Although regarded and considered by most an African forum, the African Development Bank (AfDB) Annual Meetings hosted in Kigali last week attracted investors, policy makers and government officials from European nations, most of them coming in to give their input on ways to achieve the Africa that is desirable by all Africans. Pier Carlo Padoan, the Italian Minister for Finance was around on a mission to deepen European Union ties with Africa. Padoan will also with effect from July assume office as the president of the European Union Economic and Finance unit. Collins Mwai spoke to him on European Union’s involvement with Africa and below are the excerpts.
What is Italy’s and European Union’s interest in the African Development Bank deliberations?
It is the first time an Italian finance minister has visited Rwanda or attended the Annual Meetings. I came here in dual capacity, as the Italian finance minister as well as incoming president of the European Union economic and finance ministers, a position I will assume in July.
I think it is important that Europe acknowledges the efforts the Rwandan government has put in place to boost the economy and transform the lives of its people. Most European countries are looking forward to working with Africa for the development of both economies.
As far as the Italian presidency is concerned, we will stress the need to enhance relationships between African Countries and the European Union.
As the AfDB celebrates 50 years, what are their greatest achievements from the European Union’s point of view?
There has been great progress in ensuring the availability of financial resources to leverage investments and also strengthen institutions to increase stability and foster democracy.
The bank has helped countries’ efforts to improve business environments and private investments. The bank has leveraged both financially and institutionally. A good example of countries that have utilised the opportunity to work with the Bank is Rwanda which has been able to develop sound institutions and a conducive business environment. This is what I would call a best practice case.
What is the status of the relations between African countries and the European Union?
Relations between EU and Africa have greatly improved in recent years and should be maintained. Europe has to recognise that it is in their best interest to have stronger ties with Africa and vice -versa. Both regions need each other to grow. Specific moves will have to be discussed and agreed on by European Union member countries. Certainly one of the priority areas of the Italian presidency will be to boost growth in jobs not only in Europe but also elsewhere through integration. Of course, being part of a government that is part of the southern boundaries of Europe, I cannot avoid considering immigration as a challenge.
Speaking of immigration pressure, how can it be handled to ensure a win-win for both parties?
There are several aspects to the immigration story. Orderly immigration is beneficial to Europe and to African countries. But there has also been a dramatic immigration pressure which needs to be addressed by various stakeholders.
Europe should do more to improve conditions for people to live and work safely in their home countries. This can be achieved by strengthening and ensuring the flow of resources to Africa so that there are more job opportunities created here rather than being sought outside.
Another thing that can be done is to help strengthen the education infrastructure in Africa to a level where students acquire adequate skills to enable them create their own jobs.
Despite cases of African countries exporting to Europe, trade deficits have remained rampant because their exports are not proportional to the imports, hence almost insignificant to their national expenditure.
The fact that growing economies have a trade deficit is not unusual. This is because of their desire for capital goods and other resources needed for development. The issue, therefore, should not be about trade deficit but rather sustaining development during the trade deficit.
Countries need to source for enough trade finance to bridge the gap in the trade deficit to build up the export capacity. In that point of view, looking at strengthening trade financing could be an ideal area of cooperation between Africa and Europe.
European markets have a tendency to impose too many restrictions on African exporters, most of which are considered unnecessary trade barriers. Is there a way they can be brought down?
You can look at it both ways. The fact that there is pressure to supply high quality exports shows that there is room to upgrade their export quality and capacity. Since Africa as a whole has been growing at an impressive rate in recent years, some pressure is required for them to remain competitive.
The East African Community has initiated a number of projects aimed at leveraging integration to grow economically and improve the welfare of their citizens. EU has been able to achieve that. What lessons can the region draw from your experience?
There are few important lessons to draw from Europe. The first is that integration is a very important strategy for growth. Europe has grown significantly because of integration.
The initiative that the three countries are taking will help increase investments and should be fully supported.
This can also take a monetary dimension and indeed strong trade integration is one of the pre-conditions of monetary integration.
Of course as integration proceeds, the countries will have to harmonise and work closely in national macro-economic policies, monetary policies as well as fiscal policies to ensure that integration is sustainable.
The European experience shows that integration is good but must be accompanied by the building of strong institutions. Aspects like similar infrastructure development say railway networks are the key to integration. There should also be policy integration which allows nations to come together in a flexible way.
What is your impression about Rwanda?
I see a country that has greatly transformed itself after a terrible period it its history. I am really impressed by the strides the country has made over the past two decades. I see an impressive process of growth dependent on human resources of a young population and very positive enthusiasm. I sure do hope to come back in the future.