Berlin’s downtown streets are blocked off as the column of black diplomatic limousines moves from the Chancellery through the Tiergarten on 12 June 2017. The German government has invited more than 10 African heads of state; Christine Lagarde, director of the International Monetary Fund, has come from Washington. German Chancellor Merkel, Federal Development Minister Müller, Economic Minister Brigitte Zypries (SPD), Finance Minister Schäuble and many ambassadors arrive at the Gasometer in the Schöneberg district. The German hosts have chosen the former site of Berlin’s main natural gas provider GASAG, because it stands for economic development and energy production. GASAG was the 19th century’s largest gas provider in Western Europe, when gas lanterns lit the fast-growing cities. Today, the listed landmark with its towering gas tank is an event venue.

Germany’s government has convened the G20 Africa Partnership Conference here just weeks before the actual G20 Summit in Hamburg in July 2017. As Germany holds the G20 presidency for 2017, it has declared this the Year of Africa. ‘Investing in a common future’ is the motto for the Berlin conference. In her opening speech, Merkel warns: ‘We know that pan-global development can only succeed if all continents share in such development.’ Many speakers that day will repeat her description of Africa as a continent of ‘opportunities’.^[1]

Just in time, on that same morning the Organization for Economic Co-Operation and Development (OECD) delivered its prognosis for Africa: growth would double to 3.4 percent in the coming year.^[2] Like a good weather forecast before a trip, this news should have lifted the mood. ‘Even today,’ says Merkel, ‘dynamic economic developments in Africa ‘reveal the potential that lies in African countries.’ Standing onstage, she raises her index finger in her own peculiar way: ‘But much still remains to be done.’

That day, the Chancellor calls for a new era of German development aid. ‘We have to consider whether we have always taken the right path in providing our traditional development aid,’ she says, warning: ‘There too, we have to learn to think anew.’ This meant that Germany will rely more on military power: For many years, Merkel says, ‘we felt virtuous when we were not dealing with military equipment.’ Those days were over. ‘We have to be more honest and admit that only where security is given can development take root. If hopelessness is too widespread in Africa, young people are also more likely to seek a better life elsewhere in the world.’ Therefore, the Chancellor demands an education offensive for the African youth. ‘By working together with you for your countries, we are also enhancing our own security,’ she says.^[3]

Continent of opportunities

The African leaders thank Merkel for her words. ‘We appreciate that very much,’ says Alassane Ouattara, President of Côte d’Ivoire, taking the podium after Merkel.^[4] His state’s economy, having grown over nine percent in 2015, numbers among the most dynamic worldwide. The country is one of the largest cocoa producers globally and the strongest economy within the ECOWAS.

Twenty-six percent of Côte d’Ivoire’s population were foreigners, most of them labor migrants from surrounding countries, Ouattara says. ‘Migration can also be a positive factor.’ The migrants were sending money back to their families. But for that, they needed jobs, so his country hoped that Germany would invest more in ports, streets and railways. ‘I spoke with the head of Siemens and he has promised to open a subsidiary in Abidjan,’ Ouattara rejoices.

Côte d’Ivoire is one of the states in which German businesses now want to invest more. Earlier, German Development Minister Müller had called for a ‘Marshall Plan with Africa.’ In his speech, Ouattara bluntly renames it the ‘Merkel Plan’ to loud applause. Merkel laughs and seems moved.

However, at this point in June 2017, there is no real plan yet. What the Germans are presenting to the Africans in Berlin are three different, though similar-sounding concepts developed independently by three different ministries. Journalists in the press section at the Gasometer are cursing: ‘Who still understands all this?’

Much has happened since Merkel’s Africa trip in October 2016. Launched in late 2015, the first phase of Europe’s new Africa policy – not new in content, but in scope – had relied on directly strengthening border controls. Money for stopping refugees; that was the plan. But the EU found the results insufficient. So the second phase of the policy relies on economic aid. The EU will invest billions in Africa, not for mere profit, but also to create jobs for young Africans, so they will stop leaving for Europe.

‘This continent’s population will double by 2050. Every year, 20 million new jobs are needed,’ states Development Minister Müller, without revealing how he reached this estimate.^[5] One June 2017 study even speaks of 50 million jobs needed in Africa by 2040.^[6] German companies should therefore help out by investing in jobs. ‘If we don’t help this continent, millions will leave and set off a new mass migration for Europe,’ Müller warns.^[7]

At the same time, German industry has a lot of catching up to do in Africa. Eleven of the world’s twenty fastest growing economies are in Africa. In Berlin, the presidents of Ghana, Rwanda and Côte d’Ivoire boast of growth rates of over seven percent. ‘Lions on the move,’ as management consultancy McKinsey calls them,^[8] on the ‘continent of opportunities’ according to the Federation of German Industry (BDI).^[9] Besides China and Israel, Turkey, South Korea and India are also investing in infrastructure and agricultural projects, as well as in banks and telecommunications.

German businesses are still hesitant: About 1,000 German companies do business in Africa, 600 of them in South Africa and most of the rest in the Maghreb. The enormous area in between looks like a wasteland to German investors. ‘The German industry is missing out on a market,’ Müller warned recently.^[10] ‘Africa has been off our radar for decades,’ confirms Christoph Kannengießer,^[11] CEO of the German-African Business Association. He blames ‘mental’, but also structural causes: most German companies were medium-sized, risk-averse family businesses and still viewed Africa as too volatile. German companies also tended towards the high-tech sector and supplied the machines instead of building roads and factories. ‘Companies tend to go where it’s profitable,’ says Kannengießer, ‘VW will build cars wherever they see customers.’ Drawn by Africa’s new purchasing power, Volkswagen has already built factories in Kenya and Rwanda.^[12] Germany’s government now wants to secure the field for German companies entering this risky market. Investment aid as development aid – that is the idea.

A Marshall Plan with Africa

The idea was a Marshall Plan with and not for Africa. Minister Müller introduced the 33 pages to African diplomats at his ministry’s conference hall in central Berlin in November 2016.^[13] After the end of World War II, the USA helped devastated economies in Western Europe recover with this program. The plan, named after US Secretary of State George Marshall, included loans, raw materials, food and manufactured goods. However, the US attached conditions to this aid package. Most of the funds were direct subsidies and had to be spent on US products to boost the American economy.

In Germany, a significant legacy of this era is the Kreditanstalt für Wiederaufbau (KfW), today the world’s largest development bank. It was founded in 1948 in Frankfurt with startup capital from the USA. At first, the KfW primarily granted loans and risk protection to German companies domestically. Since 1961, it has also had the task of managing financial cooperation with developing countries. The KfW remains the major instrument of German development cooperation and hence is to play a key role in the Marshall Plan with Africa.

In November 2016, Müller explained to the African ambassadors in Berlin: ‘Clearly, Africa’s challenges are not comparable to Europe’s after World War II, but the necessary efforts certainly are.’ He defined three focal points: industry, trade and employment. His plan was designed foremost as a ‘Future Pact for Africa’s Youth’, who ‘need jobs and prospects!’^[14]

President of the European Parliament Antonio Tajani liked the idea. The conservative Italian followed suit in late February 2017 and demanded that the EU also develop a ‘Marshall Plan with Africa’. Europe must invest several billion euros there now, he warned. Otherwise, millions of Africans would come to Europe over the next 20 years. However, Tajani failed to reveal his sources for this scenario. This problem concerned all EU states, not just Italy or Germany, he claimed.^[15]

The current Marshall Plan barely mentions migration. To the contrary, it focuses on creating jobs on the ground for Africa’s youth.

For 2017, the German government increased the Development Ministry (BMZ) budget by over €1 billion, to €8.5 billion. ‘We are investing the major share in Africa,’ Müller proclaimed generously.^[16] In early 2017, the German government boasted that this increase marked its first-ever achievement of the OECD’s 1970 target for official development assistance (ODA): 0.7 percent of gross national income (GNI). International NGO Oxfam criticized this calculation as a sham: ‘The German government reached the international target only by adding in the costs of housing refugees. Those now account for 25.2 percent of all German development aid,’ Oxfam states. ‘This welcome increase in the development budget in recent years must be followed by further increases of at least €1.5 billion a year.’^[17] Far from being a raise, Müller’s vaunted offer falls even below previously set targets.

Initially, the ‘Marshall Plan’ did not include a single euro. Only on the eve of the G20 Africa Partnership Conference did Müller rectify this. He quickly freed up another €300 million and picked Ghana, Côte d’Ivoire and Tunisia as his first ‘reform partners’, countries that met the German requirements for direct investments in terms of anti-corruption efforts and rule of law.^[18]

Pro! Africa – Germany’s business plan

In early February 2017, Germany’s Minister for Economic Affairs, Brigitte Zypries, brought a delegation of top executives to the German-African Business Summit (GABS) of the Sub-Saharan Africa Initiative of German Business (SAFRI) in Kenya. Representatives of Volkswagen, Deutsche Bank, Siemens, SAP, pharmaceutical company Braun Melsungen and technology group Voith came along. Kenyan President Uhuru Kenyatta gave the opening speech at Nairobi’s Hotel Intercontinental to over 400 participants from across the continent. With a trade volume of €533 million, Kenya is Germany’s most important economic partner in East Africa. Here, Germany maintains one of eight Delegations of Industry and Commerce (AHK) south of the Sahara.

At the summit, Zypries presented the Pro! Africa initiative, to which her ministry had allocated €100 million.^[19] She too speaks of Africa as a ‘region of opportunity’ and a market ready to develop its full potential. German-African business relations were good, but could be expanded, she said.

In fact, Germany’s bilateral trade volume with sub-Saharan Africa in 2015 was just €26 billion. This roughly corresponds to Germany’s trade with the Slovak Republic. Yet Africa showed great demand for ‘Made in Germany’ know-how said Zypries, and German companies were ready to invest in Africa’s youth and promote technology transfer.

Pro! Africa promotes German companies’ entry into Africa’s alternative energy markets, more trips to Africa for the German AHK, new jobs within the AHK and the embassies to promote economic partnerships. Dual vocational programs aim to train young Africans on German machines, preparing them to work at German companies. Even in the African healthcare sector, so far funded by development aid, the initiative plans to ‘introduce German products and services’ to African doctors.^[20]

‘Everyone envies our dual training system,’ says Kannengießer of the German-African Business Association. Not for the curriculum itself, but because the companies finance it, so ‘they train for their exact needs’, Kannengießer explains. This system does not qualify workers just to build up a labor reserve. Therefore,  he expects little from the proliferation of vocational schools in Africa. ‘Basically, the investment comes first, then the training; it won’t work the other way around.’ For example, he thinks that using aid money to build company-specific schools would be a good mix of development cooperation and foreign trade promotion.^[21]

Schäuble’s Compacts

As if two plans were not enough, the German Ministry of Finance under Wolfgang Schäuble (CDU) also drafted the Compacts with Africa. Just like the two plans, these Compacts promote German direct investment in Africa. However, Schäuble got the G20 on board for his Compacts: member states will offer loans, and African countries can apply by submitting project plans. They should also make their legal and tax systems more investor-friendly. The Compacts with Africa represent a ‘completely new approach in business cooperation’, states the Ministry of Finance: ‘The countries themselves must take more responsibility.’^[22] Whoever offers the best conditions gets the biggest investment package, so African countries will compete for funding.

Some African governments were allowed to speak directly to Schäuble. In March 2017, he invited Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia to meet with G20 finance ministers and central bank executives in Baden-Baden.

Hardly any place on Earth is as far removed from the reality of an African village as this posh town in the northern Black Forest, where the richest of the rich promenade past the jewelry shops and enjoy evenings in one of the world’s most famous casinos. Just as the African delegations sit at the table, a scandal erupts among the G20 states: For the first time, the 20 leading industrial nations cannot agree on expanding free trade and climate protection in their final statement. US President Donald Trump’s ‘America First’ calls for more protectionism, and the climate is not really his issue anyway. Two months later he announces the USA’s withdrawal from the Paris Climate Agreement of 2015.

The final statement from Baden-Baden vexed policymakers in Rwanda’s capital Kigali. For decades, big business had demanded that small African economies dismantle their tariffs and open up to free trade. Just when they were about to, thought the Rwandans, came this international turnaround. Whether America First or Brexit, isolationism sends the wrong signal to African countries, says Fred Nkusi, Rwanda’s leading international law expert. EAC states were just learning that ‘regional integration is the best approach for development and growth of the country’s economy’, ^[23] he commented in the state-owned New Times on the Baden-Baden meeting attended by Rwanda’s delegation.

The small state in the heart of Africa has high hopes for the Compacts. Loans are needed to build housing and connect the small, landlocked country to the East African railway line, which is planned to connect the interior to the ports of Mombasa, Kenya and Dar es Salaam, Tanzania. Construction would cost as much as $900 million.^[24] So Rwanda needs loans urgently. In Berlin, President Kagame campaigned for rapid investments. His country already was business-friendly, he said, and not prone to long discussions. Kagame’s hurry was no coincidence: elections were coming up in August 2017. Kagame’s goal was to bring home loan commitments from Berlin to secure his power. In 2018, he was still sulky that Germany had not approved a single loan for his country.

The German-African Business Association thinks it is not such a bad idea that the Compacts focus on the ‘reform champions’. After all, the Compact states were selected as model countries within their regions – with an eye on preventing or redirecting labor migration, says the Association’s CEO, Kannengießer.^[25] The notion is simple: If Ghana’s business booms and creates jobs, Togolese jobseekers may go there – and not to Europe.

There’s profit in Africa

‘If the world is to become more stable, we must reduce the gap between the richest and poorest,’ Finance Minister Schäuble explains his Compacts at the Baden-Baden summit.^[26] Yet a deeper look shows that the Compacts would primarily benefit investors in developed countries, criticizes the association Jubilee Germany (Erlassjahr), a development policy alliance between churches, politics and civil society. Since the G20 offer Africans states loans at market conditions, i.e., with short 25-year maturities and interest rates between 5 and 15 percent, they are expensive and risky – unlike the low-interest loans with maturities of over 50 years that are common in development aid. The Compacts ignore that ‘the downside of this funding is escalating debt and, in extreme cases, state bankruptcy’, says Jürgen Kaiser of Jubilee Germany.^[27]

The German NGO World Economy, Ecology and Development (WEED), which advocates for fair financial, economic and environmental policy, shares this criticism. It fears that in the long run, corporate investments in projects like road or power plant construction could put Africa’s entire infrastructure into private hands. In developed countries, privatizing public services like water and power has come at a great cost for citizens, states the NGO. The Compacts allowed G20 governments to ‘“preach” to the African countries that development is just a side effect’ of profiteering, says Markus Henn of WEED. He warns that the Compacts could ‘become the starting point of the next African Debt Crisis’.^[28] Today, the Global South already spends far more on debt service than it receives in development aid.^[29]

Those who profit from these loans are the small depositors who make up Schäuble’s core constituency, wealthy private investors in Baden-Baden, big banks, hedge funds and insurance companies in Frankfurt, as well as major pension funds, including Germany’s subsidized private pension scheme (Riester pension). Investors have a hard time finding profitable ventures in Germany or the G20 countries. Their savings earn hardly any interest, so they scour the globe. ‘The German government openly declares its aim to open up Africa for Western pension funds,’ states Jubilee Germany’s position paper. ‘Allianz and others urgently need these returns of 5 to 15 percent, which are still achievable in Africa, to meet their obligations towards customers holding subsidized pensions and other types of old-age provision.’^[30]

‘It’s not about wanting to help Africa, it’s about business and making profits,’ summarized Morocco’s Finance Minister Mohamed Boussaid at the Partnership Conference in Berlin in June 2017.^[31]

After Bundestag elections in September 2017, German politicians rarely mentioned any of the business promotion concepts they had developed for Africa. At the big EU-AU summit in Côte d’Ivoire in November 2017, the Marshall Plan no longer plays even a minor role. The final statement only echoes the issues of education and jobs. At the end of 2017, the German government passed the G20 presidency to Argentina, which had little interest in the Compacts with Africa and set its own G20 priorities.

Nevertheless: ‘One year after presenting the Marshall Plan with Africa, Development Minister Müller sees positive interim results,’ declared the BMZ website in January 2018. In February, it published a ‘state of affairs’ report on the Marshall Plan’s implementation, while noting that it ‘contains no detailed information on the Plan’s financial resources’.^[32]

The Ministry’s budget grew steadily from 2018 to 2019. For 2019 it even exceeds €10 billion.^[33] This major increase is clearly not enough for Müller: ‘I say to everyone calling to combat the causes of migration: I lack funding for some urgent programs,’ he complains to the Bundestag during the September 2018 budget debates. ‘There were simply too many crises in the world,’ he says.^[34] So while the Marshall Plan appears as a financial instrument in the draft budget, there is not one single euro allocated to it. By contrast, defense spending for 2019 was to increase 15 times more than development aid, which development politician Helin Sommer (The Left) criticized in the Bundestag debate: ’15:1 might be a great result for an international football match, but in this case, it’s morally wrong and economically unwise.’^[35]