Africa and Europe have interacted for centuries. This relationship has evolved from mercantilist interests for most of the history of the two continents, imperialist domination over Africa to the current stage of interaction which emphasises the need to deepen strategic partnership and co-operation, Afripoli reports.
In the last two decades, the European Union (EU) has made some efforts to transform this relationship from a donor-recipient relationship to one that is built on what the EU envisions as an “equal” partnership based on mutual respect and benefit. For example, the joint African Union (AU) and EU statement adopted at the 6th AU-EU Summit in Dakar, Senegal in 2022 states that a renewed partnership between the EU and the African continent should be based on “mutual respect and accountability, shared values, equality between partners and mutual commitments.”
Currently, the relationship between the two continents is centred on developing strategic partnerships around common challenges including climate change, peace and security, migration, digital transformation, sustainable growth and job creation. This article focuses on the relationship between Africa and the EU on industrial policy and industrial development in Africa. An analysis of the AU-EU relationship shows that since the beginning of formal relations between the two continents in the 1970s, little attention has been paid to industrial policy and industrialisation of the African continent.
The main focus of AU-EU interaction has been on trade and aid, and more recently on climate change and migration. Important issues such as skills development, technology transfer and industrial capacity building have not received much coverage. This is despite the fact that the African continent as a whole, through the Organisation of African Unity (OAU) and now the AU, has consistently articulated a common vision that sees industrial policy and industrialisation as vital to its quest for development. This article provides reasons why key elements of industrial policy between the two blocs have been largely overlooked.
AU-EU industrial policy co-operation
Africa and Europe were interacting even before the European discoveries in the fifteenth century. While this context is important to keep in mind, this article does not examine the history of this relationship; the focus is on official interactions between the countries of the two continents, particularly on issues related to industrial policy.
One of the first formal initiatives to develop relations between Africa and Europe was the Lomé Convention, signed in 1975 between the nine members of the European Economic Community (EEC, the forerunner of the EU) and members of the African, Caribbean and Pacific (ACP) group of countries. The Convention was seen as a means of promoting co-operation between European countries and countries in the developing world.
Under the Lomé Convention, co-operation between Africa and Europe focused on trade and aid. Trade relations were developed by giving EEC member countries free access to about 99% of exports from ACP countries without reciprocal trade obligations. This arrangement did not focus on industrial policy or strategies to promote industrialisation of the African continent; the focus was on trade.
In terms of aid, although various types of aid were provided to African and other ACP countries, they were not directed towards industrial development in the recipient countries. As a result of the low level of industrial development of African countries compared to EU countries, the dominant trade relationship between the two continents was characterised by Africa and other ACP countries supplying primary commodities to EU countries where they were processed into finished capital and consumer goods. It was noted that the trade mechanism under the Lomé Convention effectively established “harmonious and stable relations between producers and users of raw materials.”
In 2000, the Cotonou Agreement replaced the Lomé Convention as the new framework for developing co-operation between the EU and the ACP. For the EU, the Cotonou Agreement was seen as a mechanism to make a “significant contribution to the economic, social and cultural development of ACP states,” helping them to meet the challenges of globalisation.
Although the Cotonou Agreement emphasises the need to promote the growth of a competitive industrial sector in Africa and other ACP countries, no strategic measures are envisaged or implemented in this regard. The main objectives of the Cotonou Agreement include the reduction and eventual eradication of poverty in ACP countries, as well as the promotion of sustainable economic growth and the gradual integration of ACP countries into the world economy.
In terms of industrial policy, it is clear that in both the Lomé Convention and the Cotonou Agreement, the partners in the Africa-EU alliance assumed that granting preferential market access to EU member states would go some way to stimulating the growth of industrial production. This reasoning is consistent with mainstream economic theory, which argues that openness to trade can stimulate industrial growth, diversification and economic development. This idea explains why industrial policy has not featured prominently in Africa-EU co-operation.
However, this view has been refuted by studies showing that achieving sustainable economic growth in the current global economic context requires a specific type of industrial policy. Some analysts have gone even further, arguing that sustainable economic development is unlikely to be realised unless an active industrial policy is implemented.
Evidence of the importance of industrial policy for the AU
Interestingly, African countries, both individually and collectively through the OAU and its successor the AU, have consistently supported the development and implementation of sound policies aimed at promoting the growth and diversification of industrial activities on the continent. To illustrate that industrial policy is at the centre of African development strategy, we need to examine the various initiatives launched at the level of the African continent.
From the early days of independence in the 1960s, African leaders saw industrial policy as a strategic tool for the continent’s development, with the aim of increasing the continent’s share of global industrial production and achieving a reasonable degree of collective self-sufficiency. The first initiative for the industrial development of the continent was outlined in the Lagos Plan of Action, which declared 1980 as the first Industrial Development Decade for Africa (IDDA I) and the 1990s as the second Industrial Development Decade for Africa (IDDA II).
The LPA outlined a number of strategies to achieve the goal of industrial growth on the continent, such as the formulation and implementation of industrial policies, training of personnel in the required skills, and the establishment of appropriate financial institutions (including the African Development Bank) to provide the necessary financing. The LPA placed special emphasis on promoting regional co-operation among African countries to overcome underdevelopment and dependency.
The industrialisation of Africa as a whole, and of each individual member state in particular, represents a major option in the overall package of interventions aimed at ridding Africa of underdevelopment and dependency. The integrated economic and social development of Africa requires the establishment of an industrial base in each member state, tailored to the interests of that country and strengthened by complementary activities at the sub-regional and regional levels.
Interestingly, the LPA document emphasised the general tendency of developed countries, including EU countries, to discourage industrial development on the continent.
In 1996, the OAU launched the Alliance for the Industrialisation of Africa (AIA) programme under IDDA II. This was followed in 2007 by the launch of the “Accelerated Industrial Development of Africa” (AIDA) programme. Unlike the previous programmes, AIDA developed a set of measures and policies to be implemented by AU member countries to accelerate industrial development on the continent. AIDA argues that industrialisation is the engine of development and that the low level of development on the continent can be attributed to the low level of industrialisation.
Industrialisation is the most important engine of economic growth and development. Indeed, industrialisation is the essence of development. That Africa remains the poorest region in the world with 34 of the 50 least developed countries and growing poverty is a reflection of low levels of industrialisation and marginalisation in global production.
In 2010, the AU launched the Africa Agribusiness and Agro-processing Development Initiative (3ADI) to help build productive capacity on the continent. Since then, many similar initiatives have been launched at the continental level, including the Ten-Year Implementation Plan for Agenda 2063 adopted by the AU in 20132 and the Africa Industry Week (launched in 2018) to raise awareness of the importance of industrial development on the continent.
From this brief overview of industrial policy strategies adopted by the AU, it is clear that African countries have identified industrial policy as an important tool for economic development. However, it is unclear whether AU member states have raised industrial policy as an important issue in their partnership with the EU.
If the AU has raised the importance of industrial development in its engagement with the EU, it has not been given serious attention in the partnership. This can be explained by the fact that the two blocs have different views on the role of industrial policy in economic development. In this particular partnership, the EU, the dominant partner, has chosen strategic areas for co-operation with Africa. Promoting industrial development on the African continent is not among them for reasons discussed later in the article.
The dominance of trade in the AU-EU partnership
A close look at Africa-EU co-operation shows that industrial policy and issues related to industrial development have been largely sidelined. Since the mid-1970s, EU-Africa co-operation has largely revolved around trade and aid rather than industrial development.
While the range of issues covered by this co-operation has expanded in recent years to include food security, peace and security, democratisation, migration, good governance, digital transformation, climate change, green transition, job creation and investment promotion, trade and aid remain the main ones. The importance of trade in EU-Africa relations is illustrated by the fact that the EU has been Africa’s largest trading partner since its inception.
While Africa’s share of EU trade has been small, averaging only 4.7 per cent over the last 15 years, the EU’s share of Africa’s total trade has averaged a quarter of Africa’s trade over the same period. We see similar proportions in total African imports and exports, with the EU becoming the largest exporter and importer of African goods and services, despite China’s growing share.
An analysis of Africa-EU trade patterns confirms that Africa’s exports to the EU are dominated by commodities, averaging 67 per cent between 2011 and 2022, while EU exports to Africa are dominated by manufactured goods, averaging 70 per cent over the same period. In terms of imports to the continent, the EU is the largest source of imported goods and services, averaging around 30%, almost double the share of China.
In terms of foreign direct investment (FDI) to Africa, the EU is also the largest source of FDI to Africa, accounting for an average of over 45% between 2016 and 2022, well ahead of China, the US and other regions.
However, a large share of this investment has been in extractive rather than manufacturing industries. Beyond policy statements, empirical evidence also suggests that Africa-EU relations are characterised by asymmetry at different levels, with the EU extracting commodities from Africa.
Recent AU-EU partnership initiatives
In addition to trade and investment, several other AU-EU co-operation initiatives have been launched over the past two decades, starting with the development of the AU-EU Joint Vision in 2007, in which the EU expressed its desire to establish a more strategic partnership with Africa beyond the usual trade and aid arrangements. Examples include initiatives such as the Emergence Trust Fund for Africa launched in 2015, the 5th Africa-EU Summit held in 2017 in Abidjan, and the 6th Africa-EU Summit to be held in Dakar in 2022, culminating in the adoption of the Joint Vision 2030.
There are several reasons to explain the EU’s growing interests in Africa. One is the growing influence of China, which is often seen as a threat to Western interests in Africa. This was made clear at the 5th Africa-EU Summit, where there was a call to revive a “real alliance” between Africa and Europe, with then EU President Donald Tusk stating, “Today I call for a real alliance between our two continents, to face our challenges and seize our opportunities together.”
The call for a “real alliance” signifies the intention to turn the AU-EU partnership into something strategically important for both continents. Although the EU president did not specify what this new alliance would include, at the same summit, AU Commission President Moussa Faki Mahamat hinted at the need to transform the existing partnership into something more substantial, calling for “a strategic alliance rather than a simple partnership dedicated solely to the pursuit of mercantile interests.” Since the 5th AU-EU Summit, several initiatives have been launched to give the AU-EU partnership a new impetus.
In terms of industrial development and industrial policy, perhaps the most relevant is the Africa-Europe Alliance for Sustainable Investment and Jobs (AEASIJ), launched in 2018. It builds on the proposal put forward at the 5th AU-EU Summit to transform the partnership into a more substantive alliance. The AEASIJ aims to attract private investment and explore the huge opportunities that can benefit both African and European economies.
The AEASIJ initiative aims to attract investment, mainly from Europe, to the African continent and is seen as a strategy to combine the strengths of Africa and Europe for the benefit of both continents. Its initiative is expected to create 10 million jobs in Africa within five years.
While the AEASIJ initiative does not specifically target any industrial activities or sectors, it states that in an effort to attract investment to Africa, priority will be given to “high value-added sectors” with the greatest potential to create sustainable jobs for youth and women.
If this initiative is realised, the private investment it encourages could facilitate industrialisation and the creation of much-needed jobs, especially if it is channelled into non-traditional sectors, particularly manufacturing. Unfortunately, both history and current trends in FDI on the continent show that most investment is channelled into extractive industries, which contribute little to industrial development and job creation.
According to the World Investment Report 2023 (WIR), although the EU is the largest source of FDI in Africa, with the UK leading the way (USD 60 billion), followed by France and the Netherlands (USD 54 billion), the majority of this investment is directed to energy and other extractive activities, with a small proportion going to the manufacturing sector (UNCTAD, 2023). If this trend continues, job creation within AEACIJ will not be realised.
EU-Africa co-operation plan
The EU’s co-operation plan with Africa is set out in the Comprehensive Strategy with Africa (CSA), launched in 2020, which makes a strong case for “partnering with Africa, our twin continent, to jointly address the challenges of the 21st century and advance our common interests and future.”
The CSA identified a long list of common interests between Africa and the EU, including:
- developing a green growth model;
- improving the business environment and investment climate; fostering education, research and innovation, creating decent jobs and adding value through sustainable investment;
- maximising the benefits of regional economic integration and trade; ensuring food security and rural development;
- combating climate change;
- ensuring access to sustainable energy and protecting biodiversity and natural resources; promoting peace and security;
- ensuring managed migration and mobility;
- joint engagement on the world stage to strengthen the rules-based multilateral order, promoting universal values, human rights, democracy, the rule of law and gender equality.
It is clear from this list that the partnership involves going beyond the traditional Africa-EU co-operation on trade and aid. Although not specifically mentioned, there are several areas related to industrial development such as value addition, investment and job creation. However, it is interesting to note that the push for co-operation has largely come from the EU side, giving the impression that the AU is largely a passive partner.
While the AU has not explicitly objected to any of these initiatives, there is little indication that the partnership is formed on an equal footing, with each partner putting forward its own priorities to shape the co-operation. If the AU-EU partnership were equal, we would expect the AU to promote industrialisation as a key issue, given the centrality of industrialisation to the AU’s development agenda.
As noted above, industrialisation is only indirectly mentioned in the AU-EU partnership, although the AU sees it as a crucial aspect of the continent’s development strategy. On the other hand, the EU’s obvious interests are vividly expressed in the various initiatives of the AU-EU partnership, with migration topping the list.
Reasons for the low prioritisation of industrial policy in the Africa-EU partnership
There are several factors that explain the low priority given to industrialisation in the Africa-EU partnership. Three stand out among them. First, EU member states do not believe in an industrial policy that requires the state to play a central role in the economy; they rather see the market as the most effective institution to achieve industrialisation.
Thus, they do not see the need for an industrial policy that gives the state a greater role. Secondly, it is not in the EU’s interest to industrialise Africa as this would undermine its access to raw materials. As the trade data presented above shows, it is to the EU’s advantage to maintain Africa as a source of raw materials and a market for capital and consumer goods. Third, since most initiatives come from the EU – the dominant partner in the relationship – the focus is primarily on issues of strategic interest to it.
To create a genuine partnership, the AU and the EU must address existing asymmetries, including levels of industrialisation. Therefore, experts offer the following recommendations.
Recommendations
To create a sustainable and healthy strategic alliance between the AU and the EU, the two blocs must confront and address the existing asymmetries in the relationship. This will foster mutual respect and identify common strategic interests.
As industrialisation is central to the AU’s vision for the African continent, industrial policy should be a strategic area of co-operation between the AU and the EU.
In order to create a “true union” between the two continents, it is crucial to find a compromise on strategic issues between the AU and the EU. So far, the EU, as the stronger partner, has been pushing its strategic interests on the alliance agenda, while the AU’s central interests have been sidelined.
Conclusion
The relationship between Africa and Europe has evolved over the centuries. Initiatives to formalise these relations began in the 1970s with the signing of the Lomé Agreement, which was replaced by the Cotonou Agreement at the beginning of the new millennium.
While co-operation between the two blocs of countries has historically focused on trade and aid, the range of issues on which they seek to co-operate has expanded to include a wide range of issues such as migration, peace and security, climate change, investment, food security and sustainable development.
However, while the AU has made it clear that industrial policy and industrialisation are essential components of the continent’s development strategy, this issue has been sidelined in the AU-EU alliance.
