German builders fret over China’s dominance in Africa

Contractors in Germany are considering banding together to compete with Chinese contractors in Africa because they say one company can’t compete with a state-owned company from China. It seems the Chinese state owned construction companies dominate the industry not just internally but externally as well, should South Africa replicate the Chinese model by creating a State owned construction company to revive the ailing industry?

German builders fret over China’s dominance in Africa

“We need to work more intensively together,” said Hans Joachim Bliss of the Federation of German Contractors (HDB).

“One company can’t compete with a state-owned company from China,” he told Deutsche Welle.

With loans pouring out of China’s Export Import Bank, Chinese companies are building most of the roads, ports, airports and railways across Africa.

In 2018, they accounted for 62% of the continent’s infrastructure market share, Berlin-based European International Contractors (EIC) has calculated.

German contractors complain that they regularly lose bids to Chinese competitors, who can offer bids that are lower by 20% or more because they benefit from subsidies from Beijing and preferential treatment in African countries.

According to the EIC, Chinese companies are often exempt from visa regulations and taxes, as well.

Rankling German builders further, Chinese companies profit not only from Chinese largesse, but European funding as well, as African countries borrow from European and other development banks, such the European Investment Bank and the World Bank, and use these funds to pay Chinese contractors for projects.

“We haven't found the right [Africa] strategy,” said HDB’s Hans Joachim Bliss.

According to Deutsche Welle, the German Foreign Ministry has met with industry representatives met to discuss how they could compete more effectively in Africa.

But whereas the Chinese government actively throws its weight behind infrastructure projects through its Belt & Road Initiative, German policy makers are reluctant to get involved.

“Business cannot be linked to the geopolitical strategy,” Dorothee Schneider, head of the German Economy Ministry’s Subsaharan-Africa division, told Deutsche Welle.

This article was first published here