Germany commits €400m to private sector, SMEs in Africa

The German Development Ministry is looking to boost the growth of private sector and small-scale investments within the African continent, with the recent ‘AfricaConnect’ €400 million initiative.

The Fund, Daily Sun gathered, is expected to help in mitigating economic challenges occasioned by the COVID-19 pandemic which will also have an impact on the economy of developing and emerging markets in the continent.

The German Investment Corporation (DEG), a subsidiary of the KFW banking group, is one of Germany’s development actors, and one of the largest DFIs in Europe. With more than half a century of experience in development finance, it provides funding and advice to German and local companies operating in developing countries and emerging economies.

The German government’s policy has followed the principle of diffusing aid globally on the basis of need, with little geographical bias. Its development finance institution – DEG – has reflected this policy, having a global geographical focus for its investments portfolio.

In 2019, DEG facilitated entrepreneurial investment of EUR 11.1 billion in developing and emerging market countries. It provided around EUR 1.85 billion for this purpose from its own funds, a figure that come close to the result of the previous year (2018: EUR 1.87 billion). DEG’s current portfolio grew by around 8% in 2019 to reach EUR 9 billion, with investments in more than 80 countries.

The DEG’s priority investment areas are the financial sector, the manufacturing industry, infrastructure and agribusiness. The fund’s portfolio includes investments and financing in the following regions: Asia, Latin America, Africa (with a focus on sub-Saharan countries) and European countries outside the EU, as well as the financing of supra-regional projects.

In 2019, the German Development Minister, Gerd Müller, announced a new €1 billion Development Investment Fund for boosting private investments in Africa. The fund’s goal is to facilitate and support the entry of German businesses into African markets or to help Small and Medium-scale Enterprises (SMEs) in Africa grow. The new fund has three pillars: ‘AfricaConnect’, ‘AfricaGrow’, and the ‘Business Network Africa’.