German engineering firms should be more aggressive in selling equipment to fast-growing markets in Africa rather than leaving the field to Chinese, U.S., Italian and French rivals, trade group VDMA said.
“There are enormous raw material and energy discoveries there that allow the Africans to invest in infrastructure, in economic growth,” VDMA President Reinhold Festge told Reuters in an interview at the Hannover Messe industrial trade show.
Sales of German-made equipment to Africa rose 11 percent to 4.4 billion euros ($6 billion) last year, driven especially by demand for food and packaging machines as well as construction equipment, according to VDMA.
But that was still less than the amount the Netherlands alone spent on German machines and the Netherlands is only the eighth-biggest market for German machinery.
Some German companies shy away from doing business with Africa because trade credit insurers are often not willing to provide cover, Festge said.
“Eighty percent of all VDMA member companies have fewer than 200 employees. We cannot expect that they will go to Africa at their own expense and risk,” Festge said.
The VDMA represents more than 3,000 mainly small and medium-sized companies but also large companies such as Siemens , MAN SE and ThyssenKrupp.
Festge said the trade group was working with the German government to find ways to support companies wanting to invest in Africa.
South Africa is the biggest market in Africa for German engineering companies. Festge said he saw potential for growth in other countries on the continent including Algeria, Nigeria and Kenya as demand for agricultural equipment and machines used for energy production and water treatment grows.
The engineering sector is Germany’s largest industrial employer, with 993,000 workers.