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.
To aid Africa with its massive infrastructure needs, China has provided significant capital for key infrastructure projects in Africa in the last few years. Baker McKenzie’s report with IJ Global – New Dynamics: Shifting Patterns in Africa’s Infrastructure Funding (https://bit.ly/3KDjXHP) (
“The United States (US) has also renewed its focus on impact-building and financing strategic long-term projects in Africa, with the Export-Import Bank of the United States (EXIM) supporting infrastructure development on the continent. Last year, the US announced a renewed Prosper Africa initiative, which focuses on improving reciprocal trade and investment between the two regions. The US is also a major player in funding African infrastructure projects. For example, according to the infrastructure report, two US development agencies – EXIM and the Overseas Private Investment Corporation – funded infrastructure projects to the value of USD 4.7 billion and USD 3.6 billion respectively, between 2008-2020,” Foundethakis notes.
The United Kingdom (UK) is also making a strong play for influence, investment and trade with Africa post-Brexit. Further to key summits in 2020 and 2021, finance is being redirected into Africa from the UK.
Europe’s strong ties with Africa are not new. According to the European Commission (https://bit.ly/3MDFMbM), the EU, its member states, and the European development finance institutions, together known as Team Europe, are Africa’s top partners. In 2018, the EU had around EUR 239 billion in foreign direct investment stock in Africa. Team Europe is also the largest provider of Official Development Assistance (ODA) in Africa. In 2018 – 2019, it provided EUR 17 billion of ODA to the African private sector and EUR 5 billion to large infrastructure projects. In the same timeframe, the European Fund for Sustainable Development leveraged more than EUR 24 billion in private funds, and the European public development banks jointly invested more than EUR 30 billion on the African continent. One of the aims of Team Europe is to assist the continent with its pandemic recovery by investing in resilient healthcare systems and local vaccine production.
“In early 2020, the European Commission published its Comprehensive Strategy with Africa, outlining the region’s plans for its new, stronger relationship with the continent. The strategy document laid out five top priorities for the EU in Africa – the green transition and improving access to energy, digital transformation, sustainable growth and jobs, peace and governance, and migration and mobility.”
Foundethakis adds that AU member nations have noted that their primary needs included support in terms of safety and security on the continent, as well help in implementing the AfCFTA, and the massive infrastructure investment it needs to be successful.
In 2020, then AU Chair Cyril Ramaphosa said in his inaugural speech that the AU needed “African solutions to African problems”, setting the tone for a deepening relationship with Europe that was balanced and to the benefit of all. The Commission acknowledged Ramaphosa’s comments, saying that Africa wants to take its future into its own hands and that Europe needs a strong Africa.