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European Commission’s renewed efforts for increased investment with Africa

On 12 September, the European Commission gave its annual State of the Union address to the European Parliament in Strasbourg. Jean-Claude Juncker, President of European Commission proposed a new Africa-EU alliance for Sustainable Investment and Jobs during the meeting. He also put forward a plan to strengthen the Africa-EU partnership by boosting strategic investment and economic integration.

The proposal included a target of merging the multiple EU-African trade agreements into a single agreement, wherein the best interests economically of both bodies could flourish potentially. This initiative will create up to 10 million jobs in the continent within the coming five years, stated the Commission. According to the Commission, the plan has more benefits, apart from the financial one, as it would represent a “radical shift” in EU efforts to alter the way the alliance plies with one another.

For Africa, this renewed EU commitment highlights a continued desire to create a more economic partnership of equals. In 2007, several European states and African leaders established the Africa-EU Strategic Partnership to strengthen political dialogue and enhance economic cooperation. Last year in the end, the fifth EU-Africa Summit took place in Côte d’Ivoire to work upon such efforts.

In 2015, Africa became EU’s largest recipient in terms of aid for trade by EU committing €13.2 billion. Juncker pointed out that 36% of Africa’s trade is with the European Union compared to 16% for China and 6% for the United States. Moreover, the EU remains the world’s most available market to African manufactured and processed export products.

Earlier this year, EU policymakers suggested creating “controlled centers” on EU borders and “regional disembarkation platforms” in Northern African countries, aiming to handle rescued migrants with support and financing from Brussels. However, with the fear that the migrant processing centers might turn into de facto detention camps, no African country has offered to host such facilities till now.

Trade between China and Africa is also on EU’s list. The EU’s announcement arrives on the heels of China’s president Xi Jinping’s recent pledge of $60 billion for African development in the form of new loans to the continent. This pledge is in addition to the $136 billion the Chinese government, banks and contractors have loaned African governments from 2000-2017. Last year, China-Africa trade totaled $170 billion, a 30% increase from the previous year.

Further, China committed to establish a $10 billion special fund for development of Africa. The continent’s critical infrastructure financing needs are hugely met by China’s willingness to provide more than $86 billion in commercial loans between 2000 and 2014. In return for its investment, China has not only gained access to an abundance of raw materials, but entered expanding markets in Africa for commercial goods.

China and Africa’s deep commercial engagement might have greater geopolitical influences. Since the United States continues to follow its “America First” policies, China seeks closer economic ties with Africa. Chinese investment there will increase gradually, as the US continues to pursue its trade war with Beijing.

Africa is still the EU’s largest trading partner for now.The European Commission’s renewed efforts to increase investment in Africa signals a new commitment to take their economic partnership ahead.

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