Strengthening personal accountability, promoting the economy and creating more jobs: the Federal Ministry for Economic Cooperation and Development (BMZ) has established a new cooperation model to implement Agenda 2063 of the African Union: the reform partnerships.
About Stefan Oswald
Dr Stefan Oswald has been working in development cooperation for thirty years. Since May 2018 he has been in charge of the Marshall Plan with Africa, Migration and Displacement at the German Federal Ministry for Economic Cooperation and Development (BMZ).
Sub-Saharan Africa shows robust economic growth of 3 per cent on average; Ethiopia, Côte d’Ivoire, Ghana and Rwanda are even higher than 7 per cent. Every second African nation now ranks among the “middle-income countries”. The population is also growing rapidly: Africa’s population will double by 2050. Already today, 40 per cent of the population is under 15 years of age. The continent will have the largest labour supply in the world by 2035. 20 million new jobs will be needed every year. To actively address the challenges, the countries of the African Union adopted Agenda 2063 in 2015.
This is the starting point for our cooperation: we must help our African partners to better leverage economic potential and create more jobs. The private sector can and must make a much bigger contribution to sustainable, broad-based development. Against this background, the German Federal Government is now increasingly focusing on improving overall investment conditions. This was also the aim of the Compact- with-Africa initiative launched under the German G20 presidency in 2017. In “compacts” between individual African countries, international organisations (World Bank Group, African Development Bank, IMF) and bilateral partners, all participants coordinate concrete measures to mobilise local private-sector investment.
The first pilot projects are underway
The Federal Ministry for Economic Cooperation and Development (BMZ) also established a new cooperation model to implement Agenda 2063 of the African Union and to promote economic conditions and private-sector investment: the reform partnerships. Under these partnerships, we strengthen the principle of personal accountability and ask for more reforms and personal contributions from our partners to boost economic development and job creation. The first pilot projects are underway in Côte d’Ivoire, Ghana and Tunisia. In Côte d’Ivoire and Ghana, the reform partnership focuses on the private sector’s expansion of renewable energy and energy efficiency; in the reform partnership with Tunisia, cooperation focuses on the financial and banking sectors. Since 2017, the BMZ has supported the implementation of the first three reform partnerships with additional funds totalling around EUR 800 million.
Three other reform partnerships with Ethiopia, Senegal and Morocco are set to be finalised by the end of 2019. The new “Special Initiative Training and Employment” and the Development Investment Fund also support private investments with EUR 1 billion, mainly in reform partner and CwA countries.
In Tunisia, the reform partnerships have triggered important reforms in the financial and banking sectors. For example, the anti-corruption authority was expanded and the state credit guarantee fund was reformed to enable more investment in reliable overall conditions.
This article appeared in FC – The Financial Cooperation magazine in 2019.
Published on KfW Stories: Monday, 7 October 2019