Important instruments of bilateral economic relations include the joint economic commissions and cooperation councils, and the working groups on commerce and energy of the binational commissions agreed on by the governments of the partner countries. In this context, “joint” signifies that representatives both of the governments and of the business community (business associations, companies) participate in the regular events. The bodies work to promote trade in goods between the economic partners, to intensify mutual investment relations, and to boost technology transfer.

Pro! Africa initiative An equitable partnership on an equal footing

One of two focal areas for Germany’s G20 Presidency was Africa, a continent of opportunities. The Pro! Africa initiative presented by the Federal Ministry for Economic Affairs and Energy on 4 May 2017 is to support economic development in Africa, strengthen sustainable growth, and pave the way for greater cooperation and private-sector involvement. To this end, Germany’s tried and tested instruments to promote foreign trade and investment will be deployed, political cooperation deepened, and successful funding programmes opened up to Africa. A total of €100 million is to be made available for this purpose.

Business councils and business forums

In addition to the joint economic commissions and cooperation councils agreed between the governments, there are also many bodies organised independently by the business community. Many of these take the form of business councils or business forums (cf. Federation of German Industries).

High-level advice for policymakers commissioned by Economic Affairs Ministry

German advisory teams are working on behalf of the Economic Affairs Ministry in Ukraine, Moldova, Belarus and Georgia to draft specific recommendations for action by high-level decision-makers. Their primary task is to provide continuous support and guidance to economic reform processes in these countries. Their work is demand-oriented, they collaborate closely with leading national research institutions and international organisations, and they provide unbiased analyses of current economic policy problems. The main focus of the high-level advice for policymakers is on monetary and exchange rate policy, debt management and the prospects for the development of the private sector, and particularly of SMEs. Since 2007, the project’s mandate has been expanded to included targeted promotion of foreign trade and investment and wide-ranging public relations work.

More and more SMEs are venturing abroad. They particularly want to develop and secure new markets. And the statistics show that they are successful: sales abroad by SMEs rose by 44.9% between 2000 and 2016, to €208.2 billion. Companies wishing to succeed by selling niche products abroad have particularly good prospects: Germany has 1,300 hidden champions – small and mid-sized world market leaders in the fields of electrical equipment, mechanical engineering and industrial products.

The main driving force for success on foreign markets is always the company’s own efforts: They need to be able to rely on a good product, a promising strategy and reliable financing.

A wide range of support for companies

The Federal Ministry for Economic Affairs and Energy supports German firms in a variety of ways: e.g. in the form of trade policy measures which facilitate access to foreign markets. In particular, the ministry offers services to help companies develop foreign markets along the entire chain of export business.

The market development programme is targeted at SMEs in all sectors; the export initiatives (for energy, environmental technology, healthcare, civil security technologies) focus on specific industries. These services are now better coordinated, in terms of both content and structure, and can have a more targeted impact. This combined strength can also be seen in the new brand “Mittelstand global”. It brings two approaches together: on the one hand, the horizontal SMEs market development programme and export initiatives in key forward looking fields like green technology, healthcare and civil security. On the other hand, the sector-specific Energy Export Initiative which promotes the market potential of German energy technologies abroad.

The right module for everyone

The Economic Affairs Ministry’s promotional measures provide SMEs with the help they need as they target foreign markets. The services include:

• advice on the main steps to take before engaging in international business relations
• sector-specific information on target segments abroad
• specific contacts with international business partners
• showcases in Germany and abroad which enable SMEs to present their goods, products and services to an expert audience.

By concluding bilateral investment treaties with developing and emerging economies, the Federal Government creates a stable environment for German foreign direct investment. The treaties furnish the investors with comprehensive legal protection for their investments under international law and make it easier for SMEs in particular to develop foreign markets. Also, they form the basic precondition for the assumption of federal guarantees for German foreign direct investment in order to provide coverage against political risks.

On 5 November 2016, the Federal Government adopted key points for a new export strategy. The aim of the measures is to strengthen the competitiveness of German companies bidding for strategic large-scale projects abroad. As a first step, life was made easier for exporters needing to insure high volumes of services/quantities of parts supplied to projects abroad.

The instruments of AKA Bank, KfW-IPEX and DEG - Deutsche Investitions- und Entwicklungsgesellschaft m.b.H. are available to finance exports and projects abroad.

Export credit guarantees (Hermes insurance)

State export credit guarantees are available to all German exporters as well as to the banks financing these exports. They can be used to insure against default on repayment claims due to economic and political reasons, with the exporting company paying a premium commensurate with the risk. Export credit guarantees do not contain any funding, i.e. monetary grants or subsidies.

Export credit guarantees supplement the products provided by private credit insurers. They are especially called upon in cases where the private sector does not offer any (adequate) insurance cover. These especially include exports of goods and services to emerging and developing economies. Export credit guarantees particularly help SMEs to tap hard-to-access markets and to carry on doing business even when times are difficult.

Investment guarantees

On application, the Federal Government provides guarantees for investments by German-based companies in developing and emerging economies and former countries in transition in order to insure them against political risks. The investment must be eligible for assistance and enjoy adequate legal protection. Commercial risks are not covered.

Guarantees for untied financial loans

Guarantees for untied financial loans are an integral part of the Federal Government’s Raw Materials Strategy. They provide cover for loans from financial institutions based in Germany (and, upon certain conditions, also from foreign banks) for raw materials projects, protecting against the risk of default on repayments for commercial or political reasons. By doing so, they make an important contribution to ensuring that the Federal Republic of Germany is supplied with the raw materials that it needs. Untied financial loans are not tied to German supplies or services, but are rather project-based.

It was against this backdrop that the Federal Ministry for Economic Affairs and Energy commissioned a study that is to provide an assessment of how German companies fare when they want to engage in major international projects in the fields of construction, machinery and plant construction, railways, planning and consultancy, and electronics and electrical engineering. The study found that a fresh impetus is required to improve the competitiveness of German companies wishing to become involved in major strategic projects abroad. You can find the study (in German) here.

The study backs up the Federal Government’s Strategy Paper entitled “A fresh stimulus for tenders for major strategic international projects – improving Germany’s chances” (in German). In particular, the key points set out include the following measures:

• the political backing of projects in the strategic interest of the Federal Republic of Germany is to be better coordinated.
• better use is to be made of the existing instruments to promote foreign trade and investment, and these instruments are to be supplemented in certain cases,
• in individual cases, the instruments to finance strategically relevant projects are to be supplemented via large low-interest loans,
• the international initiatives for a further development of export financing rules are to be intensified.

New office for "Strategic Projects Abroad"

The Office for Strategic Projects Abroad is based in the Directorate-General for External Economic Relations of the Federal Ministry for Economic Affairs and Energy, and aims to work closely together with the relevant companies and business associations. It is supported by the Federal Government Coordinator for Projects Abroad in the Strategic Interest of the Federal Republic of Germany, Dr Ulrich Nussbaum. An interministerial committee has been set up to coordinate issues relating to the strategic importance of specific projects.

As one of the world’s leading purchasers, the United Nations buys goods and services worth more than USD 17 billion each year. The main procurement centres are New York, Copenhagen, Rome and Geneva, and the procurement takes place decentrally by the various UN agencies.

It is divided fairly equally between goods and services. The leading goods bought by the UN are pharmaceutical products, foodstuffs and construction services, and the main services used are in the field of transport, technology and administrative services. The bilateral chambers of commerce in New York, Copenhagen and Milan (for Rome) offer comprehensive support to German firms bidding for international contracts.

In New York and Geneva, staff at the permanent representations to the United Nations (staff seconded from the Economic Affairs Ministry) are also responsible for procurement issues. They stay in contact with the relevant UN offices and are available as a contact for German firms.

World Bank Group

The International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID) are jointly known as the World Bank Group. The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) form the World Bank in the narrower sense. Their main task is to promote economic and social progress in developing countries in order to help people live better lives.

Every year, the World Bank provides funding worth approximately $40 billion to projects in developing and emerging economies. Up to 100,000 contracts are concluded with the private sector every year.

The World Bank’s website provides further information about the procurement procedures. Further to this, the liaison office of the Federation of German Industries and the Association of German Chambers of Industry and Commerce in Washington, D.C. (RGIT) has published the brochure (PDF: 680 KB, in German) on its website.

Regional development banks and other organisations

Regional development banks offer further business opportunities for German companies. Their aim is to promote economic and social development. They include the following:

• African Development Bank (AfDB)
• Asian Development Bank (AsDB)
• Asian Infrastructure Investment Bank (AIIB)
• European Bank for Reconstruction and Development (EBRD) /
• European Investment Bank (EIB)
• Inter-American Development Bank (IDB)
• Caribbean Development Bank (CDB)
• International Fund for Agricultural Development (IFAD)
• Organisation for Economic Cooperation and Development (OECD)
• International Atomic Energy Agency (IAEA)