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Turning Around the African Slump

Chancellor Gerhard Schröder opened Germany's annual Africa Business Day with the same words of encouragement he has in years past. But German interest in the continent remains low.


Opening the investment tap is one of Africa's biggest challenges

There have been Africa initiatives aplenty in recent years.

An African-initiated "Global Coalition for Africa," a World Bank-sponsored "Initiative for a Strategic Partnership in Africa," a UN-sanctioned Africa Month. But war, poverty and hunger - not direct investment and economic growth - continue to be the topics of the day for a majority on the troubled continent.

African and European leaders are hoping the newest initiative, New Partnership for Africa’s Development, changes the course. The document, signed by African nations, pledges to promote the peace and stability conducive to heavy foreign investment and economic growth.

The leaders of the world’s wealthiest eight nations gave approval to the initiative at the G-8 Summit last July. At the upcoming summit in Kananaskis, Canada in July, the leaders plan to ratify it.

Among those present will be German Chancellor Gerhard Schröder, who opened Germany’s annual Africa Business Day on Tuesday with the same words of encouragement he used in opening speeches past

"Africa is an interesting and promising industry, investment and trading partner," he told the assembly of German and African politicians and businessmen and women attending the conference in Berlin.

Bad track record

The comments mirrored remarks his government has made for at least the past two years. Whether anyone among Germany’s business elite has been listening has yet to be seen.

The statistics to date haven’t been promising. Though German aid to Africa remains high at some 530 million euro, German investors prefer other regions of the world.

Asia and Latin America enjoy eight and 12 times the amount invested in Africa, respectively. Of the 50 billion euro direct investment by German companies abroad, only 5 percent heads to African nations.

Trade between the continent and Germany has been climbing. But that isn’t saying much – the amount is represented by only single digit percentages in Germany’s overall trade statistics. African imports comprised just 2.2 percent of German imports in 2000, according to the Federal Statistics Office. Exports to the continent were a lower 1.7 percent of Germany’s total trade.

Instability scares investors

It is these numbers that the German government has pledged to turn around. But as long as the African continent remains unstable, German investors promise to stay away.

German companies look at companies within the particular African countries," said Uschi Eid, the Chancellor’s G8 representative for Africa. "When they invest, that is a sign that there is trust in the domestic economy."

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