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Spurring Africa’s industrialization

Experts say the German government needs to do much more to spur investment in Africa by German industries. Establishment of special economic zones and new energy infrastructure are among the measures that would help.
The Pope is in Kenya on the second day of his grand tour of Africa. Between speeches preaching family values, Pope Francis waved to crowds in an open-sided Popemobile during a pouring rain, and was ferried around Nairobi in an ordinary Honda. It wasn’t that the Vatican can no longer afford bullet-proof limousines – the Pope was sending a message of humility. Kenyan Twitter users were quick to get the message, and pass it on.

“Thieving politicians arrive in their SUVs and Mercs to listen to a Pontifex who will arrive in a Honda. Shameless ‘leaders’,” wrote one commenter.

It has not been lost on most Africans that many members of political elites on the continent have a brazen tendency to use government offices as vehicles for self-enrichment.

Kenya is among the few countries on the giant continent to Europe’s south that has begun to industrialize. Even there, however, as in most of Africa, corruption, inefficient administration, and a very uneven enforcement of laws and regulations hold the country back.

Africa badly needs increased investment in infrastructure of all kinds – reliable clean energy and water systems, medical clinics, technical colleges , railways, roads, bridges, fiber optic networks, factories of many kinds, and much more – but such investment is slow to come in an environment in which investors face such high risks, poor infrastructure and structural inefficiencies.

Prerequisites for German investment

Given the huge influx of refugees and illegal migrants that has been pouring into Germany this year, mostly from the Middle East and Afghanistan but also from Africa, German politicians have taken to intoning the platitude that “more must be done” to improve conditions in the countries of origin of migrants, so they’ll not feel the need to flee.

Germany is a small, rather crowded country with a limited capacity to absorb newcomers. Migration to Germany is not and cannot be a solution for the hundreds of millions of people world-wide who live in difficult circumstances. That much is clear. But what can Germany do, concretely, to improve conditions in the countries of origin?

“We can support a wide range of technical cooperations, student and expert exchanges, business investments. We should focus more on economic cooperation – it will achieve a lot more than traditional development aid,” according to Robert Kappel, a senior researcher at Hamburg global affairs research institute GIGA.

Kappel advocates a coordinated push by agencies of the German government, led by the foreign ministry, to enable industrialization hotspots to emerge in Africa with German support. The aim, he told DW, should be to make it attractive for German and European companies as well as African companies to invest in special industrial zones that are plugged into global supply chains, so that African companies can get beyond supplying raw materials and acquire skills and scale at manufacturing and African economies can earn export revenues from high-value-added manufactured products, as well as supply domestic markets.

He also believes a targetted effort should be made to improve and scale up the agricultural and food processing industries, to enhance Africa’s food security.

Focus investments in special economic zones near big cities

But Kappel cautions that it won’t be feasible to industrialise every region in Africa. Many are too poor in human or governance resources, too remote from markets, or too plagued by violence and instability to make industrialisation feasible in the foreseeable future.

“German companies with German agency as well as host government support should focus their investments in special industrial zones in several of Africa’s bigger countries that have already made a start on some degree of industrialisation,” Kappel said. He named Kenya, South Africa, Angola, and Tanzania as some appropriate host countries. Nigeria, too, though the country is at risk of instability because of sectarian conflict, and heavily plagued by corruption.

Kappel suggested that specially designated economic zones be established in these countries, under independent, professional management, adjacent to or within big urban centres where there’s a proximate market.

“Those are the places where it will be possible to develop and sustain the comprehensive sets of technical and managerial competencies needed for industrialization, and see these capacities radiate out into the surrounding areas,” he said.

With German technical and administrative assistance, key factors like infrastructure, local authority management, and technical capacity development could be built in these special zones to international standards, Kappel said, adding that additional incentives like special tax rates and conditions will probably be needed as well to persuade companies to invest.

Current approaches aren’t working

Many critics, some African economists among them, criticise Western development aid, saying it would be better if it were curtailed. They say projects and services supplied by Western aid agencies allow African governments to ignore their own responsibilites to provide those services to their citizens.

Outside aid reduces African rulers’ accountability to their citizenries, and, according to this argument, actually enable corruption – oil revenues are stolen by corrupt senior government officials in various African countries, but people don’t rebel because development aid puts a band-aid on the problems that aren’t being looked after.

Kappel sees merit to this argument. He isn’t a fan of traditional development aid. Nor does he believe that an exclusive focus on security or military interventions can work, in terms of reducing the flow of refugees.

What’s needed, in his view, is economic development – and industrialisation. Within that, Germany, as a leading industrial nation facing a future of rapidly growing demographic pressure from the South over the next several decades, should play a big role.

“We can support a wide range of technical cooperations, student and expert exchanges, business investments. We should focus more on economic cooperation – it will achieve a lot more than traditional development aid,” Kappel said.

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