European Union And Challenges Of Africa’s Development; A Critical Appraisal, 1999-2010

Project and Seminar Material for International Relations

European Union And Challenges Of Africa’s Development; A Critical Appraisal, 1999-2010


Abstract


This study examined the European Union, EU and challenges of African development. Specifically, the study ascertained if the increasing rate of EUAfrican relations has increased the volume of trade between EU and Africaand secondly, ascertained if the increasing rate of EU-African relations has increased the volume of foreign direct investment from EU states to Africa.

The study interrogated the following research questions.

  1. First, has the increasing rate of EU-African relations increased the volume of trade between EU and Africa?
  2. Second, has the increasing rate of EU-African relations increased the volume of foreign direct investment (FDI) from EU states to Africa?

The theory of complex interdependence was chosen as our theoretical framework. Our choice of the theory is because of its ability to highlight cooperative actions among states and facilitate deep understanding of global patterns of interrelationship.

The study relied on secondary sources of data, and as such generated both qualitative and quantitative data. After a critical analysis of available data, the study revealed as follows: first, the increasing rate of EU-African relations has increased the volume of trade between EU and Africa. Second, the increasing rate of EU-African relations has increased the volume of foreign direct investment from EU states to Africa.

Based on these findings, the study is of the view that Africa as a continent should deepen the rate of economic activities between her and EU in order to attract more FDI and trade deals. Further, Africa should cultivate, and compete for, foreign direct investment inflows to bridge their domestic saving-investment gap and therefore augment the available funds to finance development process through bilateral investment agreements like their developing countries counterpart in other regions.


Table of Contents


  • Title page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Contents
  • List of Tables and Diagrams
  • List of Abbreviations
  • Abstract

Chapter One:

Introduction

  • 1.1 Background to the Study
  • 1.2 Statement of the Problem
  • 1.3 Objectives of the Study
  • 1.4 Significance of the Study
  • 1.5 Literature Review
  • 1.6 Theoretical Framework
  • 1.7 Hypotheses
  • 1.8 Methods of Data Collection and Analysis

Chapter Two:

The Evolution of EU And EU-African Relations

  • 2.1 History and Development of European Union
  • 2.2 Organs and Institutions of European Union
  • 2.3 History and Development of European Union-African Relations

Chapter Three:

EU Strategy and Trade Investment in Africa

  • 3.1 EU Trade Policy Towards ACP Countries
  • 3.2 EU Trade in Goods and Services in Africa

Chapter Four:

The EU and Foreign Direct Investment in Africa

  • 4.1 Rational for Foreign Direct Investment
  • 4.2 Why FDI is Important to Africa
  • 4.3 Initiatives taken by African countries to attract FDI
  • 4.4 Incidence of FDI Inflow from EU into Africa

Chapter Five

Summary and Conclusion

  • 5.1 Summary and Conclusion
  • Bibliography

Chapter One


General Introduction

1.1 Introduction

International relations are undergoing profound change with newly emerging powers entering the scene. The European Union is itself an “emerging” foreign policy actor, hoping to reinforce its political influence in order to match its weight as global development actor (2007). The European Union, (EU), is an international economic organization comprising some advanced countries of the north, which originally included France, West Germany, Belgium, Italy, Luxemburg and the Netherlands. It has however, to include twenty one (21), other countries namely, Austria, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Ireland, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and United Kingdom. Through a conglomeration of the African, Caribbean and Pacific, (ACP), group of states which today number seventy nine, (79), (48 African, 16 Caribbean and 15 Pacific) countries are associated with the EU.

As a result of the Cold War, Europe took so much interest in the affairs of Africa coupled with the fact that most of the African countries were colonized by Major European powers and dependent on them. It is also believed that Euro-African relations arises by default. According to John (1995:95):

Africa’s dependence on Europe also arises by default, that is, from the failure of African countries to diversify to any significant degree their trading links in the three decades since most states received their independence…And Africa’s economic decline makes the continent an attractive prospect as trading partner.

Europe, preoccupied with the its own problems as it moved toward the establishment of a single integrated market in 1992 and with the growing instability on its eastern borders following the disintegration of the Soviet Bloc, appeared, in the early 1990s, to have lost enthusiasm for the development compact with Africa. Following the end of the Cold War, it seemed that the EU and its Member States were losing interest in Africa. At the level of the bilateral policies of the Member States, France, the United Kingdom, and numerous other countries in Europe cut substantially the level of their development programmes (Fredrik, 2007).

In fact, John (1995:96) observed that:

Even France, long the champion of increased assistance to Africa within the European Union, seemed to be tiring of the cost of supporting its sphere of influence.

However, since international politics is shaped by the underlying global dynamics and the political context of each continent. The relationship appears to be on the resurgence. With the beginning of the new century, the collective commitment to double aid to Africa and to enhance its effectiveness has increased among members of the EU. The 2000 Lomé Agreements – renamed Cotonou Partnership Agreement (CPA) has become the main legal framework of cooperation between the European Union and the African, Caribbean and Pacific Group of States (ACP). The first EU-Africa Heads of State Summit in 2000, in Cairo, recognised the need for a new high-level political relationship between the two continents and professed a new standard of multilateral cooperation that would not be based on the usual post-colonial perspectives and donor-recipient philosophy (Andrew, 2010).

Further, the adoption of the European Consensus on Development, the ambitious agenda on policy coherence for development marked a change in the EU’s approach to international development. On the other hand, the process towards a ‘common’ strategy for Africa, which culminated in the Joint Africa-EU Strategy adopted in Lisbon in

December 2007, meant that the EU was trying to play a leading role in the international arena (Fredrik, 2009).

Africa, therefore, became central not only to the EU’s development policy, but, more widely, to its overall external affairs. This study has been designed to critically evaluate the European Union and challenges of development in Africa.


1.2 Statement of the Problem

Europe’s relationship with Africa is not new. It is deeply rooted in history and has gradually evolved from often painful colonial arrangements into a strong and equal partnership based on common interests, mutual recognition and accountability. Europe and Africa are connected by strong trade links, making the EU the biggest export market for African products. For example, approximately 85% of Africa’s exports of cotton, fruit and vegetables are imported by the EU. Europe and Africa are also bound by substantial and predictable aid flows. In 2003 the EU’s development aid to Africa totalled €15 billion, compared to €5 billion in 1985. With this, the EU is by far the biggest donor: its ODA accounts for 60% of the total Official development Assistance, ODA going to Africa (see Commission of the European Communities, 2005).

Moreover, some EU Member States retain longstanding political, economic and cultural links with different African countries and regions, while others are relative newcomers to African politics and development. At Community level, over the last few decades the European Commission has built up extensive experience and concluded a number of contractual arrangements with different parts of Africa that provide partners with a solid foundation of predictability and security.

However, for too long the EU’s relations with Africa have been too fragmented, both in policy formulation and implementation: between the different policies and actions of EU Member States and the European Commission; between trade cooperation and economic development cooperation; between more traditional socio-economic development efforts and strategic political policies. Neither Europe nor Africa can afford to sustain this situation and in December 2005, the European Union made a decisive effort to define a more strategic platform for its relations with Africa, aiming at a mutually beneficial partnership.

Against this backdrop and building on the work of the first Africa-EU summit in Cairo in 2000, leaders from both continents decided to move cooperation to a new level in 2007. At the Lisbon Summit, 80 Heads of States and Government from Europe (27) and Africa (53) agreed to pursue common interests and strategic objectives together, beyond the focus of traditional development policy. To do so, they adopted the Joint Africa-EU Strategy which redefines the relations between the two continents for tackling global challenges together. In the context of the Strategy, the first action plan covering the period 2008-2010 and introducing concrete measures was structured around eight strategic partnerships: As noted by the EuroBarometer (2010), the areas of strategic partnership are:

  1. Peace and security
  2. Democratic governance and human rights
  3. Trade, regional integration and infrastructure
  4. Millennium development goals (MDGs)
  5. Energy
  6. Climate change
  7. Migration, mobility and employment
  8. Science, information society and space

However, studies in Africa’s relations such as Adogamhe, (2006); Princeton (1988); Diamond (1995); George (2006); Cornelissens (2000); De Lorenzo (2007); with the rest of the world has always centered on her relations with America, with specific countries within the EU and more recently with China. This does not help us to understand the trajectory and dynamics of Africa-EU relations. More fundamentally, this has glossed over the role of EU in Africa’s development. Hence, this forms the lacuna in literature that we seek to bridge. This study therefore, sets out to critically appraise the EU and its role in development in Africa.

In the light of the above discussions, we pose the following research questions:

  1. Has the increasing rate of EU-African relations increased the volume of trade between EU and Africa?
  2. Has the increasing rate of EU-African relations increased the volume of foreign direct investment (FDI) from EU states to Africa?

1.3 Objectives of the Study

The broad objective of this study is to critically appraise the EU and development in Africa. Specifically, this study has the following objectives:

  1. To ascertain if the increasing rate of EU-Africa relations has increased the volume of trade between EU and Africa.
  2. To ascertain if the increasing rate of EU-Africa relations has increased the volume of foreign direct investment from EU states to Africa.

1.4 Significance of the Study

The study has both practical and theoretical significance.

Practically, the study will guide policy makers of African states in their relations with the external environment and in their domestic policy making and implementation process to develop effective ways in its relation with other continents of the world. Further, as no nation in Africa is static and every generation has its own unique problems, this work will serve as a catalyst to the present and future generations of Africa to deepen Africa’s relations with EU knowing that we are presently in an interdependent world.

Theoretically, this study will provide students of international relations with new knowledge on Africa-EU relations. The study will equally add to existing literature on Africa-EU relations and expectedly, provoke further research on the subject matter.

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Summary and Conclusion


This study examined the EU and challenges of African development. Specifically, the study ascertained if the increasing rate of EU-African relations has increased the volume of trade between EU and Africa and secondly, ascertained if the increasing rate of EU-Africa relations has increased the volume of foreign direct investment from EU states to Africa. Meanwhile, the First and Second Younde Coventions and the various Lome Conventions economic agreements between Africa and EU is an indication that both blocs have a robust economic relations and continue to see each other as a viable economic partner.

On the basis of this, therefore, this research work was motivated by the desire to provide satisfactorily answers to the understated research questions:

  1. Has the increasing rate of EU-African relations increased the volume of trade between EU and Africa?
  2. Has the increasing rate of EU-African relations increased the volume of foreign direct investment (FDI) from EU states to Africa?

In order to adequately address the foregoing research questions, we used the complex interdependence theory as our theoretical framework. Our choice of the theory of complex interdependence was informed by its analytical utility especially; its ability to explicate that economic interdependence is at the heart of relations among states. We equally chose this theory because of its ability to highlight cooperative actions among states and facilitate deep understanding of global patterns of interrelationship.

In an endeavour to arrive at a satisfactory answer to the research questions, we adduced the following hypotheses:

  1. The increasing rate of EU-African relations has increased the volume of trade between EU and Africa.
  2. The increasing rate of EU-African relations has increased the volume of foreign direct investment from EU states to Africa.

The study relied on secondary sources of data, and as such generated both qualitative and quantitative data. These were presented and analyzed accordingly. Arising from this and our findings from the study, we conclude as follows:

Firstly, we conclude that the increasing rate of EU-African relations has increased the volume of trade between EU and Africa. This is because since 2004, the value of extra-EU trade in goods with Africa has risen substantially, with imports (mainly energy products) consistently higher than exports (especially machinery and transport equipment). In fact, The EU-27 consistent trade deficit with Africa since the beginning of the decade turned into a near trade balance in 2009, with a trade surplus of EUR 0.8 billion. The increase in the value of imports in the years prior to 2009 could largely be attributed to energy products, which follow world prices and were mainly imported from Algeria, Libya, Nigeria and Angola.

Secondly, we conclude that the increasing rate of EU-African relations has increased the volume of FDI from EU states to Africa. Obviously, EU-27 foreign direct investment (FDI) stocks held in African countries in 2008 amounted to EUR 153 billion, or 4.7 % of worldwide extra-EU-27 FDI stocks. EU-27 stocks were mainly held with enterprises located in South Africa (30 %) and Nigeria (17 %). France and the United Kingdom in particular have invested substantially in Africa: at the end of 2008, these Member States held respectively 26 % and 13 % of EU-27 stocks in Africa. Conversely, EU liabilities towards African investors reached almost EUR 25 billion, with nearly one quarter owed to South

Africa. Comparatively, French enterprises held the most stock liabilities with African countries.

Following the conclusions of this study, we recommend as follows:

  1. Africa as a continent should deepen the rate of economic activities between her and EU in order to attract more FDI and trade deals.
  2. African countries should largely cultivate, and compete for, foreign direct investment inflows to bridge their domestic saving-investment gap and therefore augment the available funds to finance development process through bilateral investment agreements like their developing countries counterpart in other regions.
  3. African countries should ensure that domestic investment framework and environment in their countries should be devoid of investment-bias environment and relatively liberalised to allow for foreign participation in many sectors of their economies through investment promotion, and later, investment protection.
  4. In support of inward investment, Africa should provide overseas companies with the information they need about starting, or expanding, a business in the Africa. This includes details of locations, financial incentives, product sectors, availability of labour, employee costs and skills and the tax regimes which are in place as well as providing information on planning regulations and suppliers.
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