Strengthening the AU-EU partnership on the economic development and trade agenda – Policy recommendations

FIVE PRACTICAL POLICY RECOMMENDATIONS

There is significant scope for a stronger, more explicitly “branded” AU-EU partnership. Here we offer five examples of opportunities in areas relevant to the economic development and trade agenda:

RECOMMENDATION 1

FOCUS EXPLICITLY ON AFRICAN EXPORT-LED INDUSTRIALISATION AND PRIVATE SECTOR DEVELOPMENT THROUGH TRADE

Give particular attention to designing and implementing robust industrial and trade policies (pursuing sustainability and inclusion and fostering dynamic services). Making this a success requires:

• rigorous context analysis, to identify appropriate strategies, policy space and support; and

• accepting a degree of risk and engaging in an iterative process of learning and adapting.

Emphasise building productive capacities and creating quality jobs, especially through regional value chains, given their relevance in the ongoing AfCFTA endeavour. Focus on:

• regional strategies, which if carefully designed, can yield truly win-win partnerships between countries; • striking the right balance between national priorities and regional ambitions; and
• sector-specific support, identifying niche activities in a value chain that can foster collaboration between countries in the current competitive environment.

Actively foster linkages between the EU and the African private sector, especially SMEs, by exploring supplier relations. Through “learning by exporting”, African firms can quickly expand their productive capacities while becoming acquainted with EU standards requirements through peer exchange and feedback.33 Promoting this “missing middle” is key to truly reap the benefits of the AfCFTA. Instruments that can serve this purpose are:

• trade fairs;
• strategic joint ventures between African and European firms; and
• matchmaking instruments.

 

RECOMMENDATION 2

Pay specific attention to the AfCFTA process, focusing on:

• AfCFTA implementation and other accompanying measures;

• existing African agendas, such as support to reduce non-tariff barriers;

• the coherence of trade agendas with external parties, including the EU, with the AfCFTA framework and priorities.

Stimulate exchanges of experiences, as these can provide concrete assistance in response to needs on the ground, resisting the allure of ready-made solutions and one-size-fits-all models. Exchanges of experiences can be particularly beneficial on topics of:

• regional integration processes (e.g., regulatory issues and institutional development);

• regional value chain development, among many others.

 

RECOMMENDATION 3

SUPPORT DIGITALISATION FOR INDUSTRIAL DEVELOPMENT

Digitalisation plays a central role in sustaining industrial development. Key areas to advance African digitalisation are:

• knowledge sharing on digital technologies;

• scaling up of investments in soft infrastructure (e.g., skills building and R&D); and

• cooperation on topics like standards, data sovereignty, regulation and governance.

Given the important role of education in attaining industrialisation goals, the partnership can promote greater collaboration between educational institutions (especially for higher learning) and scale up existing programmes, including scholarships.

 

RECOMMENDATION 4

SITUATE THE AU-EU PARTNERSHIP IN THE GEOPOLITICAL CONTEXT

Tailor support to African needs, while focusing on comparative advantage. An example is the Global Gateway Initiative recently launched by Europe to be more strategic in two main ways:

• by focusing on technical expertise while providing financial assistance, for instance, to support regulatory framework reform and adoption of standards and norms; and

• by “crowding in” private investment through a mix of grants, soft loans and guarantees, thereby having greater indirect impact.

For infrastructure investments, leverage existing mechanisms, like Team Europe, better by:

• incorporating sustainability aspects, such as the use of renewable energy, digitalisation and transport infrastructure; and

• placing soft infrastructure and regulatory issues at the forefront, such as data protection and privacy laws, strengthening intellectual property rights, trade facilitation and competition policy.

Strengthen collaboration among financial institutions for development through, for example, regional investment platforms:

• to support SMEs and entrepreneurship, preferably working through domestic institutions; and

• to attract more patient capital towards productive investments in Africa.

 

RECOMMENDATION 5

PRIORITISE AN APPROACH THAT ENSURES POLICY CONTINUITY AND OWNERSHIP

• Make continuity of support a priority, to reconcile the inherently long-term quest for development with short term programmes and projects.

• To ensure local ownership of projects and programmes, establish joint mechanisms to pursue common actions.

• Channel support through African mechanisms and institutions, building on existing initiatives that reflect African ambitions. An example is to provide private sector, trade and investment support through the Boosting Intra-Africa Trade initiative.39 This does not, however, prevent Europe from drawing on its own experiences and instruments.

• Promote a more structured and intensive dialogue with civil society actors in both Africa and Europe, including research institutes and think tanks. They can be instrumental in creating greater awareness of the agendas and policy priorities of each side.