Africa: Asia leaps as Europe lags
30 June 2009
Il Sole-24 Ore
The European Union used to be the major partner for African governments, but it has increasingly lost ground to China, Russia and India, which now leads the race to take advantage of the continent's precious resources.
Europe used to be the major funder of development deals in Africa, which was an exclusive preserve for European businesses – a bit like Latin America is for the United States. However, in recent years, dialogue between Europe and Africa has ground to a halt. Europe's policy for development and the distribution of non-recoverable grants has failed, in spite of the generosity of Brussels, which will have spent almost 10 billion euros on the continent in the period from the year 2000 to 2013.
China and India have been quick to step in to fill this vacuum. African governments like dealing with these countries, both of which have built a reputation for the efficient completion of projects and rapid responsiveness. They also provide expertise at a lower cost and easily obtainable long-term loans. But perhaps the most marked difference is in what might be termed "a business only approach:" unlike their European competitors, China and India do not make a fuss about democracy, the fight against corruption, or respect for human rights. In short, they do not tell Africans what to do. But now Europe appears to be rediscovering the importance of Africa. In view of the financial crisis, the slowdown in growth, and the quest for new sources of energy and raw materials, the EU can no longer risk losing its ties with African states.
From a business perspective, Africa is a largely untapped resource for a huge range of raw materials. The continent has: 10% of the world's oil reserves, 90% of the its platinum, cobalt and chrome, 60% of its manganese, 40% of its gold, 30% of its uranium and bauxite, and 25% of its titanium – and this list does not even begin to detail the vast potential for development in areas like agriculture, which could have enormous impact with better management.
Awareness of the possibilities afforded by increased trade with Africa is not restricted to Europe. In recent times, a new breed of colonists led by China and India have set about securing a share of these resources which are vital to so many industries in industrialized and developing countries. Dmitri Medvedev is also keen to ensure that Russia plays an important role, and his recent tour of African capitals was rewarded with a string of contracts that include a procurement deal for uranium and a place for Gazprom in the consortium that will develop the trans-Saharan gas pipeline. The 15-billion dollar energy infrastructure project will transport natural gas for a distance of 4,300 kilometres from Nigeria to Italy and Spain. For Europe, the gas pipeline also represented an opportunity to diversify its energy supply, and make it less dependent on Russia. At least that was the intention, but given this latest development, it may no longer be the case.
Europe is finally beginning to understand that its privileged access to the African continent is now a thing of the past, and that it would do well to adopt a defensive strategy if it is to maintain its existing interests. In the light of a grim record of misunderstandings and poor communication, how can such a goal be achieved? For the most part, its a relationship that has to be rebuilt from the ground up, and the starting point will likely be the construction of transport infrastructure, the absence of which has long been the main obstacle to development. Europe could not make a better choice to re-establish ties with Africa than to weigh in heavily behind projects of this kind. At least, so it seems on paper. But will Europe's financiers and companies, many of which appear to have given up on the continent, warm to such a strategy? According to France's Michel Démarre, President of European International Contractors and CEO of a civil works company present in 40 countries (but no longer present in Africa), such a plan would constitute a huge challenge that would involve circumventing "political instability and interference, in a context of critical financial difficulties and a chronic shortage of local resources."