NEPAD and German Business: What’s new in Africa ?

Ever since NEPAD, the "New Partnership for Africa’s Development", was introduced by its five founding members, the governments of Algeria, Egypt, Nigeria, Senegal and South Africa, the initiative has been carefully monitored by politicians, the media and the public.
So far, NEPAD is only an idea - an African idea - and it has been followed with a great deal of sympathy by the rest of the world.
By Dr Michael Blank
At the same time, a clear cut concept on the status quo, the objective and the vision of NEPAD is missing – and so is the answer to the question as to what degree NEPAD has the potential to redefine and influence the business and economic variables of the African continent.
A conference in Cape Town (December 5–6, 2002), organized by Omega Investment Research in co-operation with the South African daily “Business Day” attempted to bring together businesspeople from Africa and abroad in order to discuss the NEPAD concept in more detail as well as to identify possibilities for the business sector to further influence the NEPAD process. I attended on behalf of SAFRI and delivered a keynote speech. Following are the most important outcomes and my impressions.
What could NEPAD achieve?
Participants agreed that NEPAD should exert political influence on the governments of Africa to support
  • a more business-friendly regulatory environment,
  • the coherence of the legal framework,
  • the reduction of government involvement in business matters and the like.
The possible political influence of NEPAD was seen as the single most important impact on the economies. Political leaders should talk to business representatives in order to create a mutual trust between government and the business sector. NEPAD, in this context, should be a catalyst for this new understanding.
NEPAD was also seen as the key for a substantial improvement in Africa’s infrastructure. Here NEPAD could be helpful in order to mobilise the necessary capital.
What NEPAD cannot do
Participants expressed a clear and realistic view on the limitations of NEPAD. As one of the delegates put it: ”NEPAD by no means is a bus that comes along whenever a road needs fixing !”
NEPAD cannot be an "African Marshall Plan” either. People cannot expect billions of dollars to pour into the continent simply as a consequence of the initiative being officially introduced. The understanding was that the money cannot come from aid donors, but rather has to be generated by
  • FDI inflows,
  • trade revenues, and
  • debt relief.
These three pillars were considered the most pivotal sources of finance for NEPAD’s needs.
In order to mobilise FDI and to increase trade volumes, NEPAD has to pave the way for a reduction in the costs and impediments that exist in the context of, for example,
  • intra-African trade,
  • intra-African flight connections,
  • communication within and out of Africa, as well as
  • diverse regulatory frameworks.
Threats to NEPAD
One businessman from Kenya openly admitted: “We don’t know what NEPAD is and we don’t understand it. Some of us think NEPAD is an attempt by Nigeria and South Africa to dominate the continent.” This comment shows that NEPAD lacks sufficient explanation – at least outside of South Africa. This deficit can be a major threat, especially if combined with a lack of commitment by political leaders.
NEPAD, as a pan-African initiative, does not yet speak with one voice. Especially smaller countries - loudly represented by Namibia and Lesotho at the conference - expressed a great deal of distrust when it came to the involvement of countries like South Africa.
The crucial question for NEPAD’s success is therefore: Does Africa have enough dedicated statesmen to push forward the concept of the initiative ? In a convincing comparison with Europe after World War II, the point was made that without political leaders like De Gaulle and Adenauer, no significant unification would ever have happened. However, taking into consideration the vast magnitude of countries, cultures and languages on the African continent, a similar "continental solution” was considered utopian.
Does business need NEPAD?
The conference delivered a clear answer: No! Quite a few African business success stories were presented, albeit with few linkages to NEPAD: African companies would "Go Africa" with or without NEPAD.
For example, within the last 5 years, South African trade volumes with Western and Eastern African countries more than tripled. A successful and serious implementation of NEPAD's principles, however, could considerably speed up and further increase this process: a mutually beneficial partnership with the public sector is seen as key. Consider Mozal I and II, two of the most impressive cases of such "best practices". ?

How can Germany help NEPAD succeed?
1. Political support
Efficient and successful lobbying within the G8 could help eliminate trade barriers and support debt relief. Germany’s role in this context has been quite impressive so far - not least because of the personal engagement of Uschi Eid, .Parliamentary State Secretary to the German Ministry for Economic Co-operation and Development.
2. Public Private Partnerships
Germany has gained experience in designing and implementing a PPP (Public Private Partnership) program over the last 4 years.
For instance, a so-called "NEPAD Fund” to be implemented and managed by a pan-African financing institution could be installed, providing funds for investors - both from Africa and abroad - that engage in business projects with a focus on NEPAD objectives. A "NEPAD Fund” could, if properly managed and monitored, also help increase the acceptance of NEPAD among the smaller African nations.
3. Business and trade
Public awareness of trade opportunities for goods "made in Africa” must be strengthened, especially in the light of numerous trade agreements that have been granted to the governments of Africa within the past years (for example the "African Growth Opportunity Act” between the U.S. and Africa; the "Anything but Arms” initiative between the EU and Africa; and the EU-South African trade agreement).
These agreements offer private businesses major advantages, even for non-traditional companies such as big multinationals serving world markets from their African operations - as most impressively shown in the cases of DaimlerChrysler, BMW and VW.
4. Changing perceptions
It’s all about perceptions. Germany could assist in improving the marketing of NEPAD here in Europe by presenting its case to the sceptical business community.
The Afrika-Verein, for example, intends to focus its next "Africa Business Forum” on NEPAD, and should address some of the questions that have not been sufficiently answered yet. These include:
  • details of the Peer Review Mechanism;
  • development of a "hubs concept” for regional solutions to NEPAD,
  • presenting promising pan-African business projects that would need substantial support from NEPAD.
5. Looking ahead: What’s next ?
As one conference participant noted, "NEPAD is the only show in town right now.” But at the same time, if NEPAD is not successful, Africa will not be taken seriously again for a very long time.
The organisation of further business conferences and consultations must therefore be considered the first of many steps.
The German business community, represented by SAFRI and its supporting organisations, therefore should take responsibility and further increase its influence on both African governments and institutions to make NEPAD work in the interest of the business sector. Only by strong and serious participation of companies and private businesses will NEPAD become a success.
Dr Blank is the DIHK Regional Director Southern Africa