Germany’s Marshall Plan for Africa 

What are the political dynamics that may have led to the adoption of Germany's ambitious framework to reinvigorate Africa's development.

Angela Merkel and Mahamadou Issoufou in Niger. Image via German Government website, credit Steins.

On January 18th, the German Federal Ministry for Economic Cooperation and Development unveiled its new Africa policy framework “Marshall Plan with Africa”. The idea was first put forward by global interest groups The Club of Rome and “Senat der Wirtschaft,” who emphasized that in the context of Africa’s demographic trend, Germany will have to mobilize more aid and private investment. The idea was also floated by Niger’s President Mahamadou Issoufou during German chancellor Angela Merkel’s state visit to Niger in October 2016. Issoufou called for a US$1 billion package to create jobs, prevent conflict, and reduce migration. Merkel was hesitant to endorse Issoufou’s proposal (it’s unclear why), yet just four months later Germany unveiled its Africa policy using that same title.

There is a long and misleading legacy of Marshall-Plans being called for in different parts of the world across a range of different contexts. In development advocacy, the term has often been instrumentalized by “big-push” theorists such as economist Jeffrey Sachs. These theorists are convinced that a large increase in development assistance will deliver low-income countries from poverty traps. However, the context in which Germany benefitted from the original Marshall Plan right after World War II was very specific to that moment and place. At that time, Germany had a large pre-existing industrial capacity, while the Marshall Plan’s transfers to European partner countries such as France, Italy, and the United Kingdom increased demand for German exports.

Before scrutinizing the plan in detail, it is useful to think about which political dynamics may have led to the adoption of this ambitious framework. With upcoming federal elections, Merkel has come under growing domestic pressure over her “open” refugee and migrant policy. Reports suggest Merkel has recently been in Tunisia, Egypt, and Libya to discuss the migrant crisis with aim of managing the flow of migrants. It is her second Africa trip in six months after having not visited the continent in five years. Germany’s minister for international development, Gerd Müller, will likely not retain his portfolio following this year’s federal election, and aspired to leave a legacy with the Marshall Plan. He is also a member of Merkel’s Bavarian sister party CSU, which has criticized her migrant policy almost as passionately as the right-radical AFD. Similar to his British Tory counterpart Priti Patel, Müller and other German politicians have communicated and legitimized Germany’s aid budget by promising fewer migrants.

Leaving aside the moral argument about instrumentalizing international aid, and normalizing anti-migrant sentiments, evidence suggests that aid might actually increase migration. As the Center for Global Development’s Michael Clemens has pointed out, migration from low-income countries increases over the course of a “mobility transition”, (at least) until countries reach upper-middle income status. Instead of promoting fairytales to an increasingly anti-migrant electorate, policymakers are shying away from taking the courage to put things into perspective, while acknowledging the hard truths about global migration:

One, migration will not decrease from its current levels anytime soon and money invested specifically for migrant-deterrence aid is money wasted.

Two, repressive migration regimes actually force people to stay in Europe and disrupt potentially virtuous circular migration patterns. West African immigrants to France frequently moved between France and their country of origin. After the French migration regime was tightened, many feared that they would not be able to comeback, and felt forced to stay.

Three, poorer countries such as Kenya, Lebanon, and Uganda are hosting more migrants and refugees per capita, without comparable levels of xenophobia and exclusion.

Four, in the future, NATO should consider the long-term consequences of military interventions.

Another underlying political dynamic is Germany’s reluctant embrace of global leadership. Germany has historically approached international development assistance with the rhetoric of altruism. But increasingly, it has become more explicit in linking national and sometimes European interests to its international development policy. Contrary to the trend in other Western countries, Germany’s official development assistance (ODA) has increased by 26 percent in 2015, with the country spending $17.8 billion. According to Devex, German development aid is expected to increase by more than $8.9 billion more than initially planned between 2016 and 2019.

Though the increase in aid is substantial for Germany, it hardly qualifies as a Marshall Plan capable of delivering the infamous big-push for all African countries. Carlos Lopes, former Secretary of the UN Economic Commission for Africa, joked that it is roughly equivalent to the budget of a medium city in Europe.

But rather than solely providing a material increase in aid, the plan was to provide a blueprint for future international development policy. The plan consists of three pillars: Economic Growth, Jobs and Trade; Peace, Security, and Stability; and Democracy, Rule of Law and Human Rights. Countries that pursue anti-corruption, women’s empowerment, and good governance are to receive a 20% increase in development assistance, while it is unclear how this will be judged. From a governance perspective, the plan is short on fresh proposals, but rather reiterates the uninspiring “good governance” and “rule of law” rhetoric, which has been criticized by scholars such as Mushtaq Khan. African researchers have also pointed out that the plan bypasses existing continental development frameworks, ironic since policymakers made sure to call it the Marshall Plan with Africa.

With regards to financing in the context of Africa’s large infrastructure gap, the plan also attempts to find ways with which to incentivize private, and institutional investors such as pension funds to invest in African infrastructure. Under its current G20 presidency, Germany has committed to boost current multilateral development guarantees, and aims to create a currency exchange fund against local currency risks. Helmut Reisen, formerly head of research of the OECD Development Centre, has pointed out, that this was already envisioned under the “G20/OECD High-Level Principles of Long-Term Investment Financing by Institutional Investors”, but did not succeed in significantly raising investment levels. He points out that development finance institutions such as the IFC have used innovative instruments such as a Managed Co-Lending Portfolio Program, or a First Loss guarantee to draw in long-term investors such as Allianz AG, but he remains skeptical about their potential for African countries. More emphasis should rather be placed on domestic resource mobilization and the fight against illicit financial flows, which are higher than overall development assistance according to some estimates.

While the plan calls for increased market access for African exports, it does not address the frequent disconnect of European development-and trade policy. Since the Lomé Convention in 1975, the EU has granted non-reciprocal trade preferences to African countries, but under the Cotonou Agreement, this system was replaced by the negotiation of economic partnership agreements (EPAs). EPAs are negotiated with different African regional trading blocs. Cameroon has angered other partners in the Economic and Monetary Community of Central Africa (CEMAC) because of its unilateral decision to ratify the EPA. The East African Community (EAC) is divided with Kenya, and Rwanda in strong support of the EPA, and Tanzania, and Uganda calling for a renegotiation of the agreement. Germany’s stated goal is to promote job creation and increase value added exports.  For this to be genuine, EPA’s have to uphold the integrity of regional blocks, leave policy space for industrial policies, and refrain from dumping subsidized agricultural products into African markets.

Finally, in light of Germany’s recent acknowledgement of the Herero, and Nama genocide, which we discussed here, Germany has yet to address its guilt as a colonial empire, and genuinely respond to calls for reparations. Traditional traditional authorities of the Herero and Nama have filed a class action lawsuit  against Germany seeking reparations. The pre-trial conference of that case (Rukoro et al. v. Germany) will be held tomorrow, March 16, in New York’s Southern District Court.

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