German investors and Ghana’s ‘Beyond Aid’ conundrum

By Dede Amanor-Wilks

German investors interested in exploring opportunities in Ghana will be able to put questions to Ghanaian policy makers at the Germany Ghana Investors Forum taking place today. The forum is being held simultaneously in Accra and Berlin and some of the discussions will be via video link.

The lessons from the investors forum, an initiative of the G20 Compact with Africa, supported by the Government of Ghana and the International Finance Corporation (IFC), will feed into the G20 Heads of State meeting on the Compact with Africa on 30 October in Berlin. The Compact with Africa is a G20 initiative to promote private sector investment in Africa.

The investors forum follows the end-August visit of German Chancellor Angela Merkel to Ghana, where she was received by Ghanaian President Nana Addo Dankwa Akufo-Addo.

It also follows yesterday’s celebration of German Unity Day, which marks the reunification of Germany after the fall of the Berlin Wall.

The leaders of the two countries are keen to support the forum and both President Akufo-Addo and Chancellor Merkel will deliver pre-recorded video messages to participants in the two capitals, as will World Bank Group President Jim Yong Kim.

This demonstrates the importance of this initiative, not only for German investors eager to explore new markets, but also for the current Ghanaian leadership, which has tied its reputation to the prospect of creating a new African paradigm that will help place the country beyond dependence on development aid.

Akufo-Addo’s championing of the Beyond Aid agenda began soon after the start of his presidency in January 2017 and won plaudits in Europe. For example, France’s Emmanuel Macron, during a visit to Ghana soon after the start of his own presidency, described Akufo-Addo as “forward looking”.

Between Ghana and Germany, trade currently stands at more than $500 million a year. But in an interview with the Business & Financial Times yesterday, Germany’s Ambassador to Ghana, Christoph Retzlaff, emphasised that investment was more important than trade for economic relations between the two countries now.

“Investment is important because it creates jobs for the Ghanaian people,” Ambassador Retzlaff said, noting that German car manufacturer Volkswagen’s plans to open an assembly plant in Ghana would be a “huge boost” for Ghana and for bilateral relations.

Volkswagen is one of more than 150 German participants who have registered for the investors forum and automotive industry in one of three themes on which the forum focuses. The other two are agriculture and financial technology (fintech).

Agriculture forms the basis of the Ghanaian economy and is also a priority area for German investment.

Fintech is interesting both for what it offers in terms of innovation and the economy of the future and also for its potential in terms of financial inclusion. Ghana, where according to the Ghana Investment Promotion Centre, 91% of people have mobile phones, has one of the highest rates of mobile phone penetration in Africa. This is broadening access to financial services that a few years ago did not even exist.

Automotive industry – of obvious interest to the Germans, who are known for producing some of the best cars in the world – may well be the most challenging of the three themes.

Africa faces huge challenges to kickstart manufacturing in a context of globalized competition and economists are divided over its relative importance. While structural transformationists such as former World Bank chief economist Justin Lin see manufacturing as crucial, others such as Nobel prize-winning economist Joseph Stiglitz, also a former World Bank chief economist, argue that Africa cannot follow the East Asian ‘manufacturing miracles’ model and should rather look to the services industry for growth.

Yet Ghana’s current economic transformation model does assume that manufacturing will be central to the creation of jobs for large numbers of unemployed youth.

Indeed, one of the government’s flagship programmes, One District, One Factory, envisages an economic development model pegged to industrialisation. Another programme, Planting for Food and Jobs, assumes that agriculture will feed into manufacturing to stimulate job creation.

In this vein, the Germany Ghana Investors Forum could be an opportunity to seek support for these programmes.

For example, discussions may arise around the scope for German investors to work with Ghanaian industrialists such as Kantanka Automobile, which has long urged the government to do more to support the development of local manufacturing. It is thought the Forum could explore the scope for local companies to produce vehicle parts economically for German companies.

These are questions that are likely to interest Ghana’s Finance Minister, Ken Ofori-Atta, who will give a keynote speech at the Forum, as will his counterpart on the German side, Olaf Scholz, Germany’s Federal Minister of Finance. Ghana’s Food and Agriculture Minister, Dr. Owusu Afriyie Akoto, has also confirmed his participation.

Besides IFC, a member of the World Bank Group, and the Government of Ghana, key partners involved in supporting the Investors Forum include German Cooperation, KfW (Kreditfanstalt für Wiederaufbau) and the Norwegian Ministry of Foreign Affairs. Organising partners include the Ghana Investment Promotion Centre, the Frankfurt-based Maleki Corporate Group and the Accra-based African Center for Economic Transformation.

Dr. Dede Amanor-Wilks is Director of Communications & External Relations at the African Center for Economic Transformation.

This article first appeared in the Business & Financial Times

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