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Why would Merkel and May start saving Africa

10.09.2018 21:03 Ian Sumter, journalist

African Solution

In August British prime-minister Theresa May and German Chancellor Angela Merkel both visited Africa. The UK leader was accompanied by 29 trade delegates; while the German development minister Gerd Muller also toured the continent.

Why should British and German leaders both be so keen to develop relations with African countries at this time? How is this connected to international and domestic goals in the two countries? And does this signal new developments in European-African relations or merely a modern form of old interests?

Theresa May was in Nigeria, Kenya and South Africa - the first visit by a UK premier to sub-Saharan Africa in five years. The principal goal was to bolster UK trade in preparation for the country's departure from the EU. May was therefore eager to talk up the economic potential of the continent, for international development and UK investors alike.

"Africa stands right at the cusp on the role of playing a transformative role in the global economy" she stated. "Now is the time for the UK to deepen and strengthen its global partnerships".

Bilateral trade between the UK and Africa stands at $35bn, and the UK Department for Trade and Industry has a goal to develop "new outward direct investment in Africa", "increase export finance and investment opportunities" in these "growing markets". Recently the UK international trade secretary Dr Liam Fox visited Uganda and Ethiopia; and the British export credit agency recently approved a record $250m loan for the construction of a new Ugandan airport.

The likely investments in Africa can be seen from the trade delegates accompanying Theresa May on the tour: construction company JCB owner Anthony Bamford, chief executive of the London Stock Exchange David Schwimmer and Standard Chartered bank chief executive Bill Winters. Other delegates represented technology industries and the Scotch Whiskey Association.

In Nigeria UK has set itself the target of being the largest G7 investor in the country by 2020; and has received an agreement from one of Nigeria's richest businessmen Aliko Dangote to list his $10bn cement business on the London Stock Exchange.

Financial issues aside, the UK's stated foreign policy on Africa is to discourage migration to Europe: both by increasing levels of investment to stimulate African economies, and to improve security and social conditions there.

The UK has secured agreements to provide military training to fight against Boko Haram in west Africa and al Shabaab in Somalia. Other joint initiatives include women's health and girls' education projects; and greater cybercrime cooperation to crack down on child abuse.

Angela Merkel by contrast toured Senegal, Ghana and Nigeria; while the development minister Gerd Muller was in Eritrea, Ethiopia, Mozambique, Botswana, Zimbabwe and Chad, offering finance development funds.

While UK premiers have visited Africa rarely in recent years, Angela Merkel has been to 9 African countries, all after the migration crisis of 2015. While the decision to take millions of refugees made Merkel enemies in Germany, this increased her popularity in Africa.

Gerd Muller too was eager to stress the link between migration reduction and increased German investment on the continent, with a special focus on education, trade, business development and energy which could all "save lives, limit the effect of climate change, avoid climate refugees and prevent mass migration".

With a view to migration control Germany has also invested in centres in Ghana and Senegal which help former migrants to Europe back into their own job market. A further centre is also planned in Nigeria.

Germany designated 2017 its African Year, billed as a modern Marshall Plan to save and reconstruct Africa. But while business development has been the goal, Stefan Liebing of the German-African Business Association stated that no "concrete implementation plans" had yet been made.

The association sees many opportunities in renewable energy,  electrification, infrastructure and IT start ups on the continent. Volkswagen has opened several plants in Africa, and a German firm has opened a cement factory in Namibia.

Stefan Liebing adds however that due to financial insecurity most of Germany's 400,000 small and medium sized businesses do not invest in Africa. He states that only 1,000 Germany companies do business in Africa, the majority of those in South Africa. Direct control of independent nations is, of course, out of the question. Instead the focus is one what Liebing calls "helping African partners create the conditions that will attract private funds".

Between 1881 and 1914 there was a great "scramble for Africa", when European powers extended their colonial interests all across the continent. This was driven by new markets for trade in European goods, and the realisation that surplus capital was better invested overseas, where potential returns would be much greater, due to cheap materials and limited competition.

An overtly imperialistic model is today unworkable, and African states are open for business to any potential foreign investors from around the globe, both private and state run.

However, the key issues remain the flow of money and where wealth ultimately resides. The experience of many Latin American countries shows that foreign finance comes at a high price, as profits and value are returned to the outside investors in the form of interest. Funds are also spent on importing technology from outside the continent, so that cash ultimately returns to the already richer, more technologically advanced nations.

European markets have been stagnating for decades, but the demand for high returns remains. Fund managers refer to Africa as a frontier market, more risky, less developed but ultimately more rewarding even than emerging markets.

And where financial interests must be protected, political control is never far away. The 21st century industrial scramble for Africa seems to be on, and all to play for.

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