Wolfgang: Africa poses biggest geopolitical risk

Durban – Africa – and not Brexit, or a new US presidency under Donald Trump – poses the biggest geopolitical risk, said German Finance Minister Wolfgang Schäuble during a panel discussion at the World Economic Forum (WEF) on Africa.

Schäuble was part of a panel discussion on the economic growth outlook on the second day of the three-day Forum, which took place in Durban this week. 

The moderator of the session, Bronwyn Nielsen, editor-in-chief of CNBC Africa asked the German finance minister to elaborate on geopolitical risk in light of recent international events, such as the Trump administration, the UK’s decision last year to leave the European Union (EU) and elections in France. 

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“With all due respect,” Schäuble responded, “changes as a result of what happened in the US and with Brexit are not a major political risk.

“In Africa on the other hand there is a widening gap between rich and poor and if that isn’t fixed we face major political trouble. There are millions of migrants leaving the continent in the face of hunger and other national catastrophes and Islamist terrorism. 

“We have to engage as a global community on these issues. If we fail to stabilise the African continent we’ll face increasing geopolitical risk,” the minister said. 

Compact with Africa 

For this reason, he added, a new “Compact with Africa” was established at the G20 meeting of finance ministries and their officials that was held in Baden-Baden, Germany in March this year. 

READ: G20 meeting: Global recovery only 'moderate, weaker than desirable'

Schäuble explained that through this “compact” the G20 wants to help African countries to attract more private sector investment. 

A framework is provided to all African countries to present their plans for investments. According to Schäuble the finance ministers of Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia have already submitted their plans. 

“I want to stress that the “Compact with Africa” is open to all African countries, but these ones are the pioneers.” 

Africa must be 'self-reliant' - Gigaba

Finance Minister Malusi Gigaba, who was also part of the panel said though that Africa needs to be self-reliant when it comes to infrastructure funding. 

READ: Infrastructure the key to unlock growth in Africa 

“We need African countries to increase their own revenue basis and collect revenue efficiently in addition to foreign investments. And we must fund our own infra investments.” 

Gigaba acknowledged that intra-Africa trade, which is extremely low – between 11% and 17% - needs to be improved upon. 

“We can’t be too reliant on outside funds,” Gigaba said, “we should generate revenue among ourselves.”