Addis Ababa, Ethiopia (PANA) – The European Union (EU) has retained a substantial share of Africa’s Foreign Direct Investment (FDI), contrary to claims that the region has lost its share to Africa’s emerging partners.
The Head of the EU Delegation to the African Union (AU), Gary Quince, said trade between the two regions remained on a high growth path. However, the AU is concerned about Europe’s diminishing role in Africa’s trade and investment scene.
With up to 60 heads of state expected to attend the fourth European-Africa Summit, both sides are examining the value adds of their partnership in qualitative terms.
“We retain a huge mutual interest,” said Ambassador Quince on the trade relations between the two regions ahead of the Brussels Summit. EU officials insist that contrary to claims that Europe’s role is actually on a decline in Africa, European aid to Africa remains at 45% of the global aid inflows. Besides, European imports from Africa have been growing at an average of 46% annually.
AU Commission Deputy Chairperson, Erastus Mwencha, said the dwindling European investment was noteworthy.
“We have seen the diminishing role of Europe in Africa. There is an indication that Europe is gradually being edged out in Africa,” Mwencha told journalists. The AU wants the European partners to facilitate trade with Africa by supporting efforts to process its raw materials before export. Most African industry players have complained about their inability to export processed goods due to a combination of tax and health regulations.
Mwencha said while Africa welcomes investments of up to US$ 251 billion, a determination to strike a reciprocal agreement was welcome if it addresses key points of concern by Africa.
In 2012, the EU laid claim to 221 billion euro worth of investment stocks in Africa. However, the amount of African Investments to Europe appears to be recording the biggest growth. Between 2007 and 2012, during Europe’s worst global economic recession, African Investments grew seven-fold to 77 billion euros.
It is clear that the growing investment from African corporate giants is behind the hosting of an African-EU business Summit. African corporate giants are behind a marked growth in telecom revolution. The African giants are currently leading the continent into a major growing global player in the mining industry.
Quince said a key section of the Brussels talks will focus on building trade between the two sides. The Summit is also featuring civil society organizations.
Members of the pan African parliament are also attending sessions to network with the European Parliament.
While trade remains central to the current talks, failure by Africa to accept an Economic Partnership Agreement (EPA) is likely to drag the discussions in Brussels. A Summit of West African leaders last weekend did not specifically endorse the trade deal. But senior AU officials said the EPA constitute an opportunity for African countries to diversify investment and trade. Mwencha said while there was no specific demand by Africa to open up its market, the current talks required market opening from Africa.
European negotiators insist the trade treaty would benefit African importers of heavy machinery. These machinery imports are currently subject to heavy taxation which makes them expensive. The African states say removal of taxation barriers and breaking state monopolies over contracts will deny Africa the tools needed to develop at the same level with the EU.
“The EPAs need to be looked at so Africa is in a position to transform our economy,” Mwencha said.
The AU official said while the EU granted Africa market entry under the Lome treaty, the continent failed to take advantage.
“Africa sees this Summit as important because it will impact on our transformation,” Mwencha said.
African imports more than a third of its industrial needs from Europe. In 2012, European Commission reports show Africa imported goods worth 187 billion euros. This was 34% of Africa’s imports.
The EU remains a key destination for 40% of Africa’s international exports while exports grew at an average of 46%.
