“Germany’s ‘Marshall Plan’ for Africa” J. Peter Pham, The Atlantic Council, 23 January 2017

Africa’s fate is a challenge and an opportunity for Europe. If we do not solve the problems together, they will come to us at some point. (...) We cannot leave Africa to the Chinese, Russians and Turks”.

Gerd Müller

(German Minister for Economic Development)

The German Government unveiled its ambitious “Marshall Plan with Africa” with the twin objectives of increasing trade and development and reducing mass migration. The International Labour Organization said that the number of unemployed Africans will rise by 1.2 million this year. It warned: “Failure to promote decent work opportunities creates incentives for workers to leave the region” and head for Europe. Last month, the EU reached a deal with Mali: aid package in return for taking back citizens whose asylum claims had been rejected. How to address countries that do not take back their citizens? Some suggest aid should be cut, raising the issue of lack of “sticks” in Müller’s approach. The Marshall Plan for Africa will concentrate on fair trade, private investment, bottom-up economic development, entrepreneurship and employment. While emphasizing development, it does not ignore the opportunities for German businesses. 400,000 German companies are active internationally; only 1,000 do business in Africa. The plan envisions a shift of development funding to leverage private capital: “Public funding can be used to directly boost private investment in Africa… Every euro of tax revenue can leverage many more euros in private capital. And then investing becomes attractive even for large institutional investors such as insurance companies or pension funds,” said Müller. The document acknowledged that African governments need to do a better job fighting corruption, mobilizing financial resources in their countries, strengthening their capacity to generate revenue. The tax ratio in the poorest African countries is below 17% when it’s 35% in OECD countries; and education budgets are chronically underfinanced. “We want to forge incentive-based reform partnerships with the reform champions among African states, thereby creating incentives for faster, sustainable development.” That is targeted support to reform-minded countries.

 

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“Germany’s ‘Marshall Plan’ for Africa” J. Peter Pham, The Atlantic Council, 23 January 2017

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