German chancellor pledges €4 bn for Africa-EU Green Energy Initiative

German chancellor Olaf Scholz has pledged four billion euros by 2030 for renewable energy investments through the Africa-EU Green Energy Initiative. “This is not about development aid according to the outdated patterns of donors and recipients,” said Scholz at speech in Berlin. “This is about investments that pay off for both sides.” The leaders of several African and European states travelled to Berlin upon invitation from the German chancellor to attend the Compact with Africa (CwA) summit. The initiative stemming from Germany’s 2017 G20 presidency brought together the leaders of host country Germany, Nigeria, France, Kenya, Ghana and the Netherlands, and other countries and was also attended by high-ranking representatives from the African Union (AU) and the European Union (EU).

Speaking at a press conference together with the head of the African Union (AU), Azali Assoumani, and the head of the AU Commission, Moussa Faki, Scholz said that “Europe’s future is inseparably linked to that of its neighbouring continent.” The chancellor said Germany would provide the four billion euros for clean energy projects in Africa, in line with the goals outlined in the Africa-Europe Green Energy Initiative. 

He said he was “confident” that the current challenges his government is faced with following a court ruling on the country’s 'debt brake' and the subsequent cancellation of 60 billion euros for its Climate and Transformation Fund will not affect any of the financial pledges made at the CwA summit.

Scholz said green hydrogen production in Africa would be among the key topics discussed at the summit, which especially for Germany played an important role in its future supply architecture of the synthetic fuel. “The message to African countries is: produce green hydrogen and you will find reliable buyers in us.” The chancellor stressed that enabling better access to affordable and sustainable energy for people in Africa would also feature high up on the meeting's agenda.  

The chancellor also stressed that African workers would be welcome to fill many of the vacant positions for skilled labour that is currently presenting a challenge for energy transition plans and wider economic development in Germany. “While we are lacking workers, many countries in Africa have a large share of young women and men who seek work and want to seize their opportunities,” Scholz said. A law on attracting skilled labour would be bolstered by “migration partnerships” with African states to encourage more skilled workers from the continent to come to Germany, the chancellor added.

The CwA would aim at a mutually beneficial economic partnership with the 13 African partner states that could improve investment conditions there, Scholz said, adding that credit guarantees and other instruments would be used to “jointly tap into the great potential” the continent has to offer for economic growth, renewable power and critical resource supply.

Higher political instability, inconvertibility of currencies and a general lack of financial reassurances for investors are still major impediments to growth in Africa, a hurdle that the compact could help to reduce, a government representative told journalists ahead of the CwA meeting in Berlin. Clean energy investments, for example in solar power, ultimately are more expensive than elsewhere and let investors shy away from long-term engagements. Securing a stable customer basis through exporting green energy instead of relying on domestic buyers in Africa could help reassure investors. At the same time, the CwA will also encompass access to critical raw materials for sustainable technologies, the representative said. A key focus is put on green hydrogen production, which thanks to the ample availability of wind and solar energy could often be done in a much more competitive way than in Europe.

While Germany is interested in finding new sources in Africa also for fossil fuels, especially for natural gas, the talks are focused on clean energy projects, the government representative said. This includes a geothermal energy project in Kenya, grid expansion and decentralised power production in Nigeria, or wind and solar power projects in Morocco. In contrast to China, which has been investing heavily in resource extraction in Africa in the past two decades to process raw materials domestically, the approach of the German government differs in that it aims at creating a platform for long-term value creation in the source states themselves. While China has a reputation for “not asking questions,” this would be different with German companies active on the continent, as a recent dispute over working conditions at a Moroccan supplier of carmaker BMW had shown. “We don’t want to copy the Chinese model,” the representative said, citing battery and steel production as examples for industry activities that in the future could take place in African CwA partner states. This would be a task that takes years to complete and cannot be achieved through a single effort, the representative added.

Africa needs energy to convince young people of staying - AU Commission head

Speaking together with Scholz ahead of a wider meeting that also included French president Emmanuel Macron, EU Commission head Ursula von der Leyen and Dutch premier Mark Rutte, AU head Azazli Assoumani said the CwA would provide an effective platform for achieving “indispensable structural change in Africa” that might also serve as a vehicle for fostering African integration. African countries taking part in the CwA on average performed significantly above their peers on key metrics and more are currently waiting in line to increase the number of members from 13 to 17. Moussa Faki, head of the AU Commission, added some 600 million people in Africa currently lacked reliable access to electricity. Providing more energy, “and preferably green energy, whenever possible,” therefore was a precondition for fostering growth in Africa. The CwA could thereby serve as a kind of “Marshall Plan,” akin to the financial assistance Europe received from the USA after World War II to spur development. This would also help to convince more young Africans to not try and migrate to Europe or other parts of the world and stay within their home countries to help developing these instead.

Germany’s development and economic cooperation minister, Svenja Schulze, said the summit would also be used to discuss several initiatives in which her ministry (BMZ) played a role for fostering sustainable economic development and the energy transition in Africa. One central aspect of the CwA in this regard was achieving a better level of education among young Africans for jobs related to these fields. “The world needs the creativity, innovative and creative power of this generation of young people to successfully master global challenges like climate change,” Schulze said. The minister from Scholz’s Social Democratic Party (SPD) said a substantial part of Germany’s international climate finance contributions would be put into a “socially just energy transition in Africa” that built on the results of the African Climate Summit held in September in Kenya’s capital Nairobi. This included the installation of up to 300 gigawatts of renewable power generation capacity on the continent by 2030. Schulze added that her ministry would also seek to highlight the role of digital entrepreneurs and startups in Africa “as a driver of the social-ecological transformation.”