The European Union has launched a new investment package worth €150 billion ($169.67bn) for Africa to create an alternative to the “unfavourable and opaque Chinese funds”.
The European Commission President Ursula von der Leyen announced the investment plan at a news conference in Dakar last week with Senegalese President Macky Sall.
This investment is half of the EU’s €300 billion Global Gateway scheme, which was launched in December last year. It will be disbursed over the next 7 years to finance internet infrastructure like submarine and terrestrial fiber optics cables, cloud and data infrastructures, renewable energy, biodiversity, agriculture and food production, climate change initiatives, education, mobility, and more across the African continent.
Though the complete disbursement plan hasn’t been revealed yet, however, at the launch of the Gateway fund in December, the EU said the investment would come in the form of grants, loans or guarantees from EU institutions, governments, EU financial institutions and national development banks.
Also according to Reuters, an EU source said “the €150 billion could come in payments of €20 billion per year, of which only €6 billion would come from EU funds and the rest from EU states and private investors.”
This may be true as it is evident in the recent announcement by the EU’s Executive Vice-President Magarethe Vestager that €820 million ($927.5m) will be invested in Nigeria’s Digital Economy. And the investment package is a combination of €160 million ($180.9m) in grants and €660 million ($746.6m) in loans over the next two years.
The Global Gateway fund is launched to, among other things, reduce the dependency on Chinese’s Belt and Road project which was launched in 2013 and has helped China to dominate trade and infrastructure development in dozens of emerging countries around the world—African countries especially.
How will this play out, will it scale to become a solution or a bigger problem than the one it aims to solve?