3 Min Read
DURBAN, South Africa (Reuters) - Wealthy nations must work more closely with Africa to narrow the gap between rich and poor and avoid global instability, German Finance Minister Wolfgang Schaeuble said on Thursday, setting out a plan to increase private investment in Africa.
Germany, which holds the rotating presidency of the G20 group of the world's biggest economies, has put Africa and inclusive growth high on the G20 agenda to address the root causes of mass migration from underdeveloped to developed countries.
Speaking at the World Economic Forum on Africa in Durban, Schaeuble said: "The French election, Brexit - let's set aside the new administration in Washington D.C. - but (these) are not the major geopolitical risks, with all due respect.
"I think we have to come back to Africa. We have to tackle the issue of inclusiveness," he said.
"If we fail to stabilize the African continent in the years and decades to come, we will face increasing geopolitical risks," he said, citing the pressing problem of African migrants fleeing poverty, natural catastrophes, climate change and war.
The German government wants African nations to team up with G20 countries and international lenders, such as the World Bank, to improve their macro-economic framework and attract more private investment to Africa through tailor-made programs.
The first stage of the initiative, dubbed "Compact with Africa," will focus on Tunisia, Morocco, Ivory Coast, Rwanda and Senegal. More countries are expected to join later this year.
The proposal is built on the idea that resilient macroeconomic institutions are critical for attracting more foreign direct investment and spurring sustainable growth.
This so-called capacity development includes areas such as implementing fair tax systems and fostering financial stability.
As the population in Africa is projected to double by 2050 to some 2.5 billion people, Germany's campaign to improve living and working conditions of Africans is also part of its broader efforts to reduce migration flows to Europe.
South African Finance Minister Malusi Gigaba welcomed Germany's push. "Many African countries are coming on board, expressing their commitment to the compact," Gigaba said.
German companies view African economies as an important market for future growth. In the first two months of 2017, German exports to African countries jumped 26 percent on the year to 4.2 billion euros, according to official data.
This followed a yearly increase of 2.5 percent to 24.5 billion euros in 2016 while overall German exports inched up 1 percent to 1.2 trillion euros. This means exports to Africa accounted for only 2 percent of overall German exports.
Additional reporting by Olivia Kumwenda; editing by Mark Heinrich