How can two nations work together economically

Development in Africa

Marcus Kaplan

To person

is a doctor of geography and senior evaluator / team leader at the German Evaluation Institute for Development Cooperation (DEval) in Bonn. One of his priorities is the agricultural sector in development cooperation.
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Christoph Hartmann

To person

is a graduate social economist and senior evaluator / team leader at DEval in Bonn, for which he evaluated the develoPPP.de program, among other things.
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Magdalena Orth

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is a political scientist and evaluator / team leader at DEval in Bonn. One of her focal points is financial development cooperation.
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Kirsten Vorwerk

To person

is a qualified geographer and evaluator at DEval in Bonn, for which she evaluates the develoPPP.de program, among other things.
[email protected]

The United Nations (UN) 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals (SDGs) it contains have outlined the key challenges that humanity is currently facing. [1] More and more, the international recognition is gaining ground that challenges such as poverty, economic development, climate change or migration cannot be overcome by individual states alone, but only through a joint effort by state, civil society and private-sector actors. This development is based on the idea that a dynamic private economy serves as a growth engine for economic development. A prerequisite for this are functioning state institutions that provide the political and legal framework and ensure that growth also benefits the poorest sections of the population. [2] Development cooperation (DC) has therefore made greater efforts over the past two decades to win over certain other actors for the financing and implementation of development projects: private companies and investors.

The topic is also becoming increasingly important in the development policy debate in Germany. This can be seen in the current strategy papers of the Federal Ministry for Economic Cooperation and Development (BMZ) such as the "Marshall Plan with Africa". [3] The Marshall Plan describes possible solutions how the member states of the European Union, together with the African countries, can use the potential of the African continent to promote peace and development. The priorities that are set here can only be pursued with the support of private companies and investors: fair trade, private investments, economic development from below, entrepreneurial development and the promotion of employment are central starting points. Be it developing an app for a mobile trading system for Ugandan coffee producers or building a value chain for bamboo in Ethiopia - German or international companies should help to develop sustainable solutions for the respective specific challenges.

Can cooperation with private sector actors really serve as a motor for sustainable economic development? Or, as critical voices from politics and civil society emphasize, [4] is it rather a question of promoting private companies that goes beyond the core tasks of development cooperation and is motivated by foreign trade policy? In the following, we present various forms of cooperation in German development cooperation and discuss current opportunities and challenges in working with private-sector actors to achieve development goals.

Approaches to collaboration

In the Technical cooperation the focus is on the joint implementation of projects in the partner countries of development cooperation. The projects are financed jointly by development cooperation and the respective company. Implementation, on the other hand, is carried out either only by the company or in cooperation with development cooperation. The BMZ is supporting a program in four East African countries to improve vocational training in relevant economic sectors. The close cooperation with private companies and the joint development of training activities should ensure that the training courses are tailored to the respective needs in the sectors. Certain programs such as the "develoPPP.de" program, within the framework of which more than 1,700 projects in over 100 countries have been funded since 1999, are only open to German and European companies (box). Local companies in the partner countries of development cooperation can primarily be involved in bilateral projects, that is, if a component for cooperation with the private sector is integrated into a "normal" project of state development cooperation.

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The develoPPP.de program

The develoPPP.de program is the BMZ's largest program for funding joint projects between development cooperation and the private sector. For example, a European solar company would like to open a new location in Kenya, but there is a lack of well-trained staff. The establishment of a training center in Kenya does not pay off for the solar company, which is why it is co-financed with German taxpayers' money through the develoPPP.de program. The aim is to simultaneously promote the company's goals (well-trained staff for the company) and development cooperation (well-trained staff for the Kenyan solar industry). The latest evaluations show that it often makes sense for development cooperation to work with the European private sector. *
European companies bring innovative ideas and products to the projects that are often not yet available in the country. However, it also shows that the develoPPP.de program has not yet succeeded in realizing this potential. One reason for this is, for example, that the goals of companies and development cooperation differ more strongly than assumed on superficial examination. The European company is only interested in training solar technicians for as long as it has its own needs. If this need is met, the company will cut back on training activities.

* See Christoph Hartmann / Felix Gaisbauer / Kirsten Vorwerk, Evaluation of the develoPPP.de program, ed. from the German Evaluation Institute for Development Cooperation (DEval), Bonn 2017.

One focus of German development cooperation in cooperation with the private sector is vocational training and further education. Sectors in which cooperation is often used include agriculture, energy, the environment and education, among others. One of the most important programs in recent times is specifically geared towards the agricultural sector and almost exclusively on Africa: The BMZ's special initiative "ONE WORLD without Hunger", launched in 2014 with its "Green Innovation Centers in the Agricultural and Food Sector", aims, among other things, at: to involve private companies and other partners from civil society and business in the transfer of knowledge and technology or the establishment of reliable business relationships. The African continent has a very high agricultural potential, but at the same time it has to struggle with many problems - for example, hunger and malnutrition are widespread in many African countries due to low agricultural productivity and high population growth. [5] In addition, the agricultural sector in Africa cannot adequately exploit its enormous economic potential. That is why 13 of the 14 innovation centers were set up in Africa. In Tunisia, for example, milk production is to be increased in cooperation with a Tunisian agricultural company and the entrepreneurial skills of smallholders are to be strengthened. In Mali, German development cooperation is working with a German group to improve the quality and productivity of the mango value chain.

In addition to the implementation of individual joint projects, various partners from the state, civil society and the private sector come together in so-called multi-actor partnerships in the long term, primarily to address overarching challenges for specific sectors or specifically for individual products. The focus here is often on questions of ecological and social sustainability. Examples of this are the Global Coffee Platform or the Alliance for Sustainable Textiles. As part of the Global Coffee Platform, for example, the Kenya Coffee Platform was founded in July 2018, the aim of which is to strengthen the productivity and sustainability of this economically very important product and generally to improve the cooperation between all those involved in the Kenyan coffee sector.

In order to better inform European companies about opportunities in developing and emerging countries, the BMZ founded the Agency for Economic Affairs and Development in 2016 - it is to serve as a central entry portal to inform companies about the possibilities in the "funding jungle" of development cooperation. In addition, the agency advises companies on questions of sustainability and the implementation of the National Action Plan for Business and Human Rights, which came into force in 2016.