The FINANCIAL — The European Commission recently announced investment funding for Africa worth EUR 150 billion as part of the European Union (EU) Global Gateway Investment Scheme. This funding is said to be in the form of EU combined member funds, member state investments and capital from investment banks.
Michael Foundethakis, Baker McKenzie’s Global Head of Project and Trade & Export Finance, and Africa Steering Committee Chair, explains that the scheme is seen as a way for the EU to build influence around the world, and is considered by some to be a counter to China’s Bridge and Road Initiative (BRI), which began in 2013.
“It is also intended to boost post-pandemic growth in regions that were badly economically impacted by the pandemic. Although the current conflict in the Ukraine could, of course, affect or change the dynamics and/or timing of these proposals,” he notes.
Foundethakis says that the Global Gateway Africa-Europe investment package will allow the EU to support projects in priority areas on the continent, with a focus on the green transition, sustainable growth and job creation. As part of this initiative, the Commission recently announced it would invest EUR 1.6 billion to support Morocco’s energy and digital transition projects.
European Commission President Ursula von der Leyen recently noted that investment in Africa should not come at a heavy cost – financially, politically, environmentally and socially, and that the Global Gateway scheme would focus on investments that were grounded in transparency, good governance and with concern for the environment and the wellbeing of the population.
Foundethakis agrees, noting that “there are considerable opportunities across Africa’s different regions and countries, but not without responsibility. As well as being bankable and yielding attractive returns, it is becoming increasingly imperative that investment in Africa should be sustainable and provide ancillary benefits to local economies. Simply put, it should be net positive for the region”.
Foundethakis notes further that Africa needs strong partnerships to address its development challenges and to ensure that it is able to take full advantage of the African Continental Free Trade Area (AfCFTA), a continent-wide free trade zone launched in January 2021.
“For free trade across the continent to be successful, infrastructure is urgently needed to facilitate the movement of goods and services across Africa’s borders. There is therefore an urgent imperative to address the infrastructure funding gaps in transportation, energy provision, internet access and data services, education and healthcare projects in Africa,” Foundethakis explains.