The 2013/03/13 at 08:20
Marie Luginsland, in Germany
While in 2011, only 18.4 % of German exporter enterprises had tackled Africa, one year later, over one-fifth of them had set foot on the continent. These statistics, gathered by a survey conducted by the DIHK, the federation of German Chambers of Commerce, confirm a growing interest amongst its members in Africa. Until now, German enterprises, including many SMEs, had limited themselves to fostering trade relations on the South African market, but today they are venturing deeper into the continent. Ghana, Tanzania, Kenya, Nigeria and Angola are the new destinations for German commodities.
Africa is, according to the survey’s conclusions, the continent where German business commitments are growing the most rapidly. This is a trend that is set to last, according to Heiko Schwiderowski, Africa Expert at the DIHK: “The volume of export towards Africa should increase at a speed of 10 to 15 % per year, whereas German exports as a whole will undergo only 4 % in growth this year.”
Another figure pointing to this trade boom: the rate of German enterprises committing to Sub-Saharan African markets is increasing while the rate stagnates at 37.5 % in the MENA (Middle East and North Africa) region.
While exports to Africa only make up 2 % of the total of German exports today, German businesses are now aware of the potential for expansion represented by the continent. German exporters, with a majority of enterprises from the machine tools, equipment goods, mechanical construction, industrial installations sectors, are benefiting from development driven by underground mining. “Our enterprises have identified the interest of infrastructures set up by the Chinese for mining African minerals: road networks, port infrastructures, railways and energy capacities. These facilities facilitate and cut the cost of on-the-spot production,” analyses Heiko Schwiderowski. However, German entrepreneurs are not satisfied with merely taking advantage of the Chinese advances, they intend to bring their own expertise, namely in the form of standards.
“Very often, Chinese quality standards satisfy neither local consumers nor African governments who prefer German savoir-faire in terms of standards,” remarks Heiko Schwiderowski. He also observes that “more and more African governments are endeavouring to establish “triangular cooperation”. According to this system, infrastructure projects are given to the Chinese due to their quick decision-making processes and financial weight. “However, production is entrusted to German enterprises due to the savoir-faire of German engineers,” enthuses Heiko Schwiderowski who specifies that the involvement of local labour constitutes the third link in this cooperation chain.
The Asia of tomorrow
Nevertheless, the enthusiasm of enterprises is currently hampered by the political situation in Mali as well as the wake of the Arab Spring. The “Going International” survey carried out by the DIHK in January this year amongst 2,500 German businesses with worldwide dealings confirms a certain hesitation. Positive opinion on the economic and trade situation in Sub-Saharan Africa fell from 33 % in 2012 to 23 % today. This figure is nonetheless higher than opinions on the trade situation worldwide (18 %) and in Europe (11%). Generally speaking, neither the strong disparities still present on the African continent, nor the extreme volatility of raw material prices hold back German businesses in any significant way when they tackle this market representing one billion consumers.
On German soil, initiatives in favour of economic relations with Africa are multiplying: the gathering of 400 German company heads with 48 African ambassadors in February this year in Berlin (see Actu-CCI), the Afro-German energy* as well as Africa Business Week**. Buoyed up by this dynamic, German businesses are pursuing their drive towards Sub-Saharan Africa that some do not hesitate to compare with the Asia of tomorrow. “This region demonstrates development comparable to that of Asian countries a few years ago,” states Richard Clemens, Secretary General of the VDMA, the German engineering federation. He goes on to say that “the economic take-off of certain African countries related to energy wealth raises a growing demand for food commodities, processed and packaged.”
These industries still operate in niches with an imported volume of 910 million ??? between 2009 and 2011, in other words 5 % of exports! They place great homes on the African food market, set to grow by 7 to 10 %, a higher rate than average compared with other economic sectors (6 %). German company heads can detect new opportunities, mainly in Nigeria, the Democratic Republic of Congo, Kenya and Ghana. “In Africa, packaging machines bring necessary hygiene just as they improve transport, conservation and distribution,” Peter Steindl, Head of Fawema GmbH.
Present for a number of years in Sub-Saharan Africa, Fawema manufactures packaging machines for food products, such as sugar and flour. The company has adapted its machines to local customs, for example by packaging food in very small quantities.
* Hamburg and Hannover, from 7 to 10 April.
** Frankfurt, from 22 to 26 April.