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Germany’s “Paradigm Shift” in international development – An African Perspective

Heirs Holdings Chairman, Tony O. Elumelu germany's paradigm an african perspective

By Tony O. Elumelu, Chairman, Heirs Holdings and the Tony Elumelu Foundation

One of the downsides of globalization is that local problems rarely stay local.  Europe is straining under a tide of migrants, making the perilous journey from North Africa, across the Mediterranean.  Tragically, thousands have lost their lives, in the attempt, and thousands more who manage to reach Europe, arrive only to face new challenges.

European governments are grappling with increasingly difficult circumstances, as concerns over the cost and the implications for their culture and security, lead to constituents vigorously calling for more restrictive policies. Evidence of this backlash is found not only in the United Kingdom’s Brexit vote, but also in election campaigns now beginning in Germany, France and the Netherlands.

In the wake of these pressures, which weigh especially heavy on the shoulders of German Chancellor Angela Merkel, whose government has boldly embraced thousands of refugees, German Development Minister Gerd Müller announced a new approach to the migration crisis: a new “Marshall Plan”, with the goal of improving conditions in Africa to such a degree, that Africans will instead choose to remain at home, rather than fleeing to Europe.

The original Marshall Plan, created in the wake of Europe’s destruction at the end of World War II, cost today’s equivalent of over US$100 billion.  Implemented between 1948 and 1952, it facilitated the fastest period of economic growth in European history, with industrial production growing by 35 per cent.  The plan was extraordinarily successful, and it is important to remember, was not developed merely out of a sense of altruism, but was also a self-interested method to rebuild the economies of America’s most important trading partners.  The result was a win-win, creating sustained rates of increased economic growth and higher levels of prosperity on both sides of the Atlantic as it laid the foundation for European integration.

The Marshall Plan for Africa proposed by Germany, which includes programs focused on youth, education, and bolstering economies and rule of law, explicitly targets the private sector, and has the potential to achieve a similar degree of mutual benefit for Africa and Europe.  I, and many of my fellow Africans, applaud this novel effort, especially given the need to create millions of new jobs each year for our rapidly growing population.

Germany’s proposal is very similar to my concept of “Africapitalism” – a philosophy informed by my more than 30 years of experience in African businesses and my belief that the private sector is the most influential catalyst for both broad-based economic growth and an increase in social welfare.  Africapitalism emphasizes the importance of entrepreneurship and building businesses that create local, long-term value in strategic sectors; in a way that, along with the assistance of key partners, facilitates responsible and inclusive development.  Additionally, to maximize the potential of business to create wealth and spread prosperity, Africapitalism urges governments to institute reforms that will dramatically improve the business enabling environment, making firms more competitive, enhancing their ability to scale and create formal wage-earning jobs.

Despite good intentions, the traditional approach to international aid has not delivered the results hoped for. Without question, some of the fault lies with Africa, as impenetrable bureaucracies, corruption, and general inefficiency have hampered development efforts.  But equally, the classic model of direct government budget support, bigger and more expensive, more complex public programs, as well as the top-down one-size-fits-all method is, at best, inadequate and, at worst, counterproductive. Developed countries’ protectionist policies, trade barriers, and a general lack of cross-border commercial engagement has also had a negative impact on Africa’s economic growth, even though research by the World Trade Organization and other international institutions empirically demonstrate how developed and developing countries alike would benefit from the eliminations of these restrictions.

Germany’s intentions should be welcomed by Africans. Their innovative plan not only relies upon the very same core economic principles that helped rebuild Europe, but will also create unprecedented opportunities for millions of aspiring Africans, to create prosperity at home which, if successful, could ease Europe’s current migration-borne burdens.  It could also mark an end to the paternal and, at times, patronising approach the developed world has taken towards Africans, by making them partners in the cause for change rather, than just the receivers of their charity and good will.  However, this will not be easy or a quick-fix.

To achieve the outcome Germany seeks – one that Africans applaud – requires an unprecedented shift in thinking about development, as well as the creation of new channels for efficient, transparent, and value-adding assistance.  One of the key deficits inhibiting African economies is electricity; only 24 percent of people have access to reliable and affordable power, which also makes it a costly systemic challenge for any business.  We need to dramatically increase public-private partnerships to help the bridge gaps in financial capital and technical expertise for large-scale power projects, with the potential to expand access to electricity for millions of businesses and households alike. A revolution in power could create a new wave of business creation across the continent, currently struggling to create enough jobs for our youth.

Africans share the same ambitions as others around the world, to improve our own lives and those of our children, as well as our communities and countries.  It was in recognition of this spirit, that the Tony Elumelu Foundation launched a US$100 million program to identify, train, mentor and financially support 10,000 African entrepreneurs over the ten years.  As we near the end of the program’s second year, the results so far are impressive, as they create products, open new markets, and employ private sector solutions to social and environmental challenges.  The energy, drive, and acumen of the 2,000 entrepreneurs from all 54 African countries with whom we have worked so far is inspiring, and should be a strong indication of the inherent potential of our continent.  These entrepreneurs, and millions of other like them, are the ultimate realization of a bottom-up African development strategy, based on personal initiative and empowerment. Through my interactions with them, I have been struck by the sense of responsibility and commitment that these, mostly young, entrepreneurs demonstrate for their fellow Africans, as most pledge to build local businesses that will create opportunities for themselves as well as their neighbors.

If Germany is genuinely committed to an African Marshall Plan, one that treats Africa as a genuine and equal partner; and whose ambition is not a temporary fix to an emigration crisis, but an attempt, co-operatively to stimulate entrepreneurship and broad based economic growth in Africa, then I strongly endorse Chancellor Merkel’s courageous approach to Africa’s development. It will need to contain concessions on opening markets to African goods and services. It resonates with the idea of Africapitalism that I champion, and is I believe emblematic of the respect her government pays to the millions of Africans who wish for nothing more than to create a future of their own making, in Africa.

This article was first published in Times Magazine here