Georg Wilfried Schmidt, Regional Director for Sub-Saharan Africa and the Sahel, German Federal Foreign Office: Interview

Interview: Wilfried Schmidt

What challenges do small and medium-sized enterprises (SMEs) face between West Africa and Europe?

WILFRIED SCHMIDT: Although German SMEs produce for markets at the national, regional and international level, most firms generate the lion’s share of their income in national and regional markets – in particular, neighbouring EU member countries. Producing for export is naturally more challenging than domestic production, as you need to understand both your local market and a foreign one – including its rules, both written and unwritten. As such, cooperating with a local partner has been a key to success for many German SMEs. An African SME would face similar opportunities and challenges when operating in Europe – particularly in terms of compliance, as the EU market is more heavily regulated.

Indeed, differing operating environments are the primary challenge to cross-border operations. Operating within the EU is less challenging than in Africa due to the harmonisation of rules and regulations, and the positive impact of solid economic and fiscal policies and the rule of law on the business environment.

African SMEs would do well to first establish themselves in their home market before testing products in other regional markets. In the context of the development of African markets – especially those in West Africa – with purchasing power on the rise, the continent’s expanding middle class is demanding higher-quality products. In short, they want value for money.

An African company that proves successful in this context is ready for a bigger challenge on the global stage, such as in the EU. To that end, the Delegation of German Industry and Commerce in Lagos is an excellent contact point for Nigerian companies that want to explore opportunities in Germany.

Which sectors in Nigeria offer the greatest opportunities for German investment?

SCHMIDT: Nigeria offers diverse investment opportunities, thanks to the country’s economic boom and the rising purchasing power of its large population. These conditions are reflected across all sectors of the economy, with growing demand for supplies and investment from abroad. Key sectors include oil and gas, energy, entertainment, IT and automobiles.

The need for improvement in the country’s infrastructure also offers investment opportunities in the construction sector and for the supply of machinery and plant engineering. Renewable energy and environmental technology are likewise on the rise, as is the country’s health care sector.

Efforts by the Nigerian federal government to diversify the economy and boost agriculture have also opened up new avenues for investment. As in other sub-Saharan economies, Nigeria has some industries that are still underdeveloped, such as chemicals or food processing and packaging. Here, too, there is strong demand for machinery and technical equipment.

How can Germany help to facilitate greater integration within the ECOWAS zone?

SCHMIDT: Germany is very conscious of the role European integration played – and indeed continues to play – in Europe’s political stability and economic cooperation. The way the EU developed is closely linked to Europe’s history and the readiness of the political leaders and citizens of member countries to give up some of their sovereign rights in exchange for closer political and economic ties among European nations.

As regional integration and cooperation is crucial for facing today’s challenges – such as economic globalisation – Germany is supporting the ongoing efforts to foster greater regional integration in Africa. To that end, the German government is financing capacity building and management programmes not only for the African Union, but also for regional economic communities such as ECOWAS. The programme is aimed at strengthening the structure of the ECOWAS Commission and reaching out to its member states. In terms of economic integration, the focal points of the German support programme are trade and public finances.