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Medium-sized enterprises miss German strategy for Africa
So far, a mere 8,000 of Germany’s 3.6 million enterprises have invested in Africa. It is above all small and medium-sized enterprises that have difficulties with investing in African countries. There are several reasons for this, and they were discussed at a workshop that was held during the 5th Stuttgart Forum for Development in late October. The one-day congress was organised under the motto “Joining forces makes a difference. Working together for Agenda 2030”.
“Today, we live as if our lives were centred on the economy,” said Club of Rome Secretary General Greame Maxton in his keynote speech. He called for a new, sustainable economy, but also left no doubt that it would be significantly more expensive than the current one, and added that “it needs the support of the government, and it needs political leadership”. Furthermore, Maxton explained, this required a stronger balance between the economy and society.
Management and labour to trigger developments
A more balanced relationship between the economy and society was also the topic of Benjamin Wolf, Managing Director of the Stuttgart-based Stay Foundation. This still young foundation is pursuing an approach of its own in promoting development in Africa. Its activities focus on the social entrepreneurs, well-trained locals who set up their own organisation and have been running it for years. With their activities, they are the precondition for development that is sustainable. Stay Alliance Uganda is a project in which the Foundation can consistently implement its principles. “Fredica Baguma is a social worker holding a Master’s degree. After her studies, she returned to her region, where she has since set up 70 women’s groups, each of which has 25 to 30 members,” Benjamin Wolf explained. “She is an employer, she is a social entrepreneur, and she has taken on responsibility. And she is a woman who is typical of the people we work with. These individuals are the key figures, socially oriented true entrepreneurs. They come from the country itself, they are familiar with its culture, and they speak the local languages. If we want development the results of which are meant to stay, then we have to work with these people.”
Stay Alliance Uganda comprises a current total of 32 social entrepreneurs working in the fields of health, education, income, human rights, environment and infrastructure. They co-operate with one another, give each other advice and communicate best practices. They run training programmes, award grants and independently administrate their project funds. “We are developing the Stay Alliance in co-operation with enterprises here in Germany,” Wolf explained. He stressed that enterprise seeking to invest in Africa could also take advantage of the Stay Alliances which already exist in several countries to gain access to the market.
Local creation of value is a success criterion
The Baden-Württemberg medium-sized entrepreneurs attending the event agreed that medium-sized enterprises were indeed facing difficulties in Africa. One could only engage in “Wolf Projects”, said Rainer Mertes, an associate of the Stuttgart architecture firm knaus mertes architekten, alluding to the Stay Foundation. “For a business will not be successful economically in the short term in Africa,” Mertes claimed. Promoting the local structure had to be at the forefront of efforts, which also meant that one had to produce locally, and together with the enterprises there.
Local creation of value and the promotion of local markets are two key success criteria for the sustainable and long-term establishment of medium-sized German enterprises in Africa. Other criteria that are crucial to business success include the education and training of the workforce and the creation of high-value jobs, as Catherine Adelmann of fosera GmbH stressed. This enterprise manufactures Pico Solar Home Systems. Production is run in Kenya and Ethiopia. “Our products have clearly been designed with a view to helping people,” Adelmann said. “This means that we also have to create high-value jobs at local level. What is more, ‘Made in Ethiopia’ is a great advantage, and so is locally provided maintenance.” fosera works with local staff and produces locally as much as possible. “Both our staff and our clients benefit from this, and so do we as an enterprise,” Adelmann explained.
Suitable financing instruments are lacking
The young entrepreneur financed the production site in Ethiopia with German money, especially via the Up-Scaling Programme of the DEG (“Deutsche Investitions- und Entwicklungsgesellschaft mbH”). In Africa, interest levels are very high. Moreover, it is difficult for foreign businesses to obtain money from African banks. In Germany as well as in Africa, there is a lack of suitable financing instruments. Medium-sized enterprises regard both the Up-Scaling Programme and the develoPPP.de Programme of the German Federal Ministry for Economic Cooperation and Development (BMZ) as insufficient. In Stuttgart, they called for a long-term partnership with the BMZ and economic support for smaller enterprises. They complained that German export financing was not successfully meeting the demands of the African middle classes. “As long as we can’t develop demand in Africa, there won’t be any development,” Jürgen Raach, Managing Director of RAACH SOLAR, stressed. Raach has been active in Africa for 25 years. “I can’t recognise any German strategy for Africa,” he told the meeting.
This year’s Stuttgart Forum was organised by “Stiftung Entwicklungszusammenarbeit Baden-Württemberg (SEZ)” in co-operation with “Engagement Global”.
Beate Wörner, journalist, Fellbach/Germany