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Marshall Plan with Africa

Private sector as saviour?

by Sabine Balk

In brief

African economies are still geared to commodity exports: manganese-ore mine in Ghana.

African economies are still geared to commodity exports: manganese-ore mine in Ghana.

Gerd Müller, Germany’s federal minister for economic cooperation and development, has proposed a Marshall Plan with Africa. He wants the private sector to generate jobs and drive the continent’s development. Experts, however, disagree on what impacts private businesses have on African development.

Amadou Diallo was born in Senegal and is now a top manager of Global Forwarding, a subsidiary of DHL. He is the only African board member of a major German corporation. In his eyes, economic growth is the key to African development. He bemoans that only about one percent of German businesses’ direct foreign investments are made in Africa.

Most German companies are small and mid-sized enterprises, so in Diallo’s eyes, there is a need to convince them of African opportunities and mitigate their risk aversion. According to him, many managers are apprehensive about the security situation in Africa. “Many countries are safe,” he insists, and German companies would be foolish to leave African markets to their Chinese competitors. He prefers using official development assistance (ODA) to support business development to channeling money to governments that tend to neglect their people.  

Elisio Macamo disagrees. The development sociologist from Mozambique is an associate professor of African studies at Basel University. He doubts that the private sector can drive development in Africa. According to him, politics and social circumstances deserve more attention. He warns that Müller's proposal will only add up to one more well-intended plan. Every new plan, he says, is the result of previous plans, but donor governments should do more to learn the lessons of past failures. Macamo says that Müller’s proposal is good in the sense of emphasising solidarity, but whether it will actually deliver results, is an entirely different question.

The core problem, according to Macamo, is the general belief that everything will turn out well if only the right decisions are taken. Things are not that simple, he argues, because human beings do not always respond to decisions as expected. Political leaders who get ODA funding, for example, don’t automatically use it to build hospitals.

Macamo points out that Africa has made considerable progress since independence, and “our expectations have grown accordingly”. It took Europe a long time to get where it is now, he says. He calls for humility and patience in regard to African development. He expresses calm confidence about the continent’s future.

Claudia Warning, who belongs to the management of Brot für die Welt, the Protestant aid agency, expresses herself in favour of creating jobs. In principle, foreign direct investment can make a difference, she says, though quality matters. As she sees it, investments all too often do not result in decent employment, but only commodity production. All too often, international labour standards concerning fair pay, working hours or occupational safety are ignored. She also notes that foreign investors tend to neglect environmental standards as well. Moreover, African economies must be driven by Africans, Warning states, rather than foreigners.

Günter Nooke is Chancellor Angela Merkel’s personal adviser on African affairs. At a recent panel discussion hosted by GIZ, a newspaper (Frankfurter Rundschau) and a public broadcaster (Hessischer Rundfunk) in Frankfurt, he was asked why a Marshall Plan with Africa was needed. His half-joking response was “media attention”. What matters most, in his eyes, is to change the perception of Africa, especially as Europe has a keen interest in African development.

Western governments want to see African economies grow, so they emphasise private-sector investments, according to Nooke. To some extent, however, Africa needs other models than the ones that work in Europe. “We want to find out, in cooperation with the Federal Ministry for Economic Cooperation and Development and the diaspora, how migrants’ remittances can serve to boost investments,” he said. One option he mentioned was that governments might subsidise business investments that are made with remittances.  

 

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