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G20 Compact with Africa Conference: strengthening the partnership with Africa to foster German investment and create prosperity
The ‘G20 Compact with Africa Conference’ is taking place in Berlin today. The Compact with Africa initiative, which has been joined by Benin, Burkina Faso, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia, is a key element of the G20 Africa Partnership. The aim of the project is to improve the investment environment in reform-oriented African countries and thus to contribute to increasing private-sector investment. The focus of support is on small and medium-sized enterprises (SMEs).
“Despite the coronavirus pandemic, Africa remains an important market for German business – a market full of opportunities. Only by working together with our African partners will we succeed in promoting investment by German companies and fostering trade in Africa. Therefore, the fact that we are signing political declarations of intent for institutional partnerships with Ghana and Ethiopia today sends out an important signal. In this way, following on from our work in previous years to improve the conditions for federal export credit guarantees and for investment guarantees for the ‘G20 Compact with Africa’ member countries, we will deliver tangible improvements to the business environment for German companies operating in the countries mentioned.Since 2020, we have also been offering an interest rate hedging programme for large-scale exports to Africa.”
Interest rate hedging for large-scale exports and export credit guarantees are currently possible for 51 out of 54 African countries. The improvements for Compact with Africa member countries include a reduced deductible and a partial waiver of the application fee for export credit guarantees and investment guarantees. Export credit guarantees protect German exporters and banks against the risk of unpaid claims and asset losses as a result of economic or political circumstances. Investment guarantees, which protect investors against political risks, can currently be granted for a total of 45 African countries on the basis of existing investment promotion and investment protection agreements.
Offering a wide range of information, advisory and support services for companies, the Africa Business Network, an initiative of the Federal Ministry for Economic Affairs and Energy, is a key measure in the implementation of the G20 Compact with Africa. The office of the Africa Business Network (email@example.com) provides companies with a point of contact that can address their concerns: the IHK Network Office Africa of the Association of German Chambers of Industry and Commerce (DIHK) for matters relating to foreign trade and investment promotion; or the Agency for Business and Economic Development for issues in the field of development cooperation. Moreover, ‘Africa Partners’ based at the office are available for queries by companies throughout the entire market entry process. The Business Network also offers regional and sector-specific services related to market entry. Finally, the ‘Africa Business Guide’ (www.africa-business-guide.de) by Germany Trade and Invest (GTAI) provides digital information on the business environment and local contact partners in African countries.
In 2019, the year before the COVID-19 pandemic, German investment in Africa rose by 5% to €12.1 billion. For 2020, a stagnation or, at best, a slight rise is expected in the stock of German direct investment in Africa. In 2020, German companies exported goods worth €20 billion to Africa – a decrease of 15.1% compared to the pre-crisis levels of 2019.