Germany Woos Africa as Europe Wrestles With China for Influence

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(Bloomberg) -- German Chancellor Olaf Scholz heads to Kenya and Ethiopia on Thursday as part of a European effort to make inroads with countries of the so-called Global South and push back against the influence of authoritarian nations such as Russia and China.

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The government in Berlin is convinced that Europe can make a better partner with Africa than can China, and Scholz will seek to advance talks on trade and cooperation agreements with the countries during his three-day trip.

Under Chinese President Xi Jinping’s Belt and Road Initiative, China has extended about $900 billion over the past decade in infrastructure and other projects around the world, including in Africa. With poorer borrowers struggling to manage their debt loads, however, Beijing has faced criticism over its role as the world’s largest government creditor to developing nations.

Germany and other European countries view Beijing increasingly as a strategic competitor and they are struggling to reduce their economic dependencies on China, a lesson learned from their over-reliance on Russian energy. They also want to ensure that they have reliable supply chains in friendly third countries.

Kenya and Ethiopia have been among the recipients of China’s largest loans to the continent, according to data collected by John Hopkin’s China Africa Research Initiative. That includes funding for Kenya’s largest infrastructure project since becoming independent — a railway line between Nairobi and Mombasa that has since run into refinancing troubles.

China’s role as the primary lender for many developing nations has increasingly become part of the wider strategic competition with the US for influence across the globe. The European Union and the US have both touted their own alternatives to the BRI, but both schemes rely on private lenders making their prospects uncertain.

During his talks in Ethiopia and Kenya, Scholz wants to discuss the challenge of debt reduction and China’s role in those efforts, officials involved in the preparation of the trip said.

Accompanied by a large business delegation, Scholz will also use the trip to deepen trade ties and discuss cooperation on green hydrogen.

In the push to secure and diversify energy supplies, Germany bets on green hydrogen as the fuel of the future and sees sun-rich countries like Kenya and also Namibia as ideal partners to produce and sell green hydrogen to European customers with the help of technology and know-how from German companies.

“For German companies, it’s important to advance economic relations with Africa,” Volker Treier, head of foreign trade at the German Chamber of Industry and Commerce, told Bloomberg. “Also in view of the current geopolitical challenges, we should take advantage of all opportunities and this must include Africa.”

Scholz sees Kenya as another promising partner as the country already gets over 90% of its electricity from renewable energies and aims to reach 100% by 2030.

Kenya’s Foreign Affairs Secretary Alfred Mutua told Bloomberg that the country is interested in attracting more German investors, adding it was a promising sign that Scholz was coming to Kenya with so many business executives.

Kenya is especially keen to attract foreign direct investments in manufacturing and food production, but also eyes closer cooperation on renewable energies and climate-friendly technologies. “Kenya is a leading user of green energy and we are interested in sharing our green energy resources with Germany and Europe,” Mutua added.

During the meetings in Nairobi, Germany wants to facilitate the already advanced talks between the EU and Kenya to seal an Interim Economic Partnership Agreement — a special trade deal which would bring tariff-free and quota-free market access to the bloc’s gigantic single market for most goods from Kenya while not automatically abolishing trade barriers for European companies vice versa.

Germany hopes that such an agreement can be used as a springboard to seal a wider free trade deal between the EU and the African Continental Free Trade Area, officials involved in the preparations of Scholz’s trip said.

--With assistance from David Herbling and Rebecca Choong Wilkins.

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