Germany’s Marshall Plan for Africa

Germany’s development minister unveiled on Wednesday a potential “Marshall Plan” for Africa, which could signal a switch from handing out development aid to strategically promoting private businesses on the continent if approved.

In a 33-page proposal, German Minister of Economic Cooperation and Development Gerd Müller calls for a noted change in how international development aid is used, proposing the money be used as a “catalyst to attract additional private investments” and also seeking greater involvement by the private sector, especially private financing, according to Germany’s international broadcaster Deutsche Welle (DW). Müller’s paper also outlines a need for “equal cooperation” between Africa and the West, creating better market access for African exports, targeting tax evasion by multinational companies, and ending illicit financial flows from Africa, DW reported.

The details of a Marshall Plan for Africa — the idea of which was brought up by Müller in August — have been long-awaited by analysts and investors on the continent.

“We must get away from all these small-scale projects, away from development policy of previous decades, and strike out in a new direction,” Müller is quoted as saying by DW.

Nigerian economist Tony O. Elumelu, chairman of Heirs Holdings, an African investment company, and a columnist for Time Magazine, applauds The Marshall Plan.

“Despite good intentions, the traditional approach to international aid has not delivered the results hoped for,” Elumelu said in his column. Germany’s Marshall Plan for Africa, however, “could ease Europe’s current migration-borne burdens. It could also mark an end to the paternal and, at times, patronizing approach the developed world has taken towards Africans, by making them partners in the cause for change,” he said.

Müller’s plan, however, is not without critics, and is yet to be endorsed by other German ministers. According to DW, only 0.25 percent of German companies are present in Africa, and bureaucracy, instability and corruption are cited by leaders as obstacles for private investors looking to Africa.

Managing Director of Afrika Verein Christoph Kannengiesser, who leads the association of German companies with business ties to Africa, said the proposal has merits. But, according to DW, he added that “unfortunately the Marshall plan remains unspecific on how the concrete measures and instruments will look like. The business community is waiting for concrete instruments to be developed that we can use.”

The original Marshall Plan

The original Marshall Plan, created by the United States to boost Europe’s economy after the destruction of World War II, is considered to have been highly successful. The economic aid resulted in industrial production growth of 35 percent, and increased trade between the U.S. and Europe.

A similar plan for Africa presents challenging differences, starting with the sheer size of Africa. The original Marshall Plan helped 17 economies in Western Europe for only three years. Still, the plan cost about $13 billion (over $100 billion in today’s dollars). Africa is a continent of 54 countries with a population of more than 1.2 billion people.

The big question for Dr. Robert Kappel, a senior research fellow for African Affairs at the GIGA Institute of African Affairs, is funding, and getting coordination within Germany and abroad to carry out the plan.

“The big question is how to get the necessary funds together,” he said to DW. “It’s necessary to talk about the funds needed, but that cannot be the duty of the development ministry alone.”