Katainen pushes African investment plan to cut migration

The Commission should think again before expanding its External Investment Plan, warn civil society leaders. [DFID - UK Department for International Development/Flickr]

The European Commission hopes to launch an investment plan to tackle the causes of migration from Africa. But the Juncker Plan’s difficulties in the EU could be just a foretaste of the challenges of investing in developing countries. EURACTIV France reports.

The first evaluation of the Juncker Plan by MEPs painted a mixed picture of the investment plan. But, undeterred, the EU executive is considering deploying a similar strategy in developing countries.

Announced on 7 June, this investment plan – to be implemented largely in Africa – would leverage public funds to mobilise €60 billion of private investment.

“The Commission would put in €3 billion, the member states could add another €3 if they wanted to,” Commission Vice-President Jyrki Katainen said at a debate at the European Development Days event in Brussels this week.

Embryonic plan

The broad lines of the African investment plan are not yet fully defined. Not least the plan’s financing, as the participation of member states is far from assured. “We expect to have made more progress by the end of the year,” the Commissioner for Investment said.

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The European Commission today (7 June) asked EU countries for up to an extra €3.6 billion of development money for poorer African countries to try and bring the refugee crisis under control.

But the difficulties encountered by the Juncker Plan in Europe could be greatly magnified when implementing a similar plan in developing countries. The Juncker Plan has been a success in the EU’s big economies, like France and the United Kingdom. But the less developed private sector in countries like Greece and Bulgaria has struggled to fulfil the requirements to secure investment.

Technical support

The Commission plans to make technical investments to help the private sector carry out its investment projects. “There are many similarities with the Juncker Plan, but we have to adapt to different realities in Africa,” Katainen said.

In Europe, the Juncker Plan used financial intermediaries to redistribute funding to smaller projects. “But in some countries, we will have to think about whether these kinds of intermediaries are strong enough for us to use,” the Commissioner added.

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One year after its launch, the Juncker Plan has reached 26 of the EU’s 28 member states.  But most of the projects are taking place in Western Europe. EURACTIV France reports.

The difficulty experienced by small business in accessing Juncker Plan funding could also complicate the situation. “Small local businesses in Africa do not have means or the expertise to launch projects that would be eligible for this kind of funding, so the plan would depend on big multinationals,” said Hilary Jeune, Oxfam’s EU policy advisor on Development Finance.

“Africa does need private investment, but in local businesses that a fund of this scale will not reach,” the policy advisor added.

Impact on migration

Another potential stumbling block for the proposed investment plan is its connection with the EU’s efforts to stop migration. Investment could be reserved for migrants’ countries of origin, but “it would be difficult to impose conditions to do with reducing migration on a private sector project,” said Jeune. “All that could be done would be to include recommendations in the calls for projects.”

“With this investment plan, we hope not only to tackle the causes of migration, but also to develop private investment in developing countries,” said the Commissioner.

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