December 7, 2023

VDMA: “Free trade can bring Africa and EU together”

VDMA e. V.

European machine technology can play an important role in helping African countries advance economically – especially in the fight against climate change. Chancellor Scholz’s trip to Senegal, Niger and South Africa should also be used to promote free trade between the EU and Africa.

Frankfurt, 24/05/2022 – Many African countries are modernizing their economies at a rapid pace, particularly to meet the challenges of climate change. “European machine technology can play an important role in moving African countries forward economically. The expansion of renewable energies is a good example of this,” says Ulrich Ackermann, head of the foreign trade department at VDMA, on the occasion of German Chancellor Olaf Scholz’s trip to Senegal, Niger and South Africa. It is precisely for the major challenges such as adapting to climate change, the sustainable use of water and marine resources, the introduction of circular economy systems, and the reduction of environmental pollution that European machinery and plant manufacturers provide the technical solutions. In this way, they can contribute to the sustainable further development of the African industrial structure as well as to the creation of local jobs – also with suitable skilled labor development.

Market opportunities in Africa are not being adequately exploited
Although the mostly medium-sized mechanical engineering companies from Germany and Europe have recognized Africa’s growing market potential, many are still hesitant about entering the market. Exports to Africa so far account for only a good 2 percent of all German exports in the mechanical and plant engineering sector, with by far the most shipments going to South Africa and Egypt. Investments on the African continent, which require an established business, are only available in manageable quantities.

Africa wants to promote free trade and thus has similar goals as the EU.

Ulrich Ackermann, Head of VDMA Foreign Trade

As a result of the global Corona pandemic and the looming conflicts between the U.S. and China, many companies in the machinery and plant engineering sector will now try to position themselves more resiliently and review their supply chains to do so. “This can bring the two neighboring continents of Europe and Africa closer together. Africa wants to advance free trade and thus has similar goals to the EU,” emphasizes Ackermann.

German government must improve framework conditions
The new German government is also called upon to provide better support for business with Africa. For example, the Africa Economic Fund, which was already conceived in 2021, should now be implemented as a matter of urgency. The aim is to combine commercial export financing with grant resources from the Economic Fund. The focus is on government buyers in Africa who demand technical products and projects. “The planned endowment of the fund was rather symbolic at 20 million euros. The new German government must summon the courage to make this promising approach a resounding success,” Ackermann demands.

Another stumbling block for the mechanical engineering sector’s commitment to Africa is that the current development cooperation funding programs do not suit the majority of SMEs’ export business. This also hinders exports that make sense in terms of development policy. Overall, the VDMA has been advocating for years that development cooperation and foreign trade promotion be better interlinked. Representatives of African states should also be met “on an equal footing.” “Unfortunately, it is not a matter of course that ministers from African countries are received in Germany on an equal footing,” Ackermann regrets.

“Skilled Workers For Africa” takes off
Meanwhile, the “Skilled Workers For Africa” initiative developed by the VDMA has become a success story. As part of this initiative, vocational training centers have been set up in Botswana, Nigeria and Kenya, with more and more VDMA member companies getting involved. There, prospective skilled workers are trained on modern machinery and equipment. Around 450 young Africans have so far been trained at the three industry-driven training centers, and 130 participants have received longer-term training. In addition, 40 trainers have also been trained.

Together with financial support from the German Federal Ministry for Economic Cooperation and Development (BMZ), African partners as well as the VDMA, its members and business partners are investing a double-digit million euro amount in building the infrastructure, conducting the training courses and linking them to local industry.

The VDMA is Europe’s most important mechanical engineering industry associaton and represents more than 3,400 German and European companies. The industry stands for innovation, export orientation and medium-sized businesses. The companies employ around four million people in Europe, more than one million of them in Germany alone. Mechanical and plant engineering represents a European turnover volume of around 800 billion euros. In the entire manufacturing sector, it contributes the highest share to the European gross domestic product with a value added of around 270 billion euros.

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