With numerous untapped investment opportunities in Rwanda and the East Africa region and growing interest by multiple external partners, the European Union has expressed intention to deepen their economic and trade relationship with Africa, through investment and job creation.
However, given previous experience and existing framework, experts are wondering if the new arrangement will this time round serve the interests of both parties, a balance that has been lacking under previous arrangements.
Last month, EU President Jean-Claude Juncker, proposed to deepen the EU’s economic and trade relations with the African region through investment and job creation.
This latest move by Europe comes at a time when different blocs including Asiatic countries, The Gulf and Americas are increasingly looking at Africa for trade, and not to do charity work as has been the case for years.
Speaking in Kigali yesterday, the European Commission’s Director General Stefano Manservisi said that there is a growing change of perception of growth in relations of the two blocs to ensure mutual benefit.
This new approach involves deepening investment and trade.
The difference from previous approach by the EU in the region is that it seeks to increase private sector involvement at multiple levels and has support mechanism for all players.
Manservisi said that the approach is a departure from the system of grants that has prevailed for generations.
“We are changing the way in which we view investments and make them the centre of relations to bring private investments and players at the centre of the relations and interactions,” he said.
He said that this will be effected through initiatives such as a guarantee facility to help private investments who may have interest in the continent but fall short in capital.
“The centre of the approach will be increasing the way the private sector is involved in the continent,” he said.
A prerequisite of the model, however, will be increased interactions to understand conditions of investments, opportunities and best ways to make the most of them.
This will help us know each other better, conditions of investments, opportunities and the best way to make the most of the opportunities, he added.
Other aspects of the model he said will include financial injections, technical assistance following the assessment of capacity needs as well as efforts to improve respective business environments for investment.
He noted that the major objectives of the approach would be to increase the creation of jobs, especially for women and children.
Manservisi said that the framework is ideal for Rwanda as the country already has a conducive business environment, growing clean energy, regional interconnection among others.
The EU has allocated about Euros 32 billion beginning the next economic cycle for the initiative’s activities.
There is, however, cautious optimism by a section of pundits given the experience of the Economic Partnership agreement between the European Union and the East African region.
The recent Economic Partnership Agreement failed to sail through as a number of East African Countries were undecided on its impact in regional economies.
By the lapse of the previous deadline, only Rwanda and Kenya had signed the agreement rendering it ineffective as all EAC partner states had to accede to it.
Lines on whether to sign it or not were sharply split with some with the view that EPAs are not ideal for the region as it will open up the region to more European exports which could promote unfair competition and kill regional industries.
Experts say that there are observations that EU continues to have stringent and constraint African countries when entering into economic partnership agreements.
Dr Elvis Mbembe, an economic lawyer said that as a general observation, the EU often has stringent conditions and somewhat unfavourable terms of trade when engaging the continent making it hard to partner with African countries.
For instance, the EU continues to prefer multilateral agreements with regional economic blocs as opposed to bilateral pacts which some say ignore complex situations in geopolitical relations.
However, Rwanda Development Board’s Chief Executive, Clare Akamanzi, said that they are optimistic about the partnership with African countries and are working out initiatives to make it beneficial.
“It is aligned to what we would want as a country. We have always been clear that we need to work from an angle of mutual benefit and respect. We have agreed to work with them to attract more investments from the EU and work through the technical assistance angle to have impacts such as reducing risks, guarantees for investment in Rwanda and improving the business environment,” she told The New Times.
This is in line with ambitions such as promoting the manufacturing sector, job creation among others.