Ethiopian Journal

German business is involved in a range of activities in Africa. In the past, it focused on trading and exporting products and supplies to Africa, but is increasingly realising and looking to investment opportunities on the continent. 

Private business association Afrika-Verein is currently representing the interests of about 700 German businesses doing business in Africa. It informs them about opportunities through newsletters and magazines, and organises large conferences and small seminars on business opportunities in Africa.

It also takes business delegations to Africa and lobbies on behalf of its members, as well as lobbies for Africa. Afrika-Verein senior vice-president and southern Africa director Andreas Wenzel explains that Africa plays a minor role as a business partner in Germany and is only perceived to a certain degree in the world of development. Afrika-Verein tries to assist African stakeholders in getting the message about Africa as a business partner through to German businesses. It aims to change perceptions in Germany about Africa only being a case for development cooperation.

He says that German businesses do have renewed interest in Africa, as they see opportunities to profit from investment in the continent, and Africa will also profit from any business interest. A German investment corporation has bought a stake in a Zimbabwean bank, which is a high-risk investment. Germany was not considered a high-risk investor in the past, but this is changing with investments into Zimbabwe, Rwanda, Ethiopia and Equatorial New Guinea. It also has interests in the energy-related activities in Angola, Nigeria and the Democratic Republic of Congo.

Afrika-Verein views energy as a big challenge in Africa. German businesses are interested in buying oil and gas from African countries to diversify their sources, especially liquefied natural gas from Angola and Nigeria. There is also interest in supplying the African oil and gas industry with machinery and supplies.

Apart from oil and gas, Germany has strong conventional and renewable-energy technologies. Wenzel says that Afrika-Verein considers renewable energy as a point of transfer for many technologies from Germany to Africa.

He says that challenges to German investment into the energy sector include that the price level of electricity is still relatively low in Africa and investors may not necessarily receive return on investments. Investment to tackle the energy shortages on the continent may not take place unless feed-in tariff agreements are established. The regulatory environment may also hinder investment, as this changes quite frequently; investors will not invest in projects that might end up suffering in changed regulatory scenarios in the future.

Further, South Africa is crucial to Germany, as it ranks in its top five non-European Union business partners. There are strong links, especially in the automotive industry, where there is ongoing investment into the sector from Germany, as well as intra-industry trade. He says that Afrika-Verein is considering taking a delegation to KwaZulu-Natal and the Eastern Cape by the end of the year, as it wants to show that there are business opportunities in South Africa apart from what already exists.

A successful German-South African business forum was held at the end of last year. Wenzel concludes that another forum, building on success and experiences, should take place in South Africa at the end of 2010 and alternate between Germany and South Africa in subsequent years. (BBC)