under the auspices of the G20 Compact with Africa, which was established during Germany’s G20 Presidency in 2017.

The summit which has been held for the third time with representatives of partner countries in attendance has been particularly important to the German Government due to its prospect of injecting further impetus into the economic relations between the parties.

Merkel said the AfricaGrow initiative is one the three pillars of the development investment funds for African countries, adding that it is focused on SMEs and start-ups across the continent.

“For AfricaGrow, we are focusing on the financing needs of small and medium-sized businesses and for start-ups in Africa. The Federal Government is supporting AfricaGrow with more than 500 million euro”, she said.

She added that another pillar of the development investment funds is the AfricaConnect which, according to her, provides financing on attractive terms, noting that the green light has now been given for 22 local business projects.

She further disclosed that the Africa Business Network, which offers tailor-made advice and mentoring both in Germany as well as through the chambers of commerce abroad or in digital form through the Africa Business Guide, is another veritable pillar.

“The latest instrument to be added is the fixed-rate programme Africa-CIRR. CIRR stands for Commercial Interest Reference Rate. With this instrument we are thus mitigating the risk of interest rate fluctuation for financing German exports to Africa. We are using these pillars to support the plans of businesses to engage more on the African market.

“As you can see, there are various support mechanisms in place and it is up to businesses to use them. I want to encourage you to reach out to the Business Network and find out more about the various instruments.

“I am delighted you are taking part in this conference whether digitally or in person. On my many trips, I have got to know Africa as a continent of opportunities and ideas, as a continent with promising growth markets and many, many committed young people”, she added.

The chancellor also noted that the Compact with Africa is working progressively as reforms have improved the business environment in most Compact countries, adding that when compared to Africa as a whole in the period up to and including 2019, they were able to attract above-average investment levels, also from German companies.

“Furthermore, in 2020 the Compact countries did actually chalk up 0.1 percent growth while other African economies were struggling with negative growth. This shows that the reforms that the Compact countries have launched are paying off. In these times of the pandemic, this is not something we can take for granted, even though of course the pandemic has made its presence felt.

“Above all this year, many companies were not able to launch or extend their investment as originally planned. Yet a survey of more than a hundred German companies revealed that almost all those questioned were sticking to their plans even though implementation of course now has a question mark attached”, she further explained.

Merkel said the reform partnerships are also all about creating new opportunities and are now helping seven Compact countries to improve the conditions for private-sector involvement. She also stated that when it comes to emergency aid to tackle the repercussions of the pandemic, “our close cooperation has paid off”.

She equally pointed out that in Africa and in every other continent, keeping the pandemic under control and if possible overcoming it is crucial for economic recovery.

“For this, we need above all to increase global production of the vaccines and ensure they are distributed fairly. That is why Germany supported the G20 initiatives ACT Accelerator and COVAX from the outset. Having earmarked 2.2 billion euro, we are the world’s second-largest donor after the United States.

“We are also involved in sharing vaccine doses. As part of COVAX and as Co-Chair together with South Africa, Germany is committed to increasing global vaccine production. We are also providing concrete support to set up production in Africa. However, we do of course need to think beyond this time of the pandemic. It is thus right for the Federal Government to continue supporting both Compact countries and reform, as well as businesses and investment”, she stressed.

The chancellor equally harped on the need to effectively utilize the Compact in overcoming other limitations, adding that “we are still thinking about how we can use the Compact to lower the remaining hurdles to trade and investment”.

“Africa has vast potential as a market but this is a potential we need to tap more successfully. We have every reason to look to the future with confidence. Take for example the G7 Infrastructure Initiative which I hope will create fresh impetus for new investment, also in African countries. Investment in renewable energies is a particular priority. It is hugely important to invest here so that we can actually achieve our global climate targets”, she declared.