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Winning with Africa - Speech by Federal President Horst Köhler at a celebration marking the 75th anniversary of the German-African Business Association, Berlin

Bundespräsident Horst Köhler auf einem Großbildschirm am Rednerpult vor Publikum Berlin, 6 May 2009 Photo: Steffen Kugler , BPA © Photo: Steffen Kugler , BPA

The branches of the baobab tree look like roots. Many legends in Africa cling to the baobab. I would like to suggest that the German-African Business Association is like a tree with roots at both ends of its trunk. The Association's roots are in Hamburg, but it has succeeded in putting down roots in Africa, too, and these roots have twisted into a tightly woven network. In the course of this development, the Association has made vital contributions to Germany's policy on Africa. It is still the most important point of contact for business contacts between Germany and Africa. I am therefore delighted to be with you today to celebrate the Association's 75th anniversary.

The baobab has something else in common with the German-African Business Association: Both have known and managed to survive long dry spells. When the Africa Association, as it was then known, was established in 1934, the world was struggling to overcome an economic crisis. Back then, each country tried merely to rescue its own economy. Today we have moved on somewhat. We know that this global crisis demands a global response. In other words: what is needed now is close international cooperation. And this means, above all, that we must not allow the emergence of any new protectionism.

There is no doubt that the crisis was precipitated by the industrialized countries. But its repercussions are now having an impact on Africa, too: foreign direct investment in Africa is being withdrawn, financing deals are stalling, the African diaspora is sending less money home, and the fall in raw materials prices is making a deep hole in the coffers of many African states.

As a result of all this, the growth forecast for Africa has been revised from six to two percent. With population growth often at almost three percent, in many countries this means that millions will be catapulted back into poverty. And let's not deceive ourselves: what might result in unemployment and cutbacks here can quickly become a matter of sheer survival in Africa.

That said, compared with the situation in previous economic crises, many African economies have become much more attractive locations in recent years thanks to political and economic reforms. Despite the crisis, Africa can still be regarded as a growth region. Nonetheless, many people underestimate the continent's potential, basically just seeing fragmented markets with no great purchasing power. But many African states are joining forces to form economic regions. My advice to the African side is to further develop this regional cooperation and to make it more widely known. The countries of the Southern African Development Community (SADC), for instance, intend to become an economic and monetary community within the next ten years. We are talking here about 230 million people with a gross domestic product of just over 3000 dollars per capita. That is just about the same as the per capita gross domestic product of one of the oft-praised markets of the future, India.

The 900 million predominantly young people of the African continent have a tremendous amount to catch up on as consumers. Let me give just three examples:

Firstly, mobility. Whether in the megacity of Lagos or in the bush, the African continent is literally on the move. At the moment, this mobility often still depends on donkeys and carts and bizarre old cars, but there is a demand for forward-looking solutions. Shouldn't the fact that Chinese and Indian car manufacturers are deliberately targeting the African market give us food for thought? Can we not work together to ensure that Africa develops sustainable mobility concepts fit to counter the threat of climate change?

Secondly, energy. The continent exports oil and has more than enough sunshine, but two-thirds of its households still have no electricity, and three-quarters of households cook with wood or charcoal. The technology is there, but often there is a lack of commercial and technical responsibility to provide affordable, efficient energy. Are all the possibilities for sustainable energy supplies really exhausted?

Thirdly: social security. When Africans become ill or lose their jobs, they are almost always dependent on help from their family and neighbours. This solidarity is good, but it does have limitations. What response would additional professional services meet with?

With all the experienced members of the German-African Business Association here this evening who make their living on the continent, I am not trying to "carry elephants to Africa", to coin a phrase. You are aware of and appreciate the potential of our neighbouring continent. Other businesses are only now beginning to look to Africa, now that demand in Asia and Eastern Europe is falling or disappearing. Even if, for most companies, new contracts in Africa will not be able to make up for their losses on other markets, this diversification is important for our economy as a whole. The fact that the German-African Business Association has never in its long history had so many members as it has today makes me optimistic. Germany would be well advised to further expand its presence in Africa, a market which will see growth in the long term.

Before they become active, however, companies will need better information about developments on the continent. It is relatively easy to get information about the Maghreb, Nigeria, Kenya and South Africa, but anything other than that and it gets considerably harder. However, better information would allow companies to assess both markets and risks more accurately. Certainly, many markets in Africa do pose risks. But to damn them all as too risky would be shortsighted. I still say, as I have said before: many an allegedly risky investment in Africa would have been safer than loans from some of the allegedly solid Western investment banks.

Over and above its countless discussion groups and fact-finding trips for businesspeople, the German-African Business Association has taken a further step towards improving the infor¬mation available by setting up its own representations in Zambia, Malawi and South Africa. The Association's experts can guide interested parties safely through the political maze and introduce them to new markets.

A knowledge of African culture is not something merely for aesthetes. I have repeatedly seen on my travels that those companies which pay the closest attention to the social context are the ones which get the best results in the long term, even in difficult locations. Anyone who takes account of the culture of his customers and the concerns of his staff is laying the foundations for lasting success. Social engagement is in companies' own interest and also promotes development in Africa.

Our country has a good reputation on the African continent. If we can present our own values in a credible manner in Africa, we will get a good start. Calling for good governance and condemning corruption on the one hand while participating in the culture of bribery on the other is not going to make anyone appear credible. We cannot preach the value of international labour standards, for instance as a member of the International Labour Organization (ILO), and then shut our eyes in Africa to the way the things we buy are manufactured. That is why multilateral initiatives such as the Kimberley Process against the trade in conflict diamonds, or the Forest Stewardship Council for the certification of tropical timber, are so extremely important. Double standards are as unwelcome in business as they are in politics. Those who operate without double standards will win confidence and be taken seriously as partners.

How should Germany behave towards Africa in the current global economic crisis? For a start, we and our European partners must, despite the pressure on our budgets, fulfil the pledges we have made to Africa. Specifically, we must continue to try to stick to the timetable for development funding: the aim is to increase development cooperation funding to 0.7 percent of gross national income by 2015. This will affect Germany's reliability and credibility on the international stage - qualities which are especially important for an export-oriented country.

At the same time, the taxpayers want to know - and rightly so, in times of crisis - exactly what their money is being used for. So we must continue to increase the efficiency of development assistance. It must not be allowed to encourage the subsidy mentality which is, unfortunately, widespread in Africa. I am gratified that Africa itself is increasingly discussing ways to get over this attitude. While good development cooperation cannot be a substitute for endogenous economic growth, it can play a decisive part in creating the foundations for that economic growth in the first place.

A key example for this is Africa's infrastructure. Without better transport and energy supplies, there is little chance of increased industrial production. Without education, safe water and health, the countries of Africa will not have enough skilled workers. Not for nothing have there been repeated attempts to improve the continent's infrastructure. Let me just mention the Infrastructure Consortium for Africa (ICA) set up after the G8 Summit in Gleneagles, the NEPAD Short-Term Action Plan or the recently adopted Programme for Infrastructure Development in Africa (PIDA). The challenge facing the African Union Commission now is to bring all these many projects to a successful conclusion.

It is good, and it is important, that Africa is not giving up on this key issue, infrastructure. And it is also good that the international donor community, despite the current crisis, has increased its funding. The Federal Government, for instance, in its second package of measures to boost the economy, made available 100 million for the World Bank's infra¬structure funds. I welcome that.

A glance at the success of the predominantly private investment in the telecommunications sector shows clearly that here at least Africa has long been forward-looking. In telecommunications, unlike in many other areas, we can see a rapid, tangible improvement in the situation even in the rural parts of the continent. If there was a Millennium Development Goal for the spread of mobile phones, Africa would probably meet it. But is it not absurd that people might have a mobile phone but no access to clean drinking water? Policymakers in Africa have shown with their telecommunications regulations that they can set sensible frameworks. But they need to show that they can do the same in other areas too. The population's basic needs should be the top priority.

This includes energy supplies. During my state visit to Nigeria last year I saw this paradox: the country exports oil, but many towns and villages don't even have electricity. President Yar'Adua wants to tackle this problem as a matter of urgency. So in 2007 Germany and Nigeria decided on an energy partnership. It is not just a matter of access to raw materials in the south of the country, but also of expanding electricity supplies in the north. Smaller sup¬pliers of renewable energies are participating in the initiative alongside big energy companies. That's a good start. But what we absolutely need now are tangible results. Only when the people of Nigeria get electricity thanks to this energy partnership will our cooperation have proved itself.

Germany remains dependent on access to commodities. Many of them come from Africa. It is good that the Federal Government's Raw Materials Strategy tackles this issue. But our trade policy cannot be restricted only to the matter of access. Also important are the conditions in Africa under which the raw materials are obtained. All too often, profits from illegally traded commodities have fanned the flames of conflict in Africa. Indeed, they still do. And we must be honest towards Africa and towards ourselves about one other important point: the fight against poverty in Africa can only be won if the countries of Africa get more work and more income from the food industry and from processing of raw materials themselves.

This is where development cooperation has a part to play again. I believe there has to be a better link between development cooperation and external economic promotion. The German Association of Chambers of Industry and Commerce made concrete proposals on this in its policy paper of December 2008. It is important to take up and promote German business's strengths. However, development cooperation must still be designed around what the partner countries themselves need and what they can themselves put into practice.

I find it good, for example, that the Federation of German Industries, with the support of the Federal Ministry for Economic Cooperation and the Kreditanstalt für Wiederaufbau - Reconstruction Loan Corporation (KfW), is working to develop pilot projects in the health sector such as German hospitals in developing countries. This is killing several birds with one stone: on the one hand, German companies can impart their expertise and earn money, and on the other, healthcare in the partner countries is improved. It is important that this improvement benefits the population at large.

Another example of self-interest which also benefits others is the many activities of German chambers of crafts in providing vocational training in Africa. Of course our dual system of vocational training cannot simply be transferred "as is" to other countries. But on my trips to Africa I regularly hear of the desire for sound vocational training. Well-trained African workers will help not only themselves but are also an important plus for German companies engaged in Africa.

So you see, there are lots of good things going on in cooperation between Germany and Africa. Much has already been achieved, and I am pleased about that. And I am counting on you, representatives of German companies linked in the German-African Business Association, not to slacken in your efforts to discover and resolutely pursue new possibilities for cooperation in a spirit of partnership with Africa. I also encourage you to urge those representatives of German business who have not yet discovered the opportunities inherent in Africa to take a closer look at the continent.

The current economic and financial crisis poses a huge challenge for the international community. It can only be overcome through determined international cooperation. Any effective crisis management will have to include Africa. The industrial countries will have to show that they are ready and willing to give equal consideration to African proposals and approaches in the international community's decision-making. And, for its part, Africa will have to seize this opportunity and confidently feed into the debate its ideas and its own responsibility for a good future for our planet. If these approaches from both sides succeed, then the current crisis will open up opportunities for new cooperation between the industrial countries and Africa. What we need is a development strategy for the entire planet.

At its centre is the reorganization of globalization. This cannot be restricted merely to ensuring better regulation of the financial markets or closing international tax loopholes. Nor can we continue to tolerate a situation in which the survival of whole societies in Africa is repeatedly endangered by extreme fluctuations in raw materials prices. Nor can it be that these prices continue to take far too little account of external costs. What we need are intelligent concepts which both provide for a fair division of profits and allow sustainable economic management.

This is the time to agree on the tasks common to the whole of humanity. The fight against poverty and the fight against climate change can only be won if we all act together. If we do so, then we may succeed in bringing greater justice to the world, which would also be to our own benefit, and in advancing the green reorganization of the global economy. All we need to do is to realize that all the people of the world are in the same boat. And people in the same boat have a duty to help one another.