The fact that Africa has enormous economic potential is no news. But until now we have not been very successful in defining the political and economic tasks that need to be tackled so that Africa can unfold this potential. This is why the German G20 presidencylaunched its G20 Africa Partnership initiative to intensify cooperation with Africa. At the core of these efforts lies the G20 Compact with Africa (CWA). It offers interested African countries the opportunity to improve conditions for private investment in Africa, including in infrastructure.
For the Compact, African countries, together with their bilateral partners and international organizations with proven expertise on Africa (such as the African Development Bank, the World Bank Group, and the International Monetary Fund) will jointly develop, coordinate and implement tailor-made measures. The main aim is to lower the level of risk for private investments by enhancing economic and financial conditions and strengthening institutions. In turn and over time, increasing investment will boost growth and productivity, create jobs, and raise African living standards, as envisioned in the African Union’s Agenda 2063.
The CWA stands for a new approach in international development policy. Of course, we do not reinvent the wheel. But the way of cooperation and coordination among the many bilateral and multilateral players as well as the commitment of the African countries is something new. We see the CWA as a long-term, demand-driven process. It is open to all African countries that are interested in improving their investment environment on a sustainable basis. The decision-makers are the African countries: They will determine what they want to do to improve conditions for private investment, with whom they want to cooperate, and in what form. Only if the African countries “own” the initiative, will it become a success.
So far five African countries – Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia – have committed to the compact initiative. Ghana and Ethiopia will join in June. Compact countries, the international organizations and bilateral partners are working closely together on the details of the country-specific compacts. At the G20 meeting in Baden-Baden in March some G20 and also non G20 members have indicated that they would like to become a bilateral partner. We as the German government will also contribute via the bilateral framework developed by our Federal Ministry for Economic Development and Cooperation under the headline “Marshall Plan with Africa”.
Our main job, however, is to bring private investors and African countries together. With the upcoming G20 Africa Partnership Conference in Berlin on 12 and 13 June 2017 we provide a platform for these African countries to reach out to investors in order to enhance the continent’s engagement with the private sector. Compact countries will present the key elements of their investment compacts in a round table to investors. They will also outline the key industries and infrastructure projects for which they are seeking private funds.
After Berlin, the implementation phase of the initiative starts. The country teams will further specify their compact measures and discuss the milestones for their implementation. At this point dialogue with investors will be particularly significant, since such conversations will helps African countries to establish out which measures and instruments are crucial for investor engagement.
To be successful, this initiative cannot focus on short-term effects. It needs to continue beyond the German G20 presidency and to be supported by the G20 in the longer term. Germany will continue to take responsibility for the implementation of the initiative. The G20 will be informed on how the Investment Compacts develop on a regular basis.
However, most important: The progress in the participating countries will send a signal to other African countries. This will determine whether the CWA initiative becomes a success. If all parties involved – African countries, international organizations, bilateral partners and, not least, investors – collaborate closely, the initiative has the capacity to promote sustainable, robust, and inclusive economic growth in Africa.
This contribution by finance minister Schäuble was first published online by procjet syndicate on 7 June 2017.