The latest initiative of the European Investment Bank (EIB) and the European Commission in favour of infrastructure in Africa (see this column yesterday) comes under the heading of increasing the volume and efficiency of EU aid to the least developed countries in general and to the African countries in particular. It targets a specific field: Major trans-national networks (roads, railways, energy and telecommunications). Experience on the ground has shown that where these networks do not exist, national projects, particularly in the field of industry, often have very little future. But most of the African countries are not in a position to acquire the resources they need, unless they are able to benefit from ultra-reduced interest rates. This is where the newly-created Trust Fund on Infrastructure comes in (see our bulletin 9128). For the initial phase (the years 2006 and 2007), the European Commission is making 60 million EUR available under the current EDF, allowing the EIB to lend between 250 and 300 million EUR at a rate of 2%, for such projects as the electricity interconnection between Mozambique and Malawi, or the joint hydro-electrics project for Senegal, Mozambique and Mali. The figures I quote are certainly modest within the overall context of European development aid, but the Trust Fund could have political, strategic and economic implications. In particular:
1. Expertise. The Trust Fund will allow the EIB to make its expertise in the field of infrastructure available to Europe, by getting involved in the funding of public, private or mixed projects, under conditions which are acceptable to the beneficiary countries.
2. Expansion. The money available under the Trust Fund is set to increase rapidly, because the next EDF will extend its involvement (allowing the EIB proportionately to increase its reduced-rate funding) and, above all, the Member States will make their contribution to this funding. They have undertaken considerably to increase the global volume of their development aid: why should not a proportion of this extra money be entrusted to the Fund? This would be in everybody's interests (see the following point).
3. Visibility. Europe's aid to Africa (it is, far and away, the largest donor) would become more visible. Europe would, of course, continue to cooperate with the World Bank, but "instead of signing cheques for decisions taken elsewhere", it would have greater autonomy in the choice and management of the projects it funds. Each Member State would have three choices, explained Louis Michel: national funding, contribution to the Trust Fund, contribution to a World Bank project. This latter institution, observed Philippe Maystadt, would keep its role as overall boss in determining macro-economic policies, and Europe would have greater autonomy in the choice and management of actual projects on the ground.
Misgivings and hopes. These plans have given rise to a few reservations. It is still generally accepted that the African countries are bent double under the weight of their debt, and the Trust Fund itself would bring about further indebtedness, even though the interest rates are extremely low. Added to this general observation are specific criticisms of the EIB's actions in the developing countries: for more on this subject, see the summary of the report published by non-governmental organisations, and supported by the United Left (GUE/NGL) group of the European Parliament, in our bulletin 9128. All that Philippe Maystadt can say, by way of a reply, is that we are still learning and that we can always improve our performance, indicating that the EIB has recruited additional specialised personnel to monitor the achievement and management of projects financed under the Trust Fund.
In conclusion, the Trust Fund on Infrastructure is certainly unlikely to revolutionise European support to Africa; there are other, more important elements, and I will come back to these. But the direction it takes is encouraging. Current shortcomings in the behaviour of many African countries should not discourage efforts to improve the situation. It is true that the most recent reports on the pillage of natural resources in the Democratic Republic of Congo show the local authorities, and certain Western companies who benefit from this, in an equally appalling light. The same goes for indications about corruption and money disappearing into tax havens as soon as it becomes available. It would be naive to believe that all the projects to be paid for by the Trust Fund will, a priori, be a success, and there will doubtless be cases when the borrower countries will sing the well-known chorus: we cannot pay the money back. But in many African countries, the authorities' efforts are effective and progress genuine. We need to have faith. (F.R.)