G20 Compact with Africa in Berlin: Implications for EU-Africa relations

On June 12-13, Berlin hosted the latest initiative of the G20 Compact with Africa, an international conference that brought political leaders together under the promising title “Investing in a Common Future”. The Berlin meeting is part of a well-framed roadmap of high-profile international gatherings: finance ministers and country representatives have already sat around the same table in Washington and Durban earlier this year, and many of them will meet again for the European Union-African Union summit in November.

The Compact with Africa (CWA) aims at providing a framework to “significantly increase private and infrastructure investment in Africa”, relying for this purpose on the expertise and assistance of G20 member countries as well as international organizations, such as the African Development Bank (AfDB), the International Monetary Fund (IMF) and the World Bank (WB). The latter trio has recently issued a concept paper that contains the instruments envisaged for boosting private investments.

Now that a number of African countries seem to have already committed to the set of measures promoted by the CWA (Ethiopia, Ghana, Ivory Coast, Morocco, Rwanda, Senegal and Tunisia), and more could do the same in the near future, a debate about the very nature of this partnership is gaining momentum. The leading question is, of course, whether the CWA should be read under the renowned rubric of “neocolonial” interventions in Africa, or as a brand new, concrete opportunity for economic growth. This short article attempts to address precisely that fine line between continuity and rupture with the past, integrating thus a historical perspective in the analysis of the matter. In doing so, I focus especially on the role of the European Union (EU), which beyond being a G20 member, is undoubtedly also the actor most interested in co-determining Africa’s future.

The context

Let us begin the analysis with two fundamental considerations: the EU needs both effective governments and solid markets in Africa, now more than ever. In fact, in the European order of things, the current pace of emigration from Africa has become unsustainable. The disastrous joint management of migration flows and quotas displayed by European governments fans the flames further, fuelling anti-Europe and anti-migrants sentiments throughout the continent, eventually corroding solidarity between member states. Against this backdrop, measures like the externalization of controls and asylum applications, or ad hoc deals with African governments do not have prospects of yielding lasting results. This has also implications in terms of security and the fight against terrorism, violent extremism and transnational organized crimes: the European Commission and EU foreign policy chief Mogherini stated that “never before have EU security interests been so intertwined with Africa”, as proved also by the numerous EU military training missions carried on in Africa.

The necessity to find viable solutions for the long-term introduces the second consideration, which regards Africa’s socio-economic outlook: we have learned that migration flows do not concern only asylum seekers, but have acquired the character of a complex and structural economic phenomenon that involves individuals relocating from the periphery to the perceived center of global wealth. This mass relocation could expand further, as the continent’s population is predicted to rise considerably in the next decades ahead. It has been estimated that Sub-Saharan Africa alone will need 18 million new jobs each year up to 2035 in order to absorb the new labor market entrants: in view of this, African states need to be able to develop internal and regional markets that can generate enough jobs. Currently only 3 million jobs are being created yearly. Not an easy task, considering that African economies remain vulnerable to fluctuations in commodity prices, which can significantly affect economic performances (as occurred in 2015-16).

For European governments, that discrepancy between demographic growth on the one hand, and job opportunities in African markets on the other, is clearly a source of preoccupation. At the same time, though, Europe sees in Africa also future opportunities for revitalizing its stagnant economy. Italy’s former president Giorgio Napolitano, who has often addressed Euro-African relations during his political career, commented after Berlin that the “general interest of Europe lies” also “in the prospect to satisfy future labor force needs within its own economies in a selective and regulated fashion, and to open new opportunities of joint development with the African continent”. African workforce stands out again at the horizon of possibilities, when it comes to filling specific gaps, finding solutions to counterbalance Europe’s ageing population, and developing new trades.

A continued partnership

The context in which the CWA talks took place appears to confirm that the concerned political actors perceive Europe and Africa to be close partners. The idea of joint African and European development, and the ultimate relevance of this partnership for European integration itself, is not new. As a matter of fact, it represents a file rouge that has connected the history of the two continents for decades, ever since the 1950 foundational Schuman Declaration, which mentioned “the development of the African continent” as one of Europe’s “essential tasks”. “In this way”, the documents continued, “there will be realised simply and speedily that fusion of interest which is indispensable to the establishment of a common economic system”. Sixty years after that historic document, there is evidently still “a lot to do” in order to “ensure that trade flows between Europe and African countries really benefit everyone”, as German Chancellor Merkel commented in the opening speech of the Berlin conference. The element of novelty is that Europe now is far more exposed to the socio-economic consequences of unequal trade, and to the shortcomings of the reforms promoted by international organizations.

Resorting to old ideas and instruments?

Continuity and rupture with the past emerge also in the pronounced preference for private and market solutions enshrined in the CWA. As highlighted in one analysis of the initiative:

“the G20’s Compact does not have the right balance between public and private financing but is heavily prone towards the private side, with all the implications for predatory-financing abuse that are well understood”.

In effect, the trio’s report accords priority to the private sector and the market for what concerns “commercial” infrastructures (such as transport, energy or water sector projects), whose gap deters investment. African governments are mainly in charge of reducing risks and creating a favorable business environment, concurring to form an “integrated approach to create the conditions for a surge in private investment, including by removing constraints that currently hamper capital flows from some industrialized countries”. This, in turn, will favor also the improvement of “non-commercial” infrastructures (urban road networks, basic education and health infrastructure). The over-emphasis placed on sending “a strong signal to private investors” comes with limitations: for example, the discouraging omission of recommendations for sustainable and ecologically-friendly development in the CWA. Jann Lay (Acting Director of the GIGA Institute of African Affairs in Hamburg) speaks about four omitted items: investment in education; G20’s responsibility in creating an uncertain trade and investment policy environment; the social and environmental risks associated with private investment; and the commitment to a sustainable development agenda, as implied by the 2030 Agenda.

The most delicate issue with CWA approach is arguably that of privatization itself, as it is closely connected with the legacy of the neoliberal agenda and of the loan-schemes known as Structural Adjustment Programs (SAPs) initiated by IMF and WB, that is, the same international organizations now spurring the CWA. SAPs are deemed by many as culpable for Africa’s “lost decades” in the 1980s and 1990s (for recent critical approaches to neoliberalism in Africa, see Soludo and Mkandawire 1999; Mensah 2008; Muiu and Martin 2009). According to many scholars and analysts, problems of unemployment, poor governance performances and deteriorating terms of trade in Africa were all derived from, or made worse, by SAP packages, which prescribed indeed liberalization, privatization, currency devaluation, cuts in public expenditure and salaries among other things. Quite interestingly, the austerity programs so criticized in Europe in the aftermath of the 2007-08 financial crisis contained very similar measures to those seen with SAPs. And the fact that recently the IMF has (partly) apologized for the effects of the policies it had promoted under the flag of the free market ideology has surely not helped selling the CWA arguments to the skeptics out there.

Privatization has certainly matured a negative connotation in Africa. For Prempeh, it has opened the way for “accumulation by dispossession”, namely “the defining hallmark of the continent’s incorporation into the capitalist system”. Yet, the state does not fare well either in terms of reputation as agent for development. It has been argued that incompetent, corrupted governments, and too much “statism” in general, have prevented or delayed in Africa the formation of domestic entrepreneurship and capital groups that could outdo foreign enterprises. On the other hand, even comparatively more efficient nation-state machineries are not saving Europe either, from reckless financial manoeuvres and tax avoidance by multinational companies.

CWA: Development for whom, and by whom?

We could discuss state and market forever. I believe, though, that the interpretative key for CWA consists, first of all, in seeing the “global market”, in all its components (doctrines and financial dynamics), as the outcome of a competition that has grown unequal over time and not as a sort of neutral ground of exchange. This inequality is visible in the legacy of colonialism, which at the time of independence left several African economies relying on exportation of (few) primary commodities, with scarce levels of diversification, industrialization, and with an almost absent domestic capitalist class. Inequality has grown further through the ill-functioning of Western-like states, which have been too often ruled by shortsighted leaderships, revealing themselves to be exceedingly vulnerable to neo-patrimonialism. Inequality continues with illegal deprivation of resources.

Once we have refreshed our minds on the historical roots of inequality, we can argue that the crucial criteria to assess the CWA at the policy level are thus linked to its concrete capacity to interrupt the aforementioned trends. The CWA should promote an alternative development model that is not based on primary production, but looks instead at boosting secondary or tertiary products. An effective and path-breaking cooperation should interrupt the cycle that makes of Africa a continent for cheap and unskilled labor that is primarily oriented at producing raw products for Western industries and markets. Understood in this sense, the kernel of the matter is not about the balance between states or the free market: one has to ponder who the private investors in Africa will be, considering that the continent presents, also for the reasons above, lower numbers of entrepreneurs and corporate groups, as well as of educated, skilled, people to cover key positions.

In this discourse, it is quite surprising to see not a single mention of African diaspora in the CWA. Surely, diaspora can be subsumed in the category of private investors, as it indeed is, yet I believe that it is quite outmoded imagining development without referring explicitly to diaspora and their local knowledge, as privileged development partners.

In these circumstances, one may wonder about the real risks involved in exposing service provision in African states to further vulnerability on the global markets, and about what are the instruments put in place to protect African consumers. Here, the CWA should have been more accurate in indicating how it intends to secure that services will not be provided only by foreign enterprises; that there will be opportunities for high-skill acquisition by Africans; that Africa’s wealth will not massively flow outside the continent; finally, that African states will have the instruments to deal with the social costs of global capitalism (tax evasion; environmental risks; social security). In other words, in order to translate CWA in a long-standing development, liberalization should come with a modicum of strategies (e.g. special agreements; protection; subsidies to local firms) to reduce dependence on foreign companies. These points should be central in a growth strategy that aims at marking a break with the past.

Besides the intricate workings of neoliberalism, we should not overlook the influence of ideology and knowledge for policymaking. Mensah has rightly maintained:

“Arguably, more than the production and consumption of material goods, it is in the creation of knowledge that the West seeks to sustain its hegemonic grip on the ‘Third World’ under a purportedly value-neutral development discourse”.

Eventually, we are back to an issue that is old as time, which concerns the understanding of what “development” means per se. Prominent Guyanese intellectual Walter Rodney underlined this problematic aspect already in the early 1970s, when he remarked that the notion of development is “tied in with the state of the society as a whole”. Development is never only an economic phenomenon, but involves far deeper socio-political matters, not least the way people control and give sense to their lives, as well as the kind of values and aspirations cherished by each and every society. Nevertheless, as Mkandawire and Soludo have recently noted, “[n]o other region of the world has been so dominated by external ideas and models” as Africa. Think of the influential Chinese economic development model in Africa. Think also about the essentialization of development in terms of variations in the Gross Domestic Product (GDP), which one retrieves also in the key CWA documents. GDP is not just a number, free from ideology: giving prominence to GPD means embracing the idea of perpetual growth, and more broadly, believing in the expansion of production as solution to socio-economic problems (see Lepenies 2016). Development, intended as modernization and super-consumerism, may not be a generalized ambition— therefore, the poorest countries do not represent “simply the rich North before its take-off” (Kalb, Pansters, and Siebers 2004).

Even worse, while reliable GDP indexes and other indicators require thorough data collecting, researchers show that economic as well as statistical estimates in Africa have to be taken with a grain of salt, because we are often in front of “poor numbers” (Jerven 2013) and “guestimates” (Bevan 2008, 208) in reason of their low accuracy.

However, this theme exposes another essential aspect of the issue: Africans are not great fans of their indigenous economic models, and often we are not even aware of the loci of African knowledge production and diffusion. While this state of things is set to change, as initiatives of indigenous knowledge valorization and deconstruction of Eurocentrism in school curricula are on the rise, a more intense circulation of ideas and intra-continental exchange of experiences is definitely needed, especially among political elites, and will be beneficial for future policymaking. Ruptures with current understandings of development will pass also through these processes.

Conclusion

The general impression is that while CWA’s economic formula contains appealing guidelines for initiating economic development (infrastructures; investments; service delivering), it does not address with the same adequacy long-term stability and protection from risks (from the environment to debt management) and global volatility. Risks are only understood as risks for the investors. The development strategy discussed in Berlin, thus, embraces for most part the still prevailing economic credo— the self-regulating market, and subsequently re-proposes similar measures seen already in the recent past, at least in the general framework of action presented so far.

Hence, the analysis provided in this article has helped putting in the right perspective Shizha’ and Abdi’s assertion that “neo-liberal globalization and development paradigms”, de facto, “re-enact colonialism”, in tragic continuity with the past. Yet, even if we put aside the ghosts of (neo-)colonialism, elements of criticism persist in policy formulation. Since privatization tends to divert development in the direction of profit maximization, we should think in advance about who will manage the balance “lucrative vs. socially-needed” services, for example.

Also, since the market is volatile by definition, a thorough discussion should clarify how do we ensure that skills and capital will remain in place, when corporations and international funds will move towards greener pastures. Otherwise, development will be short-lived. The EU, which perceives itself as a stakeholder in the future of Africa, could play a more significant role in relation to these issues, becoming the main promoter of a model that insures also African citizens from rapacious private interests. For the moment, however, the EU has not matured yet the position of “a truly responsible and capable global actor” (Mayer 2012, 457). This position is no longer sustainable, especially since Europe and Africa are integrated within an increasingly connected system in which socio-economic effects of development and global trade are felt on both sides.

* MARCO ZOPPI has obtained his PhD in Histories and Dynamics of Globalization at Roskilde University, Denmark. He holds a MA in African Studies pursued at the University of Copenhagen. His personal interests include Euro-Africa relations, colonialism and welfare. Feel free to contact him at: [email protected]

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