German Vice-Chancellor Lars Klingbeil has announced that Germany will provide an initial contribution of €10 million towards the G20 Compact for Africa initiative, which promotes private investment in Africa.
“This is not only a strategic investment, it is one that can boost growth, create business opportunities and reduce pressure on public budgets in important member states,” Klingbeil said on Thursday in Durban during the G20 Finance Track Meeting.
Established under the German G20 Presidency in 2017, the initiative’s primary objective is to increase the attractiveness of private investment through substantial improvements in the business and financing frameworks.
Under the G20 Finance Track, the Compact for Africa is governed through the G20 Africa Advisory Group (AAG), co-chaired by Germany and South Africa.
The African Development Bank Group, the International Monetary Fund (IMF) and the World Bank Group coordinate the initiative.
“To help these partners, with the support of the Compact for Africa, Germany will provide an initial contribution of €10 million to the World Bank’s Trust Fund this year,” Klingbeil said.
“We are convinced that this is a worthwhile investment and we will be pleased to see other G20 members join us. Therefore, we call on all G20 partners to consider making their own contribution to the World Bank Trust Fund to help ensure the compact’s long-term success.
“Only through our joint efforts can we truly unlock the potential of the Compact for Africa and make a lasting impact for the benefit of our African partners and the global community,” he said.
Klingbeil added that compact members had higher levels of foreign direct investment.
“It is important to recognise the initiative’s full potential impact is still emerging, partly due to unexpected external challenges such as the Covid-19 pandemic and global uncertainties.
“Political and financial commitment is necessary to unlock the compact’s full potential for sustainable and inclusive growth across Africa.”
He said that Germany’s new government wanted to deepen its engagement with its South African partners.
“We will continue to provide strong support with the compact, but more generally, we also want to engage in new thinking about development partnerships.
“The German government has committed itself to establishing a new North-South Commission to set up an international forum where experts from politics, civil society, business and research can meet on a regular basis to search for new and efficient solutions. I envision the independent experts from relevant areas from all parts of the world coming together on a regular basis.”
His government has agreed to establish a new North-South Commission to jointly suggest new North-South policies for a multipolar world.
“We have to come together on the same level to find common answers to address the challenges we are facing in the world. At the same time, we will continue to make use of the existing instruments of the G20,” Klingbeil said.
Finance Minister Enoch Godongwana said the Compact for Africa had grown into an initiative that had mobilised over $191m in private capital, supported by the development of bankable projects and improved access to services for over 13.5m people.
“It has also fostered a peer learning network among participating countries supported by institutions like the African Centre for Economic Research and provided a structured framework for reform through regular monitoring and technical assistance.
“As we look ahead, the success of the Compact for Africa will depend on our collective commitment. We must ensure that this initiative remains country-owned, reform driven and results orientated,” the minister said.
Godongwana called on governments, multilateral institutions and the private sector to create enabling conditions for sustainable development and inclusive growth.
“Africa’s development trajectory is at a crossroads, while the continent is rich in opportunity; it continues to face significant challenges ranging from infrastructure deficits and climate vulnerability to constrained fiscal space and limited access to long-term private capital,” Godongwana said.
“In this context, the Compact for Africa initiative remains a promising platform for fostering reform-driven investment partnerships between African countries and the private sector.” - SAnews.gov.za
