Handelsblatt Global Edition

GLOBAL EDITION
NO.
25 FEBRUARY 2015
GERMANY’S LEADING BUSINESS AND FINANCE DAILY, FOUNDED IN 1946
TOGO REPOR
REPORT
T
Reconnecting With West Africa
In a former African colony once the province of Prussian
engineers, German businesses are resurfacing, lured by
political stability, a growing economy and the fruits of
123
WHY IT MATTERS
After a decade of political
instability, German
businesses are gradually
returning to Togo, a former
Chinese labor.
colony in west Africa,
attracted by the country’s
BY SARAH MEWES
economic growth, and
inexpensive natural
resources and labor.
FACTS
In the 1990s and early
2000s, German companies
left Togo as the political
climate deteriorated.
Companies such as
HeidelbergCement have
returned, betting on
growth, natural resources
and affordable labor.
A worker sweeping limestone aggregate at a HeidelbergCement factory in Tabligbo, Togo.
Source: Sarah Mewes
Lomé, TOGO — When Heinrich Walbröl went to the Atlantic coast
harbor of Lomé to pick up the German beer he planned to sell in the
west African republic of Togo, he was met with an exuberant smile from
the Togolese tax collector: “Thank God, the Germans have returned!”
Togo’s GDP is expected to
grow by 5.7 percent this
year, up from 4.1 percent
five years ago.
Mr. Walbröl sells Paulaner, a beer made by an iconic Munich brewer,
which is one of several German firms now returning for investment
opportunities to a country the size of Bavaria or West Virginia about
600 kilometers (372 miles) north of the equator.
Togo, along with Cameroon, Namibia and Tanzania were once German
colonies. Many were established under ruler Otto von Bismarck, who
ordered the construction of the railroads in 1887.
Germany lost all of its African colonies after World War I.
But business ties persisted over the next century until 1993, when
German businesses and institutions began leaving to avoid the rule of
former president Gnassingbé Eyadema, who from 1967 to 2005 held the
dubious distinction of being Africa’s longest-ruling dictator.
Today, Togo, with 7 million inhabitants and one of the poorest countries
on the continent, still bears signs of its time as a German colony from
1884 to 1914 – the old Prussian-era railways, once built to transport
rubber, palm, cotton and cocoa, are still in use.
The elders in Tomefa, a village outside the Togolese capital of Lomé, throw palm wine on the
ground to welcome guests attending the opening of a school built with €35,000 in donations
from the German government and private individuals. Source: Sarah Mewes
But now, the wagons transport cement to neighboring Ghana, its
English-speaking neighbor.
The rebirth of Togo’s cement industry is one of the most concrete signs
of the return of German investment. The new factory, two hours north
of Togo’s capital in Tabligbo, cost its owner HeidelbergCement €200
million, or $226 million, to build. The German company used Chinese
laborers to build the factory. The cement maker is also building a
limestone processing facility 600 kilometers north of the capital in Kara.
The Tabligbo factory produces clinker, the main ingredient in cement.
Togo used to import limestone from Scandinavia, among other places.
But then HeidelbergCement found limestone north of the capital on a
sparsely populated stretch of red sand plain, enabling it to make cement
in a single location.
This is a huge cost-saver, said Andreas Schaller, a spokesman in
Heidelberg, Germany, at HeidelbergCement, which operates under the
local name Scantogo.
The German company decided to invest millions in Togo because it
believes the country is on a path to growth. A good indicator is Togo’s
GDP and high birth rate, Mr. Schaller said.
For 2015, the International Monetary Fund expects Togo’s GDP to rise 5.7
percent. In 2014, the country had the 29th highest birth rate in the world,
according to the U.S. Central Intelligence Agency’s website.
Chinese workers helped build HeidelbergCement’s new factory north of the Togolese capital,
Lomé. The Chinese government is financing the construction of Lomé’s new international
airport and a new air carrier, ASky. Source: Sarah Mewes
“We firmly believe that the phase of industrialization is on its way in
West Africa,” Mr. Schaller said. “We plan long-term and are looking for
investments to bear fruit in the next 30 to 40 years.”
More people need more infrastructure and housing, which requires
more cement.
Togo is one of the few countries in its region that is growing quickly.
Mr. Walbröl, the Paulaner beer distributor, said the country’s optimal
geographic position and coast made Togo a good place to set up a beer
distributorship.
“Togo is centrally located in West Africa,’’ Mr. Walbröl said. “The port is a
huge asset.”
There is a growing middle class in Togo, he said, who want to drink beer.
About 51 percent of the population hold indigenous religious beliefs, 29
percent are Christian and 20 percent are Muslim.
“Although there are no statistics, I notice families eating out, shopping
lavishly at the big supermarkets here and driving expensive cars,” he
said.
But his entry into the Togolese beer market wasn’t easy. After he began
selling his beer to supermarkets in Lomé, the supermarkets suddenly
stopped buying Paulaner from him.
Mr. Walbröl said he never received a formal reason from the
supermarkets. He suspects that the other major beer supplier in Togo,
the French brewer Castel, may have pressured the retailers to drop his
products, but he can’t prove it. He is now supplying restaurants and
hotels instead with the famed Munich wheat beer.
The Chinese and the French already have a strong market presence in
Togo, competition that is hard to beat, as in the case of Paulaner and
HeidelbergCement.
A waterfront scene in Lomé, the capital of Togo in west Africa. Commercial freight ships are
increasingly docking in Togo to avoid pirates in neighboring Benin and Nigeria. Source: Sarah
Mewes
The Chinese are known to be efficient and inexpensive at building
infrastructure, but some see opportunity for German quality, which is
still in demand more than a century after colonial rule.
“Everyone wants to work for a German company,” Mr. Walbröl said in an
interview at his beer distributorship in a one-story yellow-and-gray
cinderblock building with a thatched patio near the waterfront in Lomé.
“I had people queuing in front of my door when I opened my shop,’’ he
said.
Stefan Liebing, the chairman of the German-African Business
Association in Berlin, a group that coordinates trade relations, said
Africa is becoming an increasingly interesting location for
foreign businesses as economies on the continent grow.
“The business climate has improved notably compared to the past year,”
Mr. Liebing said.
About a third of the association’s members with operations in Africa
said they expect revenues to rise, and half expect revenues to stay the
same.
Carla Nickel, a spokeswoman at the German-African Business
Association, said Togo has “passable infrastructure,” including Lomé’s
planned new airport, which is being paid for and built by the Chinese
Export-Import Bank, as well as a new regional airline, ASky.
But Togo, despite the optimism and foreign money, faces significant
obstacles.
A beach scene in Lomé. Source: Sarah Mewes
Although the country has had no recorded cases of Ebola, it is being
negatively affected by news coverage of the epidemic in nearby Liberia
and Sierra Leone. The country has installed warning signs and handwashing machines in many public places.
Ironically, language is still an issue in the former German colony, which
for most of the 20th century until 1967 was ruled by France.
A German businessman, Heinrich Walbröhl, has begun importing Paulaner, a Bavarian wheat
beer, into Togo. Source: Sarah Mewes
German companies in Togo often lack French-speaking staff, which
makes it difficult to set up in Togo, where French is the only official
language.
The other stumbling block are national elections to be held sometime in
the first half of this year. The country has been ruled since the death of
the old dictator by his son, Faure Gnassingbé, whose Union for the
Republic party is the dominant political force in the country.
Beads at a shop in the Togolese capital. In Togo and some other African countries, women tie
beads around their waist to keep track of their weight. Source: Sarah Mewes
Investors will be watching to see whether the political climate under the
current president stays stable.
Lomé is also increasingly being used as a haven for commercial
shippers, who are taking refuge from sea-faring pirates operating from
nearby Nigeria and Ivory Coast. On a recent day in January, the vista of
the waterfront at the Boulevard de la République in Lomé was dotted
with dozens of large, ocean-going cargo ships parked off the coast.
Mr. Walbröl, the beer distributor who grew up in Cologne and moved to
Togo in 2010, hopes more of his countrymen join him. For one thing,
that would mean more beer drinkers. But personal interest aside, Togo
has its charms.
“You can’t experience this kind of freedom in Europe,’’ he said.
Sarah Mewes is an editor at Handelsblatt Global Edition. A native of
Berlin, the author spent most of her childhood in Togo, where her
parents worked for a German international development organization
now called the Gesellschaft für Internationale Zusammenarbeit or GIZ.
To contact the author: mewes@handelsblatt.com
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unearthing-german-roots-in-west-africa
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