The European Commission has defined five areas of investments – so-called investment windows – for its External Investment Plan. The aim is to raise at least 44 billion euros in private investment for Africa by 2020, notably for the most fragile parts of the continent. The EU Commission presented its five investment windows In the run-up to the EU-Africa Summit in Abidjan, Côte d’Ivoire, in late November.
"Micro, Small and Medium Enterprises (MSMEs) Financing"
At 66 per cent, the area of Micro, Small and Medium Enterprises (MSME) accounts for the largest share of employment in countries in economic transition. The MSME are of importance both for the local ecosystems and for business activities in Africa. In terms of its access to financial resources, this economic sector is limited, and investing in it entails a particularly high equity risk. The EU MSME investment window MSME seeks to bring together the demand for financial products among small enterprises and supply in Sub-Saharan Africa with tailored solutions. The aim is to progressively oust the informal sector.
"Sustainable Energy and Sustainable Connectivity"
The Paris Climate Agreement and Agenda 2030, one of the goals of which is to provide energy for everyone, are opting for renewables. Often, political framework conditions, bad governance and a lack of infrastructure prevent the tapping of new energy sources. Investments in these areas are to create the domestic market as well as cross-national grids in order to transform present economies into low-carbon economies with renewable energy sources.
While urbanisation only requires a small area, it leaves a considerable ecological footprint. Cities generate 88 per cent of the gross national product in countries world-wide, accounting for 70 per cent of primary energy used world-wide and emitting 80 per cent of total greenhouse gas emission. At the Paris Climate Conference, 450 cities with around one billion inhabitants in all agreed to reduce their emissions by more than 50 per cent by 2030. Investments in sustainable cities are urgently needed in the areas of mobility, water and wastewater management, energy and the circular economy.
"Sustainable agriculture, rural entrepreneurs and agroindustry"
More than 500 million smallholders have to help secure food supplies world-wide. On a global scale, they account for a major share of employment. Many smallholders work land owned by the local community or the government in remote regions. Investments in this area are to offer them growth strategies via co-operatives, mechanisation and insurance solutions regarding climate risks. The aim is to strengthen smallholders and thus guarantee food security for their countries.
"Digitisation for Sustainable Development"
Africa has the greatest potential for a digital dividend. In 2015, 80 per cent of its inhabitants had a digital terminal, although the digital industry accounts for just 6.7 per cent of the sum of gross national products. At least this has led to the creation of 3.8 million new jobs. Today, Africa has more than 180 digital hubs, and it is regarded as a champion of innovation for digital financial transactions. However, the countries themselves are still far from generating a digital dividend. Legal framework conditions as well as incentives for private investors are lacking, and there is an imbalance between cities and rural areas. At 23 per cent of the population, the rate of digital users in cities is twice as high as it is in the rural areas. Investments are to enhance the spread of broadband technology, facilitate eSkills and generally promote eCommerce.
Roland Krieg, journalist, Berlin/Germany