Migration and security concerns will continue to top the agenda of the December European Council until the root causes are addressed. The impact investment community can provide concrete solutions to this challenge, writes James Knight.
James Knight is a Brussels-based associate at Etoile Partners, a geopolitical consultancy.
Behind the walls of the 16th century fortress and capital city of Malta, less than a month ago, more than fifty heads of state from Europe and Africa attempted to work out how to deal with the largest mass movement of people in Europe since the Second World War.
In the light of the Paris attacks, which followed hard on its heels, the EU-Africa Summit on Migration already seems an age ago. There has been a hardening of resolve across Europe, and the imperative for short-term solutions is overwhelming. However, the impetus of Valletta must be sustained.
Even before the attacks, the mismatch between the expectations of Africa and Europe was obvious. Now those positions risk becoming more entrenched.
At Valletta, Europe was desperate to secure its external borders and salvage Schengen, which was already on its knees. Donald Tusk said so directly. In contrast, African leaders were looking for assistance in building their economies, not lectures on accepting returnees.
However, our response to Paris should not be to reverse years of progress and close borders outright. It is in Europe’s interest to help the countries that are producing migrants and refugees to become viable, sustainable economies.
That is a long-term task, and one that requires some form of peace and stability, and focus. Otherwise we will still be in the same position in another 20 years’ time – and 20 years after that.
Any rush to connect migration and extremism needs to recognise that combating the root causes of both requires action across economic, governance, climatic, demographic and security spheres.
In Africa, where economic growth is strong in places but where Boko Haram, ISIL, Al-Shabaab and others can also tap into a desperate cycle of poverty and poor governance that is all too common, the private sector is being overlooked in the role it can play.
In terms of financial commitments, Commission President Juncker’s €1.8 billion Trust Fund is a drop in the ocean when spread across 54 African countries with a combined GDP of $2.4 trillion.
Compare this with $45 trillion sitting in mainstream investment funds that have publicly committed to incorporate environmental, social and governance factors into their investment decisions. Or the economic activity created by migration in the form of $33 billion of remittances to sub-Saharan Africa in 2015 – an essential safety net for families whose governments are unable to provide for them. This has a market-creating development effect far in excess of aid when used to pay for schooling or healthcare.
The narrative needs to move beyond seeing European development money as a bulwark against migration, and for institutions to work in partnership with the impact investment community to harness enormous, untapped liquidity demand that will deliver transformational projects in Africa to build sustainable, safer countries.
The summit’s focus on more efficient ways of remitting money, and on enlarging channels for legal migration, is welcome, but needs impetus.
First, the African Development Bank, the European Investment Bank, and the European Bank for Reconstruction and Development should be invited into the Valletta process immediately. Their specialist skills will translate into credible private sector initiatives that fit with the summit’s Action Plan.
Now is also the time to constitute a joint European–Maghreb Development Bank, perhaps headquartered in Malta with shared European and African leadership and governance, to finance turnkey infrastructure projects (gas pipelines, electrical transmission grids, power and high-speed broadband networks) that would immediately create jobs and lay down the backbone of growth.
Other emerging markets are pioneering new financial instruments, particularly impact investment bonds, sold in the private sector but backed by development finance institutions, geared towards funding national education and employment programmes. These transfer risk and free up capital in pursuit of sustainable development goals and can be adapted for joint EU-Africa targets.
Instead of member states matching the funding of the Trust Fund (which will never happen), encourage them to pool an equivalent amount in soft loans for their domestic SME sector to pursue opportunities in trade and investment in Africa, building the acquisition of diaspora skills into the process.
Finally, seek to dismantle entrenched trade protectionism that unfairly benefits uncompetitive European industries and inhibits the emergence of economies of scale in, for example, agriculture and agribusiness in the developing world.
Does the political will exist for bold ideas? The Maltese prime minister’s commitment to assess what has been achieved from Valletta by the end of 2016 and to fold outstanding actions into Malta’s European Council Presidency in early 2017 ties the country to the migration issue on a medium-term basis.
It offers all member states a timeframe to think about a multi-layered response to what will become the defining issue of our generation, as the European fear of further attacks grows; and, in the developing world, resources become scarcer and populations grow.
If Europe is serious about tackling economic migration in a way that defeats extremism it must, collectively, pick up its head and scan the horizon for more ambitious solutions than are currently being proposed.