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Europe's Strategy and Tools for PSD

Published on: 14-Jul-2015

The first European-African Business Event was organised on the 25th of June because of NABC’s appointment as Chair of the European Business Council for Africa and the Mediterranean (EBCAM). This offered NABC the opportunity to focus on the question what Europe and the European Union can do to enhance (Dutch) business in Africa? A more detailed discussion took place between the ECBCAM, the European External Actions Service (EEAS) and the European Investment Bank (EIB) about the EU’s strategy towards African and the available tools for the private sector.

The EBCAM aims to be the principal private sector interlocutor of EU institutions and African countries on matters affecting the interests of the EU private sector in Africa. The EBCAM brings together European investors and other operators engaged in economic activity on the African continent.  EBCAM tries to foster cooperation between the European private sector and African countries, in particular the private sector. It is the only organisation that comprehensively represents the range of business activities undertaken in Africa by European companies. “Accordingly it has played an important part in the preparation for the Barcelona Agreement in 1995 and the Cotonou Agreement signed in 2000 and continues to monitor and advise on aspects of their implementation which affect the private sector” says Alexandros Spachis, Vice-President of the EBCAM.

The Cotonou-agreement is known as the Joint ACP-EU Cooperation Framework for Private Sector Development support in ACP Countries. This agreement is based on the conviction that a competitive private sector and an enabling business environment are key conditions for achieving smart, sustainable and inclusive growth, creation of decent jobs and poverty reduction. The agreement aims to encourage the development of a more competitive and responsible business sector active in local, regional and international markets via (i) promoting a policy and regulatory framework, which fosters the emergence of a competitive local private sector and takes the informal sector into account, (ii) improving export prospects and access to markets and integrating ACP states into the world economy, (iii) strengthening production capacities and entrepreneurship in sectors that can contribute to achieving more inclusive and sustainable growth. Spachis: “This strategy forms the basis on which European private sector can intensify its business in Africa resulting in mutual gain”.

Angél Carro Castillo, Head of Division of Southern Africa at the EEAS, emphasizes Spachis’ statements referring to the political Joint Africa-EU Strategy (JAES) that has been signed in Lisbon in 2007. He states that “the promotion of an investment and business friendly environment is a core prerequisite for the development of the African private sector. Cooperation between Africa and the EU will aim to promote stable, efficient and harmonised legal frameworks for business, free of unnecessary administrative red tape, as well as to promote Corporate Social Responsibility.” The linkage between Africa and Europe is very strong due to its history, culture, geography, a common future and shared values. Castillo: “Although the close proximity of Africa and Europe have resulted in negative developments, such as colonisation and the recent boat migrant fluxes, Africa’s recent economic development shall enable Europe’s private sector to benefit from it.”

The JAES is the overall political framework which defines the EU-African relations. Its objectives not only contain private sector development issues, such as the promotion of sustainable economic integration, but also include the promotion of peace, security, democratic governance, human rights and regional integration.

The European Investment Bank (EIB) provides the European private sector with tools and finance to achieve the goals mentioned in the Cotonou-agreement and the JAES. The EIB is the largest borrower and lender by volume that provides finance and expertise for sound and sustainable investment projects supporting the EU’s objectives. Projects are being assessed on two criteria in order to be eligible for EIB’s funds and expertise: (i) significant contribution to growth and, (ii) contribution to employment in Europe.

“Although 90% of EIB’s activities are focused on Europe, 10% is available for projects abroad” says Christine Collin Head of Corporates, Business Development and Implementation division, Global Partners Department at the European Investment Bank. “EIB’s activities entail lending, blending and advising and are available for all sizes clients – multinationals as well as SMEs – to support growth and jobs of which lending is the bank’s core activity.” The EIB lends to multinationals and individual projects for which the total cost exceeds € 25 million. The loans can cover up until 50% of the total cost and must therefore be seen as co-finance.

Since 2008, the EIB has shifted its focus more and more towards the SMEs in Europe. In 2014 the EIB supported over 285 000 SMEs in Europe.  In the coming years the bank aims to maintain increased support for SMEs and medium-sized corporations. The EIB enables continuous and affordable (low interest rate) access to finance for SMEs. The loans must further at least one of the public policy goals: (i) Increase in growth and employment potential – including SME and Mid-Cap support, (ii) economic and social cohesion by addressing economic and social imbalances, promoting the knowledge economy/skills and innovation and linking regional and national transport infrastructure, (iii) environmental sustainability - including supporting competitive and secure energy supply, and (iv) action for climate-resilient growth.

The bank also offers microfinance opportunities for small businesses. The EIB helps leading microfinance providers, investment fund managers and other stakeholders to increase sustainable and responsible access to finance for micro and small-sized enterprises. Outside Europe the EIB is in particularly active in sub-Saharan Africa, the Caribbean and the Pacific.

The last decade, all EU institutions framed the comprehensive approach drafting Europe’s strategy towards Africa and providing tools for European private sectors to enhance its activities in the African region. More information about EIB’s products and criteria can be found on their website.

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