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  • Europe-Africa:
    A Special Partnership

    Report -
    July 2019

The opinions expressed in this report do not bind these persons or the institutions of which they are members.

  • Dalila Berritane, Founder & CEO, Nedjma Consulting
  • Thierry Déau, President, Meridiam
  • Jean-Michel Huet, Partner, BearingPoint
  • Larabi Jaïdi, Senior Fellow, Policy Center for the New South
  • Dominique Lafont, CEO, Lafont Africa Corporation
  • Frannie Léautier, COO, Trade & Development Bank
  • Alain Le Roy, Ambassador of France, former Executive Secretary General of the European External Action Service
  • Antoine de Saint-Affrique, CEO, Barry Callebaut
  • Georges Serre, Institutional relations, CMA CG

Rapporteurs

  • Lucie Cogino
  • Awa Dé, Policy Expert, Banque de France
  • Mahaut de Fougières, policy officer, Institut Montaigne
  • Ludovic Morinière, Africa and International Development Director, BearingPoin

As well as

  • Waël Abdallah, policy officer assistant, Institut Montaigne
  • François Jolys, policy officer assistant, Institut Montaigne


The opinions expressed in this report do not bind these persons or the institutions of which they are members.

Institut Montaigne would also like to thank all the people met or interviewed in the writing of this report, in particular Gilles Babinet, Advisor on Digital Issues at Institut Montaigne, Eric Chaney, Economic Advisor at Institut Montaigne, Michaël Cheylan, President of Corrèze & Zambèze and Viviane Nardon, Chief of Staff at Meridiam.

 

  • Zineb Abbad El Andaloussi, Partner, Helios Investment Partners
  • Ibrahim Assane Mayaki, Executive Secretary, ADUA-NEPAD
  • Benjamin Audinos, Regional Director for Africa, Egis
  • Mossadeck Bally, President and CEO, Azalaï Hotels
  • Dolika Banda, CEO, African Risk Capacity
  • Chakib Benmoussa, Ambassador of Morocco to France
  • Christian Bevc, Head of Infrastructure, KfW IPEX
  • Pascal Blanchard, Researcher at the Communication and Policy Laboratory (CNRS) and co-director of the Achac Research Group
  • Khaldoun Bouacida, Managing Director and Country Cluster Head Northwest Africa, BASF
  • Alexandre Boudet, Project Manager Africa, MEDEF International
  • Deborah Brautigam, Director of the SAIS China Africa Research Initiative, Johns Hopkins School of Advanced International Studies (SAIS)
  • Sophie Burel, Deputy Director of Public Affairs, Renault
  • Guillaume Chabert, Head of Multilateral Affairs and Development Department, Direction Générale du Trésor
  • Grégoire Chauvière Le Drian, Advisor to the Vice-President, European Investment Bank
  • Sarga Antoine Coulibaly
  • Muriel Dubois, Director of Development - Africa, SciencesPo Executive Education
  • Robert Dussey, Minister of Foreign Affairs of Togo, ACP Chief Negotiator - Cotonou 2020
  • Ambroise Fayolle, Vice-President, European Investment Bank
  • Louise Fresco, Chairman of the Wageningen University and Research Executive Board  
  • Sandrine Gaudin, Secretary General, General Secretariat for European Affairs
  • Philippe Gautier, Managing Director, MEDEF International
  • Etienne Giros, Deputy Chairman, CIAN
  • Stephan-Eloïse Gras, Director of Strategic Partnerships - Africa, OpenClassrooms
  • Jean-Louis Guigou, President, IPEMED
  • Jaouad Hamri, President of the Ethics and Good Governance Commission, General Confederation of Moroccan Enterprises
  • François Héran, Professor, Collège de France
  • Mohamed Laâziz Kadiri, Chairman of the Economic Diplomacy Commission, Africa and South-South, General Confederation of Moroccan Enterprises
  • Anne-Elvire Kormann-Esmel, Programs Coordinator & Advocacy Lead, AfroChampions
  • Philippe Labonne, Deputy CEO, Bolloré
  • Patrick Lawson, Deputy Head of Concessions, Bolloré
  • Faïcal Leamari, Head of Capital Markets, Attijariwafa Bank
  • Camille Le Coz, Policy Analyst, Migration Policy Institute Europe
  • Thibault Le Gonidec, External Relations Advisor, Ministry of Europe and Foreign Affairs
  • Carlos Lopes, African Union High Representative for Partnerships with Europe
  • Stefano Manservisi, Director General for International Cooperation and Development, European Commission
  • Rémi Maréchaux, Director of Africa and Indian Ocean, Ministry of Europe and Foreign Affairs
  • Amine Marrat, Head of Strategy and Chief Economist, Attijariwafa Bank
  • Nicolas Martin, CEO e-commerce, Jumia
  • Kabirou Mbodje, President and CEO, WARI
  • Yvonne Mburu, CEO, Nexakili, Member of the Presidential Council for Africa
  • Aïchatou Mindaoudou, Former Minister of Foreign Affairs of Niger, Former Special Representative of the Secretary General of the United Nations in Côte d'Ivoire, CEO Ipiti Consulting
  • Elisabeth Moreno, Vice President and Managing Director HP Africa
  • Faycal Mouaci, Director, VAMED International Hospital Projects France
  • Uwe Mueller, Director for Ports, Airports, Social Infrastructure, KfW IPEX
  • Dominique Musset, Africa, Middle East, India and Pacific Business Development Director, Renault
  • Emmanuel Okalany, Technical Specialist for Development and Partnership, RUFORUM
  • Akotchayé Okio, Africa Development Officer, SACEM
  • Dr Gilles Olakounlé Yabi, Founder, WATHI
  • Talal Ouazzani, Group Head of Syndication, Attijariwafa Bank
  • Franck Paris, Africa Advisor, French Republic Presidency
  • Christophe Parisot, Deputy Director of EU External Relations, Ministry of Europe and Foreign Affairs
  • Eric Pignot, CEO, Enko Education
  • Jean-Michel Ristori, International Development Director, Egis
  • Rémy Rioux, CEO, AFD
  • Stéphanie Rivoal, Ambassador, Secretary General of the Africa-France 2020 Summit
  • Hamza Rkha Chaham, CEO, Sowit
  • Kamil Senhaji, Regional Director Africa, Middle East, Asia & Latin America, Galileo Global Education
  • Patrick Sevaistre, President of the European Institutions Commission, CIAN
  • Coumba Traoré-Peytavin, Secretary General, Bamako Forum Foundation
  • Bruno Witvoet, President Africa, Unilever
     


14 kilometres separate Europe from Africa through the Strait of Gibraltar. This geographical proximity goes hand in hand with economic relations, diplomatic exchanges and many common challenges - security and climate in particular. Why are we addressing this relationship today? Because the Cotonou Agreement, which governs political, economic and financial relations between the European Union and 48 sub-Saharan African countries, expires on 29 February 2020. The two continents thus face the question of the partnership they wish to define for the next 20 years, and its level of ambition. 

It is now time to put the partnership with the African continent back at the centre of the European agenda. In fact, the current course of negotiations does not seem to be up to the task.

In this context, and beyond the formal Cotonou framework, Institut Montaigne has brought together African and European actors from the public, private sectors and civil society to fully consider an ambitious partnership, based on clear priorities. A new vision of Europe-Africa relations must materialize.

A Shared Destiny in an Ever-Evolving Context

Since the signing of the Cotonou Agreement nearly 20 years ago, Africa, the European Union and the international context have undergone profound evolutions. On the one hand, the EU has enlarged to 28 member states, some of which have no historical links with African countries. Africa, on the other hand, has experienced profound demographic, technological and economic disruptions, which have propelled its growth and brought about institutional changes, such as the evolution of the Organization of African Unity (OAU) of the founding fathers  into the African Union (AU).
 

    Europe-Africa: A Special Partnership

    Beyond economic and security issues, to which the ties tends to be reduced, the EU and Africa are closely linked on four key issues: diplomacy, multilateralism and international influence; economics, development and finance; security and defence; and climate change and human mobility. 

    Africa and the EU share a common destiny that calls for a strong and renewed partnership, whose vision must be based on three main axes:

    • First of all, reaffirming the Sustainable Development Goals (SDGs) as a common vision. There are 17 SDGs, which aim at prosperity and take into account the preservation of the planet. They were adopted in 2015 by all the countries of the world and must be achieved by 2030.
       
    • Then, getting to know each other better through joint networks of influence, exchanges between European and African students and researchers, and a more active communication on the EU's achievements on the ground.
       
    • Finally, placing job creation in Africa as an absolute and urgent priority: by 2050, 30 million young Africans will enter the labour market!

    A Partnership Focused on Five Key Challenges

    The Europe-Africa partnership must focus on five priorities, and address the major challenges faced by the African continent, in order to achieve the ultimate goal of job creation. These challenges are: the business environment, industrialization and integration into the global economy, taxation, regional integration, and professional training. While providing answers to these challenges will benefit the African continent, it will also be beneficial for Europe through preferred cooperation.

    Business environment

    The political, legal, institutional and regulatory conditions in African countries are currently not optimal for foreign companies wishing to invest on the African continent, which hinders the attractiveness of these countries. Infrastructure is a key element of a country or market’s  attractiveness - and therefore of its economic activity. Without a road or railroad in good condition between Dakar and Bamako, which foreign ord local company can consider Senegal or Mali as a large market in which it is interesting to invest? Yet, infrastructure needs remain tremendous in African countries in search of foreign investment. 

    Industrialization and integration into the global economy

    Today, Africa represents only 2% of global value chains - that is, all the activities that bring a product from design, to production, to delivery to the final consumer. The continent's industry, which is largely focused on raw materials, is insufficiently competitive and creates little added value locally. In addition, the African continent currently suffers from a deficit in African regional value chains.  

    Taxation

    To finance the $600 billion a year needed for development, African states must and have the potential to raise more domestic resources through tax collection. This will also have an impact on the attractiveness of African countries for companies, particularly European companies, which tend to be overtaxed. 

    Regional integration 

    Intra-African trade now accounts for less than 18% of the continent's trade. While the entry into force in July 2019 of a Continental Free Trade Area (AfCFTA) signed by 44 African countries and ratified by 22, is a promise of improvement in this regard, it should not conceal the future challenges of African regional integration. There are significant differences in income between countries and the capacity of existing regional institutions - UEMOA (West African Economic and Monetary Union), ECOWAS (Economic Community of West African States), ECCAS (Economic Community of Central African States), SADC (Southern African Development Community), EAC (East African Community) - are currently too low. 

    Professional training 

    About 30 million young Africans enter the labour market each year. However, professional training does not meet the needs of the African continent: it is too poorly funded and unsuited to the needs of companies, which often have to pay for remedial training, which represents significant, even prohibitive costs.

    What Tools for the EU to Support these Priorities?

    Although it commits various and important resources to the African continent, the EU's action is still too unclear, invisible and ineffective. The EU must rethink the tools of its partnership with Africa, in particular in three areas.  

    • Today, the European Development Fund (EDF), the EU's financial instrument for sub-Saharan African countries under the Cotonou Agreement, prioritizes aid in the form of financial support, particularly to States. In order to create a favourable environment for private investment in African countries, technical assistance, i.e. the provision of know-how, in the form of personnel or training for example, which currently represents just over 3% of EU aid, should be encouraged. This technical assistance should target particularly the private sector, especially SMEs, without neglecting technical assistance to African administrations, particularly in project implementation and legislation standardization.
       
    • Few of the EU's funding today is dedicated to the private sector. In addition, the processes for private sector actors to obtain such financing are too slow and complex. This is one of Europe's weaknesses in Africa, particularly in the face of emerging countries. A telling example: six years of unsuccessful negotiations between Africans and Europeans took place to develop a railway infrastructure that links Djibouti to Addis Ababa... while it took China only two years to build the rails and run a train. The EU must work to facilitate access to its financing for African and European companies, which are best able to create jobs on the African continent.
       
    • As early as 1970, most OECD Development Assistance Committee (DAC) countries committed to spending 0.7% of their GNI on development aid. This objective, however symbolic it may be, focuses public development aid policies on the amounts committed rather than on the impact of the projects financed. In order to maximize the impact of its  aid, the EU must develop tools to reduce the risk associated with private investment on the African continent, such as guarantees. In this context, blended finance initiatives, i.e. combining public and private resources, must be increased.

    Our Proposals

    1
    Rethinking the Paradigm of the EU-Africa Partnership
    More details here

    Sharing a Common Vision of the Partnership
    Basing the EU-Africa partnership on the 17 Sustainable Development Goals (SDGs). Building on the SDGs to make the EU-Africa partnership one of reciprocity and balanced exchange, so that each party embraces the national, continental and global challenges.

    Making Business Environment a Shared Priority  
    Implementing a Euro-African arbitration chamber for trade, financial and legal claims involving European companies in Africa and African companies in Europe.

    Relying on Institutions to Reinforce Regional and Continental Integration
    Defining a precise roadmap for the development of a strong continent to continent relationship between the African Union and the European Union, in which the latter could share its integration expertise acquired over the course of its 60-year existence. This roadmap could set out the framework for:

    • Stronger skills for the AU and the definition of its subsidiarity with respect to member states and regional organisations;
    • Strict application by all parties of regional rules on customs prices and the free circulation of goods, people and capital within the African Continental Free Trade Area (AfCFTA);
    • Improving the capacity of existing regional bodies in priority sectors (agriculture, education, health and regional infrastructures).
    2
    Conveying Together a Strong Economic Ambition
    More details here

    Articulating a European Offer on Infrastructure
    Building an integrated public/private sector European offer for the deployment of sustainable infrastructure in Africa, by promoting the comparative European advantages (attention given to financial viability, quality and sustainability, maintenance, and project assistance on training and governance). In parallel, making fast execution a priority.

    Improving the Added Value Produced in Africa
    Targeting industries of joint interest and building a model of gradual opening to global markets, in order to assist and develop the creation of African value chains and regional champions and, ultimately, to support them in their international export strategy, particularly in Europe. Together, updating an industrial cartography of Africa, building on the work initiated by NEPAD, paired with a cartography of relevant skills, in order to stimulate and develop Africa’s productive ecosystem.

    Financing Agriculture, i.e. 60% of the Active African population
    Increasing the amount of funding reserved for small farmers and family farms, notably through support for cooperatives and skill exchanges with European farmers.

    3
    Deploying More Efficient Tools
    More details here

    Mobilizing More Domestic Resources
    Directing more funding towards training for African tax administrations and supporting cooperation between African tax administrations, notably on the topic of data exchange and availability. Helping African states to build tax collection projects by deploying digital tools. Working alongside African states on tax and social protection solutions offering a flexible, graduated approach, depending on the economic player’s degree of insertion in the formal or informal sector.

    Deploying Efficient and Targeted Technical Assistance
    Redirecting and reinforcing a standardised technical assistance from the EU to the private sector and in order to improve the business environment, by setting up mixed European-African teams to prevent cultural bias that could hinder the implementation of good practices.

    Supporting the Private Sector, and SMEs as a Priority
    Facilitating access to European finance instruments for European and African SMEs by offering them simpler access. Accelerating the deployment of the EU External Investment Plan. Creating European chambers of commerce in African countries responsible for facilitating the dialogue between European and African companies and for sharing information on European financing schemes, in collaboration with the EU delegations.

    Increasingly Resorting to Blended Finance
    Increasing and targeting the use of blended financing - combining public and private resources - for the upstream design of projects, local currency financing, and the most risky projects often excluded from this type of financing despite their potentially tremendous ripple effects on the economy. Measuring and favouring the leverage effect on the market and the ripple effect on growth and development as impact criteria.

    4
    Knowledge and Expertise, Essential Prerequisites
    More details here

    Investing More in Professional Training
    Allocating substantial European funding to training, notably technical (productivity for the agricultural sector, technicians for industry and the service sector) and instructor training. Allocating a large proportion of this funding to the professional training of women, who represent the majority of the workforce in high potential sectors (agricultural transformation, small shops), and to digital training to guarantee access to better information and enable the use of essential tools. Building joint skill reference systems for professional training in collaboration with African countries to encourage the acquisition and sharing of knowledge and dialogue, and to fulfil the specific needs identified for the country or market, in both the formal and informal sectors.

    Developing Tomorrow’s Field Actors and Project Owners
    Mapping, structuring and coordinating a network of new economic, political and cultural players in Africa. Enhancing the financial effort devoted to strengthening the organisations, skills and governance of these structures.
     

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