Dr. Albrecht Conze, German Ambassador to Uganda, calls on the European governments not to hesitate any longer to extend the mandate of the European Bank for Reconstruction and Development (EBRD) to Sub-Sahara Africa. “Time has come to cross the Sahara and make use of the EBRD’s huge experience and great capacity for fostering the further development of the whole of Africa”, he writes in his proposal, which he first introduced at United Europe’s CEO Roundtable “Africa and Europe in the 21st century” on 6th May in Berlin (please find the summary here). This step “should become a founding pillar of Europe’s indispensable new strategic pivot to Africa”:
1. The problem
For quite some time, European embassies in Africa have been ringing alarm bells about the growing dependence of the continent from China. A few years from now, a second sovereign debt crisis is likely to annihilate the successful debt relief which most African countries had been granted since the turn of the century under the HIPC initiative, initiated by the G8 and implemented by the World Bank and the IMF. Western countries and institutions are unlikely to come to Africa’s rescue for a second time, as most of the continent’s recent debt is now being owed to China.
A new sovereign debt crisis could jeopardize Europe’s attempts to address the root causes of irregular migration. If we limit ourselves to reactive emergency measures, we will fail. Europe needs to adopt a comprehensive and holistic policy towards Africa, based on geopolitical considerations and equipped with effective instruments. Without such a policy, the delicate balance between Europe and Africa cannot be maintained, and mass migration risks not contained. It should be conceived by diplomats and economists, and quickly become a centerpiece of Europe’s foreign policy. As such, it should not be left to the traditional “development community”.
Today, European governments should no longer hesitate to extend the mandate of the European Bank for Reconstruction and Development (EBRD) to Sub-Sahara Africa. This highly successful institution has done much useful work since 1991, first for Eastern and Central Europe, and recently also for a number of other countries and regions, with most of Northern Africa among them. Time has come to cross the Sahara and make use of the EBRD’s huge experience and great capacity for fostering the further development of the whole of Africa. It should become a founding pillar of Europe’s indispensable new strategic pivot to Africa.
2. Background and solution
Europe and Africa are one double continent, like North and South America. We have long neglected this geopolitical fact, but cannot do so any more as many of our southern neighbours continue to arrive on the shores of Lampedusa and Andalusia. The continents belong together, whether we like it or not. We must make the best of it.
Europe’s current official leitmotif is called “addressing the root causes of migration”. Fair enough, but not sufficient. Our long-term strategy must transcend this limited concept, imposed on us by the politics of the day. Oddly enough, geostrategic thinking today can best be learned from China. It has proclaimed a new Silk Road, implemented through a “Belt and Road Initiative”.
Europe and Africa are much closer to each other than China and Africa. Strengthening the links across the Mediterranean is a geopolitical necessity. Exploiting all potential synergies will be to the geo-economic advantage of both continents. We have been linked by history for centuries, not to say millenniums. Europeans are culturally closer to Africans than anyone else.
In short, geography, geopolitics, geo-economics, history and culture all speak for a carefully crafted strategic rapprochement of Europe and Africa. Part of Europe’s geopolitical approach should aim at preventing others from engaging in neo-colonial behaviour, as the Malaysian Prime Minister and many others have described China’s geo-economic efforts. A second scramble for Africa is ongoing. Although China keeps denying this fiercely, its Belt and Road Initiative very much looks like a new colonization.
As Europeans, where should we start? Why not by recalling the achievements of the Phoenicians? Are we still embarrassed about the age of colonialism? Obviously, it is far from being forgotten and forms part of the long and complicated Euro-African history. But most of the pages have now been turned, and the double continent is today facing a host of new challenges of entirely different categories and dimensions.
Europe needs to readjust its attitude towards Africa. Our constantly bad conscience should be put aside, and with it the almost automatic dichotomy of development cooperation: we give, the Africans receive, and it should be 0.7% of our GDP. This is mechanistic, out of place, out of time, and condescending. We are finally beginning to understand that we also have to ask something from our African partners. We did so for the first time in November 2015 at the Valletta migration summit. Some African leaders were surprised, or even irritated. But with the initial shock gone, it appeared that Europe’s concerns were in fact better understood than some of the official reactions had suggested. A gradual transition towards interest-based partnership will be beneficial for the intercontinental relations in the long run, and certainly enhance honesty on both sides.
Almost everywhere in Africa, China has replaced Europe as the continent’s first partner. Unless we decide to react vigorously, the Belt and Road Initiative, promoted by Beijing with much energy, is going to further shift the geopolitical and geo-economic balance in China’s favor. The United States, traditionally a like-minded partner, cannot be counted upon. Their presence in Africa, apart from the mining sector, remains relatively modest. Fifteen years after the HIPC initiative, the continent is on its way towards a new dependence, this time from China.
Chinese soft power has had little success so far in Africa. Africans with a desire to emigrate to China are hard to be found. This fact may well entail an absurd consequence. The migration pressure towards Europe could grow further as Chinese domination slows down Africa emergence. China’s presence in Africa may thus soon become a problem for Europe.
Financing and building infrastructure has, since the beginning of this century, been China’s foremost tool of intervention. The list of projects is impressive and without precedent. Many of them are useful, responding to basic priorities of their recipients. But some are mainly catering for African rulers’ desire to provide bread and circuses, in good Roman tradition. African football fans can watch soccer games in a stadium built by China. However, some of them might not be able to sit there and enjoy themselves without Western donors providing most of the funds for their country’s national healthcare budget. We are doing many useful things, and should talk more about it.
China is using three financial instruments. Bilaterally, the China Development Bank (CDB) and the Export Import Bank of China (CEXIM), and multilaterally, the Asian Infrastructure Investment Bank (AIIB), which, by the way, counts most European countries among its founding members. We couldn’t beat them, so we joined them.
Without much of a fight, China was allowed to take over the field of infrastructure for Africa from the Western countries in general, and Europe in particular. Some of the motives for Europe’s astonishing disengagement followed a sense of responsibility. After the write-off of Africa’s sovereign debt, there were hesitations to once again exposing countries with weak governance to long term obligations; Western development banks, applying high standards of compliance and due diligence which often require extensive feasibility studies, are annoying African partners; and a strong focus on good governance and minimal standards for democracy and human rights frequently entails the slow-down, and sometimes the stopping of major infrastructure projects. As a case in point, President Museveni frequently states his conviction that the World Bank is an instrument for obstructing development. China, he continues, is faster, cheaper, and does not ask questions. Similar words can be heard from many other African leaders.
As Westerners, we naturally stick to our lofty principles and noble values. But what do we do when this results in a de facto abdication of Europe as Africa’s first partner? It is futile to complain about China’s recklessness and our own marginalization. We must find remedies and come back, building on our traditional qualities.
In private, African ministers immediately admit that they are unhappy with China, and would rather work with us. They cannot be fooled by propaganda soundbites such as “win-win”, “South-South solidarity” or “the struggle”. They realize that, after the initial period of grace, debt servicing will become a huge issue. They have all heard about the Sri Lankan port of Hambantota. They are afraid of similar debt for equity swaps, eventually transforming China into a neocolonial power.
Europe now seems to be waking up to the challenge, albeit in a disorderly way. A host of new initiatives has seen the day recently. A “Compact with Africa” was conceived under the auspices of the G20. However, beyond the limited number of countries who so far have qualified for participation, it still remains virtually unknown in Africa. The German “Marshall Plan with Africa” is a national initiative, currently not endorsed by the EU Commission who, in an attempt to provide funds for private sector development in Africa, created an External Investment Plan in July 2018, initially funded with € 800 million only, but fueled with the hope to leverage € 8 to 9 billions from public and private sources for investment in Africa. Until further notice, however, Brussels mainly continues to work through DEVCO, its traditional development behemoth which keeps shifting huge sums to African governments according to five-year plans – not exactly the most innovative method for improving Africa’s destiny.
None of the new initiatives is yet showing results which European ambassadors in Africa could be proud of. They are not providing us with any adequate tools or instruments for matching China’s influence and clout. Our Chinese colleagues are walking around like proconsuls, and we are trailing them almost everywhere.
Could we do better without abandoning our principles? Are there any elements of China’s success which we could emulate? If so, we may need to be courageous enough not to view with mistrust everything China is doing, but rather take a close look at its unique financing instruments. In 2016, CDB and CEXIM were able to invest in Africa over three times more capital than IBRS, EIB, ADB, AfDB, IADB and IFC combined. Following standards established by the World Bank, the traditional development banks have, over the years, all tightened their conditions – beyond reason, in African eyes. Is there any room to reverse this tendency?
While China can act in an autocratic manner, Western governments have to face headwinds from two directions, from the right and the left, simplistically speaking, both fueled by a fair amount of ignorance. To the right, there is populist resistance on both sides of the Atlantic against any further “help”, as it is perceived, for a continent without much hope. To the left, innumerable NGOs keep opposing infrastructure projects which they believe to be threatening the various causes they are defending, often with noble motives. As a result, Europe finds itself marginalized where it should occupy center stage: in promoting the geopolitically indispensable development of the European-African double continent and in mitigating the long term risks for its equilibrium.
There is a way to neutralize these headwinds. In April 2018, Sir Suma Chakrabarti, the president of the EBRD, suggested to incrementally extend the bank’s mandate beyond the Sahara. The bank’s governors – none other than Europe’s ministers of finance – then rejected the proposal. However, he tried once more at this year’ EBRD Annual Meeting at Sarajewo. This time, the resistance seems to have weakened, at least to the extent that by 2020, a proposal will be made to the Board of Governors
Sir Suma is right. As Europeans, we do have an instrument at our disposal with almost thirty years of experience, perfectly suited to financing African infrastructure while promoting empowerment of our partners. If European governments could be convinced in the coming months to follow his proposal, a major step could be taken to effectively address China’s challenge in Africa. Europe, in dire need to assert itself, would be back on the scene.
Why would the EBRD be Europe’s best choice to make a sound return to Africa?
Following its foundation in 1991, it has made tremendous contributions to the development of open markets and societies in Central and Eastern Europe. The bank has gained much experience in creating modern economic structures and promoting change in the region of its activity. Since 2011, its mandate has been extended to a number of countries in Southeast Europe and Northern Africa. Its activities to promote transition towards market economy and to privilege entrepreneurial initiatives are very much in line with the recent European initiatives for Africa. Among the EBRD’s achievements are its support two more than 30 countries to reform their banking and financial systems, to stabilize the formation of prices, to privatize parastatals, and to set adequate legal frameworks for property and land rights.
All these reforms were accompanied by programs of advice, training and technology transfer as well as investment in the public and private sector. Most of this, by the way, is not being offered by Chinese players in Africa.
The extension of the EBRD’s mandate to sub-Sahara Africa could be the fastest and simplest way for increasing European engagement to a dimension that could match China’s dominance. The creation of an entirely new European African Development Bank, modeled after the EBRD blueprint, could be an alternative. But it would take years to get it up and running. We do not have that time. Incremental additions of new tasks to the already existing EBRD looks like a much more pragmatic and promising way to respond to Africa’s needs.
The extension of the bank’s mandate would have to be carefully crafted to avoid overlap with other development banks active in Africa, including the EIB. Existing synergies should be taken into consideration. There are no quick fixes to the dilemma between keeping decent governance standards on one hand, and being as fast, effective and flexible as possible on the other. Europe cannot offer delivery from one hand, of the one stop shop type China is able to propose. Hence, we must make up for it in other ways, by highlighting our traditional advantages related to training, technology transfer and empowerment through real partnership.
If European governments can be persuaded to make the far-reaching political decision to bring the EBRD to the whole of the African continent, we will be able to offer Africa an alternative to China’s aggressive takeover attempt. Africa is waiting for us. We are, and we remain its first natural partner on our double continent. But we will have to be ready to assume our role.
Albrecht Conze, Kampala, July 2019
The author currently serves as Germany’s ambassador to Uganda. This essay reflects his personal views and does not engage the German Government.