A Marshall Plan with Africa

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Hints to a Memorandum* of Club of Rome and Senate of Economy Germany,

which has been handed over to the German Government on 11 November 2016

F. J. Radermacher

* The memorandum „Migration, Nachhaltigkeit und ein Marshall Plan mit Afrika – Denkschrift für die Bundesregierung“, a short version and a companion volume may be downloaded from the following

websites: http://www.faw-neu-ulm.de, http://www.senat-deutschland.de/, http://www.senatsinstitut.de/, http://www.clubofrome.de/ and http://www.clubofrome.org/.

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ü Must the African population double by 2050 and quadruple by 2100 before we act? No. Here we should immediately take action, e.g. in the form of co-operation in the development of social systems in the countries that are involved and contribute in the fields of education and training as well as with respect to the social role of women. Jobs for youth need to be created on a large scale. All this counteracts the population explosion.

ü For Africans, we Germans only invest about 2 Euro per year for development. Within the framework of German reunification, the transfers per capita to the new Länder amounted to € 4,000 per year. The care of a minor unaccompanied refugee in Germany costs about 5,000 euros per month, i.e. 60,000 euros a year, which is 30,000 times the 2 euro amount. In return for the modest help we provide, we are picking up trade from the African countries. We also tolerate an international financial structure in which elites "park" money from Africa in taxpayer's paradises. We again benefit from this. Obviously, sustainable development for all cannot be achieved this way.

Statements

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Statements

ü Funds for Africa should be allocated to the fields of renewable energy, infrastructure construction and reforestation. There are great opportunities for Africa and the world. Above all, the Sahara is a real "Joker". It is important to use the available potential in Africa and parts of the Middle East for grid-based renewable energy (sun, wind and water; sun especially in the deserts). They are an essential prerequisite for promoting prosperity on the ground. The use of resources in agriculture, in conjunction with massive afforestation programs, is recommended and has great potential for economic and social development. Afforestation will detract huge amounts of CO2 from the atmosphere (negative emissions). Afforestation is a key to the promotion of 12 of the 17 sustainability goals of the global community under Agenda 2030 in Africa.

ü We propose a "Fund Future Africa", which could be presented at the EU-AfricaSummit in 2017. On the German side, this fund is proposed to cover a total of 120 billion euros through 2030. The funds can be collected in large parts over the financial market, thereby opening up interesting investment opportunities for interested parties.

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ü The Marshall Plan with Africa needs to be combined with a HumanitarianProgram for Refugees in Need and for Qualification-oriented Immigration.

ü Investments for better life prospects of people living in Africa are not only much more cost-effective than the use of social-state funds in Germany for refugees from Africa - everything that gives people an incentive to shape their future in their own country also much more respects the dignity of those affected.

Statements

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Positioning

ü The “Future Africa Fund” could be initiated by Germany and announced at the G20 summit or at the scheduled EU-Africa summit, respectively. It should be an EU fund that is being managed together with African partners. The fund is aimed at the implementation of Agenda 2030, a major economic boom in Africa and in the MENA region and stable, secure neighbours around Europe, in terms of safe third countries.

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Volume

ü The German contribution will start in 2017 with a volume of € 3 billion (1 billion in 2016, 2 billion in 2017). Thereafter, the deposit amount increases annually by one billion; the deposit amount per year would achieve 1.5 billion in 2030, a maximum that should be kept constant until further notice.

The sum of German contributions up to 2030 is 120 billion.

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Method of Appropriation

ü The fund will be partly spent as outright grants, particularly supporting the buildup

of social systems, partly they will be used as rolling investive posts such as

collateral, loans and microcredits, which, ultimately, always flow back to the fund

and can then be investigated again. The fund must partially make commitments

over many years and has to cope with a high volatility. Therefore, an approach is

needed, which is not dependent on annual budgetary decisions.

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Acquisition of Means

ü The "Fund Future Africa" can be largely financed through the issuance of bonds,

which means that the raising of financing can be transferred in larger parts to the

private sector, i.e. interested investors. Investors would be offered interesting new

investment options. When pursuing appropriate investment strategies involving

African partners, Africa offers enormous potentials that are attractive to the

financial markets and can be designed to benefit all stakeholders. The market is

waiting impatiently for good opportunities. The funds for the financing of social

systems (about 50% of the fund volume), which are awarded as lost grants, could

be procured by the government through guaranteed debt securities at conditions

similar to those of government bonds. The state guarantee is decisive for the

customers. With the holding of the papers an additional CSR dimension can be

opened up for the donors.

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ü The other half (initially 60 billion) would be used to stimulate entrepreneurial

activities, such as infrastructure construction or business development. In this

case, the fund generates surpluses over long periods. The state could place this

part in such a way that it assumes the important main risk tranche of, for

example, 20%. For the remaining funds of a total of 48 billion euros, two risk

classes should be provided which contain different returns for private investors. In

the riskier tranche, the interest rate could be 2% above the interest rate of

German government bonds, in the safest tranche 1% above. The state should

guarantee the interest rate over the entire period. This could be an interesting

offer for many investors.

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Fund Future Africa

Fund Future Africa

(blocks colored in grey will be generated via the capital market)

Objective of input of means:

social stabilization(60 billion €)

Objective of input of means:

investments, infrastructure, enterprises(60 billion €)

obligations(interest as for German federal obligations)

+ CSR dimension

low risk(interest 1 % above interest for German federal obligations / guaranteed by the German state)

+ CSR dimension

40 %

increased risk(interest 2 % above interest for German federal obligations / guaranteed by the German state)

+ CSR dimension

40 %

risk tranche (highest risk) will be held by Germany 20 %

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Governance

ü The fund needs to be professionally managed. In addition to the German side,

the World Bank, the EU, the African Development Bank and the African Union

would participate in the supervisory bodies with the aim to bundle the investment

chances in Africa.