EU Urged to Spearhead Major Investment Drive in Africa Amid Rising Challenges

In a bold call to action, the think tank Friends of Europe has advocated for an "unprecedented" EU investment strategy in Africa, spotlighting the continent's urgent need for support amid its persistent image problems. Giles Merritt, the organization's founder, highlights the critical prejudice against African nations concerning corruption and inefficiency, stressing the necessity for a drastic change in perception and approach.

Unveiling Africa's Investment Paradox

Despite African companies' desperate need for investment, a significant obstacle remains: the scarcity of "bankable projects". This issue is rooted in a cycle of insufficient infrastructure, declining living standards, and stagnant productivity growth. The Friends of Europe report draws attention to the International Monetary Fund (IMF) and the World Bank's proposals, including IMF chief Kristalina Georgieva's suggestion for G20 countries to reallocate a fraction of their Special Drawing Rights (SDRs) to bolster funding for African initiatives. This move could potentially double the financial support available to the continent's low-income countries.

The Financing Gap and International Dynamics

The African Development Bank has identified a widening gap between the financial needs of infrastructure projects and the available funding, with only $50 billion annually allocated against a $170 billion requirement. The comparative analysis of remittances from Africans working abroad before the COVID-19 pandemic and the official development aid received by Africa underscores the inadequacies of current financial inflows. Merritt posits that while the EU alone cannot bridge this financial gap, it possesses significant planning and mobilization capabilities that, in collaboration with member states' private sectors, could foster a robust European strategy to support Africa.

Seizing a Strategic Opportunity

As global dynamics shift, with the US adopting a more inward-looking stance and China facing financial challenges in its Belt and Road and Global Development initiatives, the EU stands at a crossroads. The continent has a golden opportunity to assert its global role and leadership in supporting Africa, particularly in the aftermath of the COVID-19 pandemic and the ongoing Russia-Ukraine conflict. Merritt emphasizes the strategic importance of Africa to Europe, urging a reevaluation of traditional development approaches in favor of a substantial investment plan. This call to action is not only a matter of addressing Africa's immediate needs but also securing long-term strategic interests for European citizens.

The proposed investment strategy by Friends of Europe serves as a clarion call for the EU to redefine its engagement with Africa. By addressing the continent's financing gap and leveraging its planning and mobilization capacities, the EU has the potential to lead a transformative investment drive. This initiative could pave the way for a renewed partnership between Europe and Africa, one that transcends traditional development aid and positions both continents for mutual growth and prosperity.