New markets don’t create themselves

Michael Krake has headed the Economic Cooperation Directorate within the German Federal Ministry for Economic Cooperation and Development (BMZ) for around two months now. The editorial team talked to him about interest-driven development cooperation – and what it means for small and medium-sized enterprises (SMEs). 

Editorial team: German interests have recently started to play a greater role in development cooperation. What does that mean in concrete terms for German SMEs? 

Krake: German interests are highly varied and can very often be aligned with those of developing countries. After all, developing countries value German quality and technology. We should capitalise on that to ensure that an appropriate share of German companies are awarded international contracts. Likewise, supply chain resilience, resource security and energy security in Germany can go hand in hand with greater value creation and more jobs in developing countries. Key future markets for sales and investment can therefore also be found on our neighbouring continent of Africa. And we will only be able to resolve the skilled labour shortage in Germany by working together with selected developing countries and emerging economies.  

Editorial team: Many SMEs say that international markets are too risky and too complex. What would you say to them? 

Krake: I am increasingly meeting SMEs which see the opportunities and not just the risks of tapping into new markets. Particularly because, from both a business and a wider economic perspective, it is becoming more important to reduce dependencies on individual trading partners. And the German SME sector already includes successful global leaders, or ‘hidden champions’, which we hope will inspire others to follow in their footsteps. Naturally, companies ultimately need to weigh up the opportunities and risks themselves. Development policy can support them in this by sharing its specialised knowledge of new markets, networks, and of course also financing. 

Editorial team: SMEs often have limited resources for international expansion. How do you ensure that small companies, specifically, benefit from development cooperation – not just large corporations? 

Krake: With the programmes that it has brought together under the umbrella of Partners in Transformation, BMZ is launching concrete projects, helping to dismantle investment barriers, and creating financing options. BMZ involves companies in this with the specific aim of working with them to reduce risks and open up new opportunities. And through advisory services, networking and access to attractive financing arrangements, BMZ also supports German companies – especially SMEs – in gaining market access in our partner countries.  

Editorial team: Many companies view sustainability requirements as an additional burden. Don’t they make it even more difficult to enter new markets? 

Krake: No. Sustainable business practices are actually a hallmark of German and European companies, and are often the key to ensuring quality, managing resources efficiently, and achieving long-term business success. It’s not usually the requirements that companies criticise so much as the work it takes to prove that the requirements have been met.   

Editorial team: Entrepreneurs often ask what specific business opportunities exist. Can you provide some specific examples? 

Krake: BMZ supports companies that want to invest sustainably in a developing country or emerging economy and expand their local operations. But that’s not all – projects with companies in BMZ’s partner countries can also use German key technologies and introduce improved product and production standards. This enables us to create real added value, for the German and European private sector too. In 2025, Partners in Transformation projects mobilised EUR 565 million in private investment – made possible by the use of public funds. This results in cooperative arrangements that open up economic opportunities while also advancing development.  

Editorial team: What would you say to an SME that is still hesitant to become active internationally? 

Krake: I would advise them to talk to successful international entrepreneurs. I find that more convincing than advice from the public sector.  

Editorial team: Critics say that development cooperation is being relabelled as economic development. What would you say to them? 

 Krake: Improving the interplay between foreign trade promotion and development cooperation does not mean that we are abandoning our core development policy mandate. Our partners in developing countries are also calling, above all, for more economic cooperation.  

Editorial team: How will you gauge whether this realignment of development cooperation is a success? 

Krake: There is probably no other area of policymaking that is evaluated as thoroughly as development cooperation. So I am certain that, in a few years, independent institutions will evaluate how successful we have been in making development cooperation more focused, strategic and partnership-based. Particularly at a time when resources are scarce, Germany is targeting its investment at areas where development policy and the private sector are working together and genuine partnerships are emerging. Working together is how we can achieve the greatest impact – both for the people in our partner countries and for people in Germany.