European and Chinese investments in Africa

What is the current situation with regard to the economic development aid in Africa?

When it came to investments in Africa, the EU promised a lot but delivered little. Now however the EU wants to change its approach: an investment campaign is planned that should generate more than € 44 billion by 2020. Nevertheless the EU is not the only one to invest in Africa but it is competing for influence with China. President Xi promised to invest € 51.6 billion, of which € 15 billion should serve as mere financial aid and interest-free loans.

China’s investments are only tied to the condition that the loans must come from Chinese banks. Therefore experts critically accentuate China’s debt-heavy investment policy that is aiming at increasing its influence by driving African countries into a debt trap. China however dismisses the accusations by emphasising the fact that it would not, in contrast to the EU, lay down neither constitutional nor political conditions. More precisely, the Cotonou Follow-Up-Agreement contains inter alia possible sanctions for governments with a poor human rights record. This would mean, the African states would have to reform their political system in order to receive the necessary loans. For this reason the Chinese offer seems more attractive to African governments.

Although the EU is well aware that Africa should not be left to China, it still has problems developing a coherent Africa policy. The main problem appears to be the relatively small budget in comparison to China. For this reason a fair number of EU member states want to launch individual initiatives with Africa. The German government for instance calls for ramping up private sector investment in the continent. Likewise the European Investment Bank (EIB) tries to focus on the expansion of infrastructure in order to boost the development of the private sector. Experts however bemoan the fact that the planned EU investment would only serve one objective: long-term migration control. As a consequence this would push important subjects like the development of energy capacities and the industrialisation of agriculture into the background.

The Croatian EU Commissioner Neven Mimica sees Africa as a great opportunity for the EU as well as a great danger that should not be underestimated. In his opinion, the EU must fully exploit the trade potential with Africa by increasing the investment. Gerd Müller, the German Development Minister, criticised only recently that the current European investment would not move Africa forward.

Despite everything the EU tries to strengthen its position in Africa. Hence the Commission plans to conclude a comprehensive free-trade agreement in order to further support and boost the economic development in Africa. Furthermore the EU Commission President Jean-Claude Juncker promised over 10 million jobs in the next five years, more Erasmus grants for Africans and to connect the hometowns of over 24 million people to the road network. The EU foreign policy chief Federica Mogherini points out that the EU wants to distance itself from the idea of a “donor-receiver”-relationship and thus targets an equal partnership. In the interim, however, the primary objective is to create a good investment climate in Africa.