"There are good reasons to invest in Africa"
What if armed conflicts, climate change, and famines threatened the survival of millions of people in Europe? What if hundreds of thousands of Europeans were seeking refuge and a better life in Africa? What if the biggest exporting countries were in Africa and European companies had to struggle to compete in the global economy? What if it was all the other way round and Africa and Europe traded places? Simply asking these questions breaks a pattern that has solidified over decades, if not centuries. I think this pattern deserves to be broken. It must be broken to create a better Africa for Africans.
Since Germany assumed the G20 presidency, a number of initiatives have been launched, including a “Compact” with individual African nations and the visionary proposals of the so-called “Marshall Plan with Africa.” These initiatives are big steps in the right direction. Why? Because they call for a respectful partnership. Europeans must finally understand that Africa needs partners, not donors and a lot of good advice. And that requires a new way of thinking and new policies. Africa needs African solutions that create value in Africa for Africa. For example, the demand for electrification and infrastructure is huge in Africa, but who is willing to develop financing models that work for Africa?
In fact, there are good reasons to invest in Africa. A number of its markets are highly dynamic; in some countries, the GDP growth rate is higher than six percent per year. Foreign direct investment is steadily growing. Africa boasts an abundance of natural resources. But more of the value-add generated from these natural resources should stay in Africa. As a result, the manufacturing industry would gradually gain more ground, and in the long term that would spur growth in related sectors, such as the service industry. Finally, Africa’s workforce is young. Half of the 1.2 billion people living on the continent are under the age of 25. According to projections, Africa will be home to one in five of the planet’s young people and the size of its labor force will exceed 1.1 billion by 2040. With a workforce of this magnitude, Africa has the potential to be one of the world’s largest markets and account for a significant share of the world's economic output – provided a number of requirements are met.
Discussions at the World Economic Forum in Durban will center on these challenges. My hope is that these discussions will deliver practical and actionable strategies for tackling these challenges – because Africa's future is at stake.
One of these challenges is the massive migration to cities. By 2035, more than 50 percent of Africa's population will live in cities. This is fueling demand for urban infrastructure. Siemens is helping governments throughout Africa meet this demand in an efficient, affordable, and sustainable way – by providing highly efficient power generation and transmission technology in South Africa, Egypt, Nigeria, Sudan, and Ethiopia, rail automation systems in Algeria and Mozambique, and high-performance wind turbines for Africa’s largest wind farm in Morocco, to name just a few examples. And we will do more.
Climate change will also be at the top of the agenda at the WEF. Its impact is likely to be more severe in Africa than in other regions of the world. Worst-case scenarios include a drop in agricultural yields, water shortages for up to half of Africa's population, the spread of diseases, and threats to coastal areas due to the expected rise in sea level. Yet, the fight against climate change could open up new opportunities for African countries. They could become forerunners of a more sustainable economy by deploying state-of-the-art environmental technologies. Here, too, Africa can work with partners like Siemens. In 2016, our technologies enabled customers worldwide to reduce their carbon-dioxide emissions by 521 million metric tons. That’s more than South Africa’s total carbon-dioxide emissions. As a leader in climate protection, we use these technologies ourselves. Siemens was the first major industrial company to commit to being carbon neutral by 2030.
Establishing a globally competitive industrial sector that sustains Africa's growth is another critical challenge. This cannot be achieved without good skills in digitalization. Digitalization is transforming every industry and many aspects of life. Like no other company, Siemens covers the electrification, automation, and digitalization markets – at Siemens, we call that E-A-D. And digital technologies are pervading all of these markets. Recent forecasts indicate that the adoption of digital technologies could add US$300 billion in GDP growth to African economies by 2025.
Siemens is the world's most advanced digital industrial company. Our industrial software generates annual revenue of more than €5 billion. The advantages of our digital technologies are evident in the province of Gauteng, where we are implementing a new signaling system and a state-of-the-art control facility for the Passenger Rail Agency of South Africa (PRASA). This facility centralizes rail traffic management, ensures safer passenger movement, and reduces headways from 15 to 2.5 minutes.
Digitalization will also open up the job market and serve as a welcome opportunity for Africa’s future workforce. We must understand that digitalization will only be a success if it is inclusive – if society as a whole benefits from it. Inclusiveness involves giving Africa’s youth the opportunity to acquire digital skills. At Siemens, we spend over €500 million worldwide per year on training and educating employees. In Africa, we closely collaborate with universities and institutes from Ghana to Nigeria and from Kenya and Angola to Mozambique. We've founded Power Academies in Nigeria and South Africa that provide customers with training in operations and maintenance.
To hold their own in tomorrow's digital, knowledge-based global economy, African countries need young people with digital skills – young people who want to start their own enterprises and make a difference in Africa. And we at Siemens are ready to do more for society. Unlike some others, we share our knowledge and expertise and train and educate young people.
Clearly, a company must be profitable to survive. Yet, from my point of view, every business equally has the responsibility to serve society – not just in the short term, but in a lasting way, for the benefit of future generations. At Siemens, we call this approach “Business to Society.” And we serve society in Africa by helping to create a more prosperous, more sustainable, and more inclusive Africa – a better Africa for Africans and the world.
"There are good reasons to invest in Africa"