Olaf Scholz, 2021/photo Wikimedia Commons/Public Domain The government in Berlin is convinced that Europe can be a better partner for Africa than China, and Olaf Scholz, during his three-day trip to Kenya and Ethiopia, will seek to accelerate talks on trade agreements and cooperation with these countries. Germany and other European countries increasingly see Beijing as a strategic competitor and struggle to reduce their economic dependence on China, learning lessons from over-reliance on Russian energy. They also want to make sure they have reliable supply chains in friendly third countries.
China the world’s lender
Under Chinese President Xi Jinping’s Belt and Road Initiative, China has allocated around $900 billion over the past decade to infrastructure and other projects around the world, including in Africa. China’s role as a major lender to many developing countries is part of a wider strategic competition with the US for influence around the world. According to data compiled by John Hopkin’s China Africa Research Initiative, Kenya and Ethiopia are among the largest recipients of Chinese loans to the continent. Thanks to Chinese support, it is possible, among other things, to finance the largest infrastructure project in Kenya, which has run into refinancing problems since independence – namely the railway line between Nairobi and Mombasa. The European Union and the United States have touted their own alternatives to the Belt and Road Initiative, but both schemes rely on private lenders, making their prospects uncertain. During talks in Ethiopia and Kenya, Scholz wants to discuss debt relief and China’s role in this process, the chancellor’s closest circle said.
Scholz’s African plans
Accompanied by a large business delegation, Scholz also intends to use the trip to deepen trade ties and discuss cooperation in the field of green hydrogen. Striving to secure and diversify its energy supply, Germany is betting on green hydrogen as the fuel of the future and sees sun-rich countries such as Kenya and Namibia as ideal partners to produce and sell green hydrogen to European customers using the technology and know-how of German companies. Scholz sees Kenya as another promising partner as the country already sources over 90 percent of its electricity from renewable energy and aims to reach 100 percent by 2030. Kenya has a particular interest in attracting foreign direct investment in manufacturing and food production, but is also increasing cooperation on renewable energy 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,” says Kenya’s Foreign Secretary Alfred Mutua. Mutua also told Bloomberg that the country is interested in attracting more German investors, adding that it is a promising sign that Scholz is coming to Kenya with so many businessmen. “It is important for German companies to develop economic relations with Africa,” Volker Treier told Bloomberg. , head of foreign trade at the German Chamber of Commerce and Industry. “Also because of the current geopolitical challenges, we should seize all opportunities and this must include Africa.” At the Nairobi meetings, Germany wants to refine the already advanced talks between the EU and Kenya to seal the Interim Economic Partnership Agreement – a special trade deal that would provide duty-free and quota-free access to the EU market for all Kenyan exports and partial and gradual opening of the Kenyan market. Germany hopes that such an agreement can be used as a springboard for a broader free trade agreement between the EU and the African Continental Free Trade Area, as reported by officials involved in preparation for Olaf Scholz’s African trip. Source: Bloomberg