German companies plan to boost their activities in Africa next year, with a main focus on the green energy and natural gas sector. Nigeria is one of the Sub-Saharan African countries that stand to benefit from this increased energy investments in 2023. As Europe’s biggest economy, Germany has been seeking to reduce its reliance on Russia for gas since the invasion of Ukraine, Kannegiesser said he sees big opportunities in the energy sector in Africa.
The head of the German-African Business Association, Christoph Kannegiesser, also highlighted Senegal, Mauritania and Namibia as African countries with potential for energy investments.“The field of green hydrogen and liquefied gas will give a new impetus in many countries,” he said, highlighting Senegal, Nigeria and Mauritania as countries with investment potential.
The German-African Business Association, which represents about 85% of German businesses active in Africa, has asked for support from the German government through improved conditions for export credit insurance and investment guarantees to ensure African business is not left to the United States and China.
“The majority of companies want to expand their activities in the coming year,” Association head Christoph Kannegiesser said, “It makes sense, because the continent is still on a growth trajectory.”
The survey carried out among companies in the association showed that 56% of the companies viewed their business activities in Africa in 2022 positively and a further 7% rated them “very good”. 43% of the companies are planning to increase investment in the continent and 39% of Association’s members aim maintain stable spending levels in Arica.
In 2022, these companies invested an average of €1.1 billion in Sub-Saharan African countries and about 1.1 billion euros went to the sub-Sahara region in 2021.
To facilitate the increased energy investments in Africa, the association is advocating for the following from the German government:
Investment guarantees, cover not only political risks but also selected commercial risks including payment risks such as default or delayed payments, as well as currency risks such as foreign currency shortages and exchange rates fluctuations.
Project development insurance where the project developer pays an insurance premium and is reimbursed a portion of the project development costs in the event of project failure. This is to lower the barriers to entry for small and medium-sized enterprises, who are disposed to limited amount of risk capital for project development.
Special research and development support for companies in the field of climate-friendly technologies, like increasing the tax deductibility of research expenditure, supporting pilot programs with new technologies and closely linking promoted university research projects with the German industry.
An emissions trading system to put a price on carbon emissions and thus establish market-based incentives for the application of low-carbon technologies.