Development cooperation Tackling the Root Causes of Migration

Germany's development minister, Gerd Müller, believes businesses hold the key to boosting development and tackling the root causes of the refugee crisis.
Technicians work at the thermal power station.

The German government has persuaded German companies that operate in poorer regions of the world to help it deal with the root causes of the refugee crisis.

Development Minister Gerd Müller told Handelsblatt he welcomed the announcement from Federation of German Industries, or BDI,  last week that the business community was prepared to help the government tackle to root causes of the refugee influx to Europe.

"I'm specifically pleased with the declared intention of the BDI and its call to German companies to become more involved in developing countries," Mr. Müller told Handelsblatt.

Late last week, BDI President Ulrich Grillo said that the business community supported the goal of combating the causes of refugee flight locally.

Chancellor Angela Merkel has always insisted that development aid remain a priority for her government, believing that tackling the root causes of why people may flee their countries will help diminish the flow of migrants heading to Europe.

"We are definitely helping to significantly curb the causes of flight,” Ms. Merkel said. “In Germany, we are currently experiencing directly what it means when people flee war, persecution and hopelessness.”

Public money sources cannot shoulder the enormous challenges of poverty reduction by themselves; for that they need the commitment of the business community as a whole. Gerd Müller, Development Minister

Mr. Müller has long wanted to bring aid and business together. His ministry recently established the Business and Development Consultancy for entrepreneurs who want to help the development effort. And indeed the refugee crisis has prompted a rethinking of how businesses should approach difficult situations abroad. "It is no longer the isolated problems of poor countries," Mr. Grillo told Handelsblatt.

This new cooperation has benefits for both sides. Closely coordinated development cooperation between the government and business can open doors for companies long-term. Other European and American businesses are envious of German companies where both sides work on the issues more closely.

On the other hand, this cooperation gives the development ministry access to additional resources that do not impact on the government budget. "Public money cannot take on the enormous challenges of poverty reduction; we need the commitment of the business community as a whole," said Mr. Müller. Recognizing this, the United Nations requires greater involvement of the private sector in combating poverty in its new development goals for 2030. 

Officials from the government development office, or BMZ, met with the the BDI on Tuesday and GIZ, a government-backed body that coordinates international development programs. The first topic to be discussed was what can be done at Dadaab, a vast town-like refugee camp, the largest such camp in the world, in Kenya.  They aim was to improve conditions at the camp and give its residents options that meant they would not feel tempted to make the long. desperate journey to Europe's borders. 

The development ministry points out that many of the instruments of cooperation that the BDI is calling for already exist. The government-owned development bank KfW and its subsidiary DEG are set to launch financing tools for mid-size businesses. German entrepreneurs would be supported in projects such as "develoPPP.de." The declared goal is the integration of educational projects of the German education ministry with business training projects.

In theory the development ministry would be prepared to increase the funds in the budget earmarked for cooperation with business - but not by as much as the BDI calls for, the ministry said. The amount set aside for this cooperation has already risen from €80 million ($89.5 million) in 2013 to €125 million in 2016.

The German Chambers of Commerce and Industry, or DIHK, notes the BDI’s new-found enthusiasm for development work with a note of mild mockery. "Development workers are not business consultants," said Volker Treier, foreign trade director at the DIHK. It would be helpful, however, he added, for foreign trade and development aid to be better coordinated. There are German chambers of commerce in developing countries such as Nicaragua, Myanmar and Ghana and just recently a branch office was opened in Zambia , Mr. Treier said.

Combining aid and business is obviously the way forward. Development critics say money alone has paralyzed innovation, prevented momentum and encouraged corruption.

In the last few months, Egypt has started several major infrastructure projects in which German companies are participating. Volker Treier, German Chambers of Commerce and Industry

Instead, everyone benefits at the moment when trade and development coincide. Take Egypt, a country that plays an important role in the refugee crisis.

If Egypt is stable, fewer refugees will continue on to Europe, according to Mr. Müller. In December he traveled to Cairo for talks with Egypt's president, Abdelfattah Al Sisi. On Thursday his Egyptian counterpart Sahar Nasr and the Egyptian Trade Minister Tareq Qabil arrive in Berlin for a return visit. Representatives of large companies and the German Foreign Chambers of Commerce will also be present at a roundtable discussion to explore the contribution German companies can play in economic development.

The numbers encourage optimism. Mr. Treier from the Chambers of Commerce said German-Egypt economic relations had got off to a good start.  In the first quarter of 2016, German exports to Egypt grew significantly by around €1 billion ($1 billion) or 13.4 percent over the same period last year.

Mechanical engineering and power plant construction supply exports are key drivers of this growth. "In the last few months, Egypt has started several major infrastructure projects in which German companies are participating," said Mr. Treier.

According to the DIHK, not only Egypt but the entire North African region is stabilizing slowly. In the current German Chambers (AHK) World Business Outlook, nearly half of the respondents from North Africa, including Egypt, Tunisia, Algeria and Morocco, assessed the current business situation as good. "In some places administration and security situation have finally noticeably improved," Mr. Treier said. "However, hopes for major growth surges are still subdued given the low oil prices."

Where before only a few kerosene lamps flickered from inside huts, now the blue lights of energy-efficient LED bulbs can be seen through doorways.

In other parts of the world too, new projects are highlighting new ways the West can work with poorer countries. Take the Solar Energy Foundation in Ethiopia. The foundation has been active there for more than 10 years and built their biggest solar project in the village of Rema. Solar energy has boosted the overall economy of the whole region.

Where before only a few kerosene lamps flickered from inside huts, now the blue lights of energy-efficient LED bulbs can be seen through doorways. Just recently 10 rural health centers in Ethiopia received solar systems for light and for the refrigeration of medicine from the Solar Energy Foundation. Because many development projects collapsed after the withdrawal of the helper, the foundation is conceived as a hybrid between a non-profit organization and private companies.

The World Bank estimates that Africa may soon be the world's largest market for solar energy. At the moment many solar companies first look to developed markets before they venture into the risky sub-Saharan countries, but the foundation and projects like it, may encourage groups to first do business in the parts of the world they are needed most.

 

Donata Riedel covers economic policy for Handelsblatt. Wolfgang Dreschler is Handelsblatt’s Africa correspondent. To contact the authors: [email protected][email protected]