Tuesday

23rd Jan 2018

Analysis

EU-Africa relations: from 'handouts' to 'hands on'

  • What does the future hold for EU-African relations? (Photo: World Bank Photo Collection)

It was sadly inevitable that the crisis in the Mediterranean, which has become a cemetery for thousands of would-be migrants seeking to escape north Africa for Europe, dominated the annual meeting of African Union leaders and their EU counterparts in Brussels on Wednesday (22 April),

On Wednesday, Italian prime minister Matteo Renzi told his national parliament that the EU should assume "a greater role in Africa". Renzi was talking about migration as well - telling the Senate that the EU “must intervene in Nigeria, in Sudan, to the south of Libya,” to wage war against human traffickers - but the statement applies more generally to EU-Africa relations.

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The question is what that role should be.

The EU’s main role in recent years has been as an investor and trading partner. The bloc has promised to invest nearly €40 billion into the African continent between 2014 and 2020. It is also bidding to conclude regional and bilateral trade deals, known as economic partnership agreements (EPAs).

The international community is also about to begin negotiations to agree new targets to succeed the Millennium Development Goals which expire at the end of 2015.

Finance ministers will gather in Addis Ababa, Ethiopia in July, to decide how to finance the successors to the Millennium Development Goals (MDGs), which aimed to halve the number of people living in extreme poverty and dramatically increase access to education by 2015.

The new development framework will then be agreed at a UN summit on sustainable development in September.

The headline goal from 2000 to reduce the number of people living in extreme poverty by 700 million compared to 1990-levels was met in 2010, while a host of other targets on improving access to education and health have been met or nearly met.

But European governments have failed to live up to their commitments for development spending. Aid budgets were one of the first victims of austerity-driven budget cuts adopted by most EU countries over the past five years. As of 2014, only four EU countries - the UK, Luxembourg, Sweden and Denmark - met the 0.7 percent target, while the EU average stood at 0.43 percent. The 0.7 percent target, agreed by the world’s wealthiest countries at the UN, is unlikely to be met any time soon.

The European Commission, not to mention African countries themselves, is keen to move away from old-style aid handouts towards investment in infrastructure financed by soft loans and grants.

For the EU, this means a more active role for private companies in development policy, and a combination of public and private money to fund infrastructure projects in developing countries, a process known as ‘blending’.

In this process, grant money is used to subsidise the terms of loans to make what would be otherwise expensive terms, more attractive and affordable for governments. This use of development cash unlocks money that otherwise would not be available. The size of these soft loans are often four times greater than grant money alone

This approach is characterised by the EU’s mission in Kenya, one of the bloc’s largest operations in Africa, which has a number of projects in the energy and infrastructure fields where it has partnered up with the Kenyan government and local businesses.

Meanwhile, the European Investment Bank has pumped several hundred million euros into wind-farms and geothermal energy projects. Another €900 million project to establish a bus transit network in Kenyan capital Nairobi, also involving the World Bank, French and German development banks, will see the Commission contribute a €20 million grant alongside a €100 million EIB loan.

“There’s no country in Africa where we’re not active,” Erik Habers, head of development at the EU mission, tells EUobserver, and the evidence is compelling that partnerships of equals are the best way for the EU to engage and work with African governments.

Elsewhere in the region, the EU has pumped €10 million into a newly created Energy Access Fund aimed at investing in companies offering energy products to the 60 percent of sub-Saharan Africans who live off-grid.

The need for aid is not going to disappear any time soon. Sub-Saharan Africa, in particular, may be one of the fastest growing regions economically in the world - the World Bank expects average growth rates of between 4.5 and 5 percent between now and 2017 - but the presence of extreme poverty remains high.

Alongside the investment in new roads, buildings and renewable energy, Habers tells this website that the EU runs projects to vaccinate and improve the management of livestock and provide basic crop insurance in Kenya’s remote farming communities.

“Blending is not going to completely replace grants,” he says.

This ‘hands on’ rather than ‘handout’ approach is a more effective development tool. Not only that, but partnership is clearly the only approach that can successfully combat crises of migration or terrorism, and form the basis for fruitful relations.

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