Africa and the G20: Building alliances for sustainable development

Speech by Parliamentary State Secretary Thomas Silberhorn at the T20 Africa Conference, 1 February 2017 in Johannesburg

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Ladies and Gentlemen,

I am very pleased to be here with you in Johannesburg.

In December, Germany took over the Presidency of the G20. Today, we still have most of this Presidency year ahead of us, so it is a good time for an exchange of thoughts.

The Group of 20 represents the world’s twenty biggest economies. Together they generate 80 per cent of global GDP.

The German government is glad to have in South Africa a strong African partner at its side. Because, for the first time in its history, the G20 has given itself a regional focus for its work: Africa.

During all the visits I have made to countries in Africa I have seen that Africa is a young, dynamic and optimistic continent, a continent that is bursting with energy, rich in ideas and full of get-up-and-go.

However, it is also a continent that is facing many challenges:

  • Between now and 2050, the population of Africa is set to double in size and will probably rise to over 2 billion people. That means millions of young people needing schools, training, university places and jobs.
  • African economies may be growing at a rapid pace: eleven of the twenty fastest growing economies can be found in Africa; but does the African continent also have the potential to create the 20 million jobs a year that are going to be needed?

The traditional forms of development cooperation will not be enough to meet these challenges. Business as usual in development cooperation will not enable us to organize the transformation change needed.

We are convinced that we must bring a new dimension to our cooperation with Africa. That is why the Partnership with Africa will be a priority area of the German Presidency of the G20.

Many countries in Africa want to use the opportunities for sustainable development that are currently available to them and have launched important initiatives. The African Union has set out in its Agenda 2063 its very own vision for Africa’s future.

We will stand by Africa as the continent works to achieve these goals. Especially as the Group of 20, the key forum for international financial and economic issues. And particularly as the strongest economies in the world and with the power we thus have to shape a globalised, networked world.

Taking as its starting point the African Union’s Agenda 2063, and with a view to complementing the G20 Partnership with Africa, the Federal Ministry for Economic Cooperation and Development has set out the cornerstones for Germany’s cooperation with Africa – so as to kick off a joint discussion. We have called it our Marshall Plan with Africa, because we wanted to make it clear that strong concerted efforts will be needed.

Instead of being an economic finance plan, which is what the original Marshall Plan was, we want this Marshall Plan to be used as a plan for mobilising the economy in order to create wealth for all. The focus is on youth in Africa. The African Union has declared 2017 to be the "Year of Young People and Employment" – and we are happy to be part of that.

How can we manage to give millions of young Africans better prospects? How can we make sure that the universal principle of being able to live your life in dignity does not depend on where you happen to have been born? How can we ensure that a whole generation of young people is not left behind by a globalised world? Africa’s path – and also the path of Europe and the path of the rest of the world – will be crucially determined by how and where this generation of young Africans finds its place.

We want to make more private finance possible by improving the enabling environment. Because public funding alone cannot create jobs in the long term and government measures alone cannot ensure sustainable economic development.  We want more investment instead of subsidies; more entrepreneurship instead of state support; more value creation in Africa instead of export of resources and import of processed goods.

We are looking for strong partners to help achieve that. Strong governmental partners, but also partners from the African and the German private sector and civil society, partners from the international community and, of course, from among yourselves – the members of the academic community. All of you are called upon to contribute your ideas and suggestions to the discussions today.

Germany is seeking to establish reform partnerships with African countries based on shared values. These values are: accountability, transparency and binding commitment.

We are prepared to provide even more support for Africa in countries where political leaders take their responsibility and, therefore, we are able to make a difference.  What that means is that we do not want to pour out money like water from a watering can; instead we want to strengthen reform champions.

For them the principle of "more for more" will apply. In our current budget we will set aside an amount of over 300 million euros for reforms. Good governance and anti-corruption efforts will then play a substantial role in determining the distribution of ODA funds. That way, reform-oriented countries will receive substantial support to help them continue on their path. 

However, there will also need to be a fairer regulatory framework for Africa, so that the goals African countries set themselves can actually be achieved. Which also means that we Europeans must first tidy up our own back yard.

We need fair trade rules that allow Africa to build up a productive economy, fair taxation rules to avoid tax base erosion and profit shifting and an enabling business environment to faster foreign and – above all – domestic investments by industries and SMEs.

We need to realise that official development assistance alone cannot bring about a transformation of this dimension. Let us therefore also talk about money: Each year the countries of Africa lose 50 billion US dollars due to illegal financial flows. This is money that is then lacking for investments. Many African countries have a tax ratio of less than 20 per cent.  Despite the sale of extractive commodities their education budgets are underfinanced.

We should address these issues together. We are proposing a new triple approach to financing:

First of all: We want African governments to increase the amount of funding being made available from their own budgets. We agreed upon the basic principles for this in2015 in Addis Ababa. Responsible management of government funds is a top priority. We are therefore working on a G20 initiative for combating illicit financial flows and tax fraud. However, the initiative is also concerned with developing more efficient and quicker administrative processes. Secondly:  Mobilising private investment. We want to encourage Germany’s private sector – and the African private sector as well – to get more involved in Africa. Exports to and imports from the African continent account for just two per cent of Germany’s foreign trade.

We want to launch an initiative for more private investment in Africa during our G20 presidency. By offering higher guarantees and stronger tax incentives we want to considerably reduce the risks for investors.

Thirdly: Making greater use of ODA funds as a catalyst. Our contribution here will be that we will improve our promotional instruments and make greater use of ODA funds to leverage private capital.

All these sources of financing have to be checked; there is no getting away from that.

Even before the G20 summit we want to organise a conference with African partners from the worlds of politics and business, and from society and academic circles, in order to discuss with them the topics for the G20 partnership with Africa.

Offering the young African generation better prospects for the future! That is one of the key concerns of our Presidency; and we will have a series of initiatives to back up our efforts:

  • we will strengthen vocational education and training;
  • we will shine a spotlight on youth employment in rural areas;
  • and we will support activities to encourage digital proficiency in young girls;

to name just a few examples.

Our intention with these initiatives is also to prepare the ground for the EU-Africa summit in November. Because Europe and Africa are not only linked by their shared history – we have a shared future, too.

The only way we can hope to meet the challenges we face in today’s networked world is if we face them together. Germany will use its Presidency to do just that.

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