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China and Europe: the scramble for Africa?

Video guest: Josephine Mwangi

April 2019
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Friday, 07 September 2018

China and Europe: the scramble for Africa?

When it comes to increasing investment in the African, Caribbean and Pacific countries covered by the Cotonou Agreement, the EU talks a good game. But it is facing stiff competition from China, armed with more cash and fewer concerns about democracy and the rule of law when it comes to investment. The recently established Trust Fund for Africa and the soon-to-be-expanded European External Investment Plan are the EU’s latest Africa-focused investment vehicles. The EIP was launched in autumn 2016 and the Commission says it will generate more than €44 billion of investments by 2020. The European Investment Bank is set to have a major role in coordinating the EU’s expanding investment remit. The EIB’s investment in projects in East Africa in 2017 totalled €400 million. That was a good year, said the bank’s bureau chief for the region, Catherine Collin. “The Cotonou mandate has a very strong focus on private sector development. To have growth you need a port that functions, you need energy supply, so it is normal that we are still focusing on those traditional infrastructure projects,” Catherine Collin tells EURACTIV. “On the other hand, we have been given a mandate and the instruments to develop the private sector…and in this region there is potential,” says Collin. The scope of this mandate is broad enough to include access to local currency loans for small businesses; regional private equity funds – including funds investing in microfinance and local mid-cap enterprises; and subordinated bank capital to banks in the region. Around half of the EIB-backed lending in Africa supports private sector investment by small and medium-sized businesses each year. But the EU’s various investment vehicles all come with political agendas. The EIP and Trust Fund are focused on long-term migration control. Increasing energy capacity and agricultural industrialization are other key goals to the EU.