Study – German companies want to expand their African business

– by Andreas Rinke

Berlin (Reuters) – After years of hesitation, the German economy is apparently ready to increase investment in Africa.

In a study carried out by the African Association of German Business and the management consultancy KPMG and available to the Reuters news agency, 59 percent of the companies surveyed stated that they wanted to expand their business on the African continent in view of geopolitical crises. 20 percent want to get involved for the first time. Two thirds want to increase their investments in view of Africa’s role as a trading partner and location for diversification. According to the study, 78 percent expect an increase in sales in their African business in the next five years. African raw material reserves apparently only play a secondary role in companies’ considerations.

The study makes it clear that the German economy is also perceived to be lagging behind in Africa. 38 percent of the companies surveyed stated that international competition from China, for example, dominated Africa. 32 percent believe that international competition is still growing. Nigeria is seen as the most important future market ahead of Ethiopia, the Ivory Box and Egypt. Then follow Ghana, Morocco, Rwanda and Kenya.

The market size and market growth are mentioned as the most positive location factors. The companies see political instability as the greatest external risk, followed by far behind insufficient risk protection, geopolitical uncertainties and growing protectionism. Within the countries, corruption and political instability are the main complaints. The energy, automotive, healthcare, chemical and consumer goods industries are viewed as promising economic sectors.

On Monday, Chancellor Olaf Scholz will welcome leading representatives of more than a dozen African governments to the so-called “Compact with Africa” summit. The meeting is intended to promote cooperation with African countries that are considered particularly keen on reform.

(Report by Andreas Rinke; edited by Christian Götz. If you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets).)