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KPMG study - German companies' interest in Africa is growing


‘In an international comparison, the German economy was late to recognise the signs of the times and has a lot of catching up to do,’ is one of the key findings of the ‘Africa Study 2023’, which the management consultancy KPMG conducted together with the German-African Business Association.


According to the consultancy's research, German investment in Africa has more than doubled in the last 20 years. That may sound like a lot, but it is by no means. In the same period, Africa's economic output has roughly quadrupled.


Our neighbour France increased its direct investments on the continent six-fold between 2003 and 2023; China even increased them by a factor of 90. The investment restraint of the past is now being felt by German companies in Africa, as the companies active on the market are facing dominant international competition from France, China and Turkey.


How can we catch up and in which sectors do the greatest opportunities lie?


‘In public discourse, Africa is often perceived as a continent in crisis. However, Africa has long since developed into a continent of opportunity, as many African countries, but also the continent as a whole, have gained in importance in recent years,’ is another key thesis of the study.


Africa's economic growth has an engine that keeps the speed at a minimum level: It is the continent with the fastest growing population. According to forecasts, five of the ten largest mega-cities in the world will be in Africa by the end of this century. This also means that the continent will undergo the same structural change that can be observed in all emerging regions: urbanisation. People moving to the cities will no longer be self-sufficient. New industries will emerge in the production of food and consumer goods as well as in the service sector. The basis for supply is a functioning infrastructure and for all of this, in turn, a functioning energy industry is an elementary prerequisite.


The energy industry is therefore also named as the number one investment sector in the latest KPMG study. The potential is huge, as over 40 per cent of people in Africa still live without an electricity connection - which is a huge brake on further development. In absolute figures, that is around 600 million people, which is almost a third more than the EU's population of 450 million.


At the same time, the opportunities for supplying solar energy are unrivalled: Africa accounts for 60 per cent of the world's most suitable solar locations - but so far these only represent 1 per cent of the world's installed capacity.


It is therefore no wonder that, according to the KPMG study, German companies are looking increasingly favourably on Africa. The fast-growing African population (51 per cent of respondents), Africa's untapped markets (52 per cent), market size and growth (69 per cent) and the availability of labour (27 per cent) were cited as the most important plus points.

ion to profitability, of course).

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