Cluster for Economic Research on Africa

In the German public's perception, Africa is still a continent of crises, while other geopolitical actors see opportunities and are committed to expanding their economic relations with Africa. The opportunities in Africa lie both in the untapped potential, e.g. for private sector involvement, and in the steadily growing and increasingly well-educated African population.

However, a clear identification of risks is also necessary to make informed policy and business decisions. It is only with a realistic assessment that companies can make informed decisions about entering a market, or that policies can be developed to deal effectively with existing barriers. Risks do not only exist at the country level, as the COVID-19 pandemic and the Russian attack on Ukraine have shown. For many companies, supply chain diversification will have to play a greater role in the future if they want to minimize global risks and reduce strong dependencies. This creates new opportunities for suppliers in African countries in the energy, manufacturing and services sectors.

To date, however, there has been little economic research dealing specifically with business decisions, trade and investment policies, and the macroeconomic framework (growth, stability, public revenue, and debt) in Africa. In the first phase of the project, the Cluster for Economic Research on Africa has already successfully begun to address these issues and to lay the foundation for significantly expanded economic research on Africa in Germany, for example by compiling new databases.

The second phase of the Cluster builds on this work and focuses on three overarching themes:

1. The corporate level with a special focus on potentials and entrepreneurial activities in African markets. The focus is on the identification of decision-making and success factors for African and German companies active in African countries. Digitalization and technology play an important role.
2. Investment and trade in and with African countries and the underlying policy framework. Market size, skilled labor potential, and trade policy regulations are among the topics we analyze. Other areas of interest include business-to-business trade and investment networks, looking at local and global value chains, and intra-network technology transfer.
3. Issues of macroeconomic development, stability and public finance in Africa. An important component is the identification of countries with particular growth potential. The realization of potential depends, among other things, on government investment, for example in education and physical infrastructure. This requires substantial resources that need to be financed. We therefore focus on the revenue situation of African countries as well as on the issue of debt.