A new G7 initiative could open up additional opportunities for entrepreneurs and investors – especially in Africa. For this to happen, however, warm words must now be followed by deeds.
No question, it is an initiative in the spirit of “Africa First!”: The G7 countries want to counter China’s “New Silk Road” and finance infrastructure projects in poorer countries on a large scale. The goal is “transparent, high-quality partnerships”, announced US President Joe Biden after the G7 summit in Cornwall in June. According to Chancellor Merkel, the regional focus will be Africa.
Beyond the melodious announcement, however, there is little concrete information. How much money is at stake? A G7 paper only talks about up to 2.7 trillion dollars per year, which are necessary to achieve the United Nations’ “Sustainable Development Goals”. And what exactly is supposed to help? Particular focus would be on climate-friendly projects such as solar plants and railway lines, it said. Details? Not at all.
It will be several months before detailed information is available: A G7 task force for infrastructure projects is now to work out proposals. Merkel hopes that the first projects will be presented at the G7 summit next year.
The chance of the century to end poverty
At least the G7 has already set a course that gives us hope:
Firstly, the international community is not relying on taxpayers’ money alone, but wants to mobilise private capital for infrastructure development. That is right – especially in view of empty state coffers after the Corona crisis and low interest rates in the global North.
Secondly, development banks such as the European Investment Bank (EIB) or the Kreditanstalt für Wiederaufbau are to implement the projects together with local partners. This is also the right thing to do, because it would finally allow us to tap their potential and not have to rely on ponderous global institutions like the World Bank.
This is already two recommendations from “Africa First! The Agenda for our Common Future” are already part of the G7 initiative. We now hope that others will follow – first and foremost the proposal to lend our creditworthiness to reforming states (for example through interest rate guarantees for infrastructure bonds). In this way, we would enable African governments to mobilise private capital for their infrastructure projects on a large scale.
This is a huge opportunity to use the low-interest phase to build Africa and trigger a green economic miracle on the sunny continent. Those who are still shying away from investments should therefore question their reservations now at the latest.
We are convinced that even if the G7 initiative falls short of expectations, it will provide positive impulses. This suggests that it will perpetuate or even accelerate long-term upward trends in a number of reform-oriented countries.