Tuesday

19th Jan 2021

Opinion

EU's new Africa strategy misses the mark

  • Africa loses €44.bn a year in illicit financial flows, including tax evasion and avoidance by European companies. Yet the EU's new Africa strategy includes no concrete proposals to address this (Photo: Liane Greeff)

Europe is highly dependent on Africa's natural resources.

From minerals for solar panels, mobile phones, electric car batteries and wind turbines, to raw agricultural commodities, such as cocoa and coffee, securing access to these resources is crucial to sustaining economies in the Global North.

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With its growing urban middle-classes, Africa is also seen as an attractive market for European businesses. But the continent is also a source of young migrants, and Europe has been doing its best to ensure Africans remain in Africa, including by making aid and trade conditional to tighter border controls and returns.

These are some of the reasons why the EU this week published Towards a Comprehensive Strategy with Africa, setting out wide-ranging proposals for cooperation between the two continents.

The EU is right to recognise Africa as a major strategic partner.

The strategy includes a number of welcome elements, such as the focus on local food production and value addition, the importance of supporting African countries to mitigate and adapt to climate change and the importance of supporting inclusive business models.

However, the relentless support for "a comprehensive continent-to-continent free trade area" ignores the risks posed by trade liberalisation where labour, fiscal and social regulation is immensely diverse and sometimes weak.

In the same vein, by eluding the fundamental question of rising inequality in Africa, as well as between Africa and the rest of the world, the strategy misses the mark.

In most if not all African countries, GDP growth in recent years has been accompanied by a deepening gap between the rich and the poor.

The combined wealth of Nigeria's five-richest men ($29.9 billion, €26.4bn) could end extreme poverty at a national level, yet five million face hunger and more than 112 million people are living in poverty.

According to Oxfam, the combined wealth of the 22 richest men in the world is more than the wealth of all the women in Africa.

Many factors explain the rising social and economic inequalities in Africa: the heavy weight of debt, cuts to public services, widespread tax avoidance by large companies, which deprive governments of revenue they need to redistribute wealth, and the prevalence of regressive taxes at national level that disproportionately hit the poor, such as an over-reliance on VAT.

No answers

None of these challenges are effectively addressed in the proposed strategy.

Today, several African countries are spending more on debt servicing than they are on health and education combined. Many others spend the equivalent of over half of their total budget for health and education just on repaying debt.

This translates into a sharp erosion of public services such as health, education, water and sanitation, with devastating impacts on people living in poverty.

Women are particularly affected as they compensate the lack of public services by taking care of the sick and elderly, or spending hours in fetching water – without pay.

Spending all their time on unpaid care and domestic work is a major barrier to women's accessing decent work and participating in politics.

But the strategy fails to recognise this major challenge. It does not include any commitment to debt relief, or to encourage the World Bank and the International Monetary Fund not to impose draconian austerity policies on African countries as conditions attached to loans.

Africa loses $50 billion [€44.bn] a year in illicit financial flows, including tax evasion and avoidance by European companies.

This is nearly double the official development assistance that sub-Saharan Africa receives.

Revenue losses due to 'legal' tax avoidance are estimated to cost developing countries $200bn [€177bn] every single year.

Yet the strategy includes no concrete proposals to address tax evasion and avoidance, notably by European companies operating in Africa. Nor does it include a commitment to support progressive taxation in African countries, taxes that are socially just and don't hit the poor and women the most.

The EU strategy with Africa has been drafted by the European Commission, without seeking input from the people of Europe or Africa, or civil society organisations from both continents.

This may explain why what matters to people – more just and equal societies – is hardly addressed.

It's time to listen to civil society organisations and grassroots movements' aspirations for future cooperation and collaboration between our continents.

Author bio

Isabelle Brachet is EU advocacy advisor for ActionAid, where Buba Khan is Africa advocacy adviser.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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