Select Committee on European Scrutiny Fourth Report


9 EU-Africa Infrastructure Partnership

(27705)

11682/06

COM(06) 376

+ ADDs 1-2

Commission Communication: Interconnecting Africa: the EU-Africa Partnership on Infrastructure

Legal base
DepartmentInternational Development
Basis of considerationMinister's letter of 25 November 2006
Previous Committee ReportHC 34-xxxvii (2005-06) para 34 (11 October 2006)
Discussed in Council16 October 2006 General Affairs and External Relations Council
Committee's assessmentPolitically important
Committee's decisionCleared, but further information requested (reported on 11 October 2006). Now provided. Further information again requested.

Background

9.1 One of the conclusions of the EU's Strategy for Africa, which we cleared on 30 November 2005,[25] was that rapid, sustained and broad-based growth is essential for development and fighting poverty. As the Commission noted in the introduction to this Communication, one of the main measures underpinning the Strategy is the creation of the EU-Africa Partnership on Infrastructure. It argued that inadequate infrastructure has a significant impact on growth, competitive trade, regional integration, and achievement of the Millennium Development Goals, and suggested that African governments and development partners should invest more in infrastructure, particularly given the sharp decline in the share of resources going to infrastructure in Africa during the 1990s.

9.2 The Communication emphasised that African leadership is paramount, with the African Union (AU) and its socio-economic programme, the New Partnership for Africa's Development (NEPAD), as key partners. NEPAD had identified specific objectives focusing on areas including policy and regulatory frameworks, capacity building and capital investment. NEPAD also suggested that donors must work better together and that there should be stronger involvement from the private sector. The Partnership would respond to these goals at continental, regional and country levels.

9.3 To fund these activities, the Communication proposed the creation of a Trust Fund combining contributions from: the European Investment Bank (EIB); the 9th European Development Fund (EDF 9 2003-2007); and voluntary contributions from Member States. The Commission hoped that the Fund would attract, and leverage, additional development and non-development loans. It would provide: interest rate subsidies for loans; co-financing with the EIB, Development Financing Institutions and the African Development Bank; risk guarantee mechanisms not already covered by other arrangements; and grants for project preparation and capacity building. A Steering Committee of African and donor partners would set policy guidance, an Executive Management Committee would assess and approve projects, and a secretariat would support the committees.

The Government's View

9.4 In a characteristically helpful and informative Explanatory Memorandum of 25 July 2006, the Parliamentary Under-Secretary of State at the Department for International Development (Mr Gareth Thomas) was "in principle supportive of the initiative", but made a number of observations on yet-to-be-settled management issues and monitoring and evaluation mechanisms which seemed to us to be well-founded. His most important concern, however, related to the sustainability of the proposed Trust Fund, where he noted that there was no guaranteed funding beyond 2007. It appeared that Member States — including the UK — were unwilling to commit themselves to their part in the proposed tri-partite funding arrangements, and would agree to use EDF 10 funding only provided that the Fund had performed well — presumably in the use of the €540 million to be provided by the 9th EDF and the EIB. Although understandable, this inevitably meant that there would be little time in which the Trust Fund could demonstrate its effectiveness before, on present plans, running out of funding.

9.5 He concluded by saying that the Development Commissioner was due to make a formal presentation of the Communication at the September General Affairs and External Relations Council (GAERC) and that, although the Presidency expected Development Ministers attending the October GAERC to adopt Conclusions on the document, it was unclear at that stage whether the October GAERC would discuss the Communication or adopt Conclusions.

9.6 Due to the summer recess, we were unable to consider the Communication and the Explanatory Memorandum until 11 October. Given the importance of the issue, we cleared the Communication. However, since it might well have been that, in the intervening period, it had been possible to make progress in the areas of concern to which he referred, we asked the Minister to inform us of the outcome of the GAERC meetings and to provide his assessment thereafter of the Trust Fund's management and evaluation arrangements and its prospects for sustainability.

Minister's letter

9.7 In his 25 November 2006 letter, the Parliamentary Under-Secretary of State at the Department for International Development (Mr Gareth Thomas) confirms that the GAERC meetings on 16-17 October agreed Council Conclusions which confirm the focus of the Infrastructure Partnership on trans-boundary, regional and national infrastructure in transport, water, energy, and information and communication technology contributing to trade and fuller regional integration; recognise that environmental and social impacts of large infrastructure projects can be severe; and invite the Commission to establish sustainability criteria for selection of projects and to ensure application of environmental and social impact assessments, and mainstreaming of gender and HIV/AIDS issues.

9.8 The section on the Trust Fund, he says, "proved to be the most controversial element". He continues as follows:

    "the final agreed language leaves a number of important issues unanswered. Several Member States disagree strongly with allowing non-contributing Members States a seat on the Executive Management Committee, fearing that this will make management of the fund unwieldy. Thus under pressure the Commission reviewed its earlier decision to allow non-contributing Member States a seat. There is no final decision on this matter yet. To date, Spain is the only Member State to commit to the €10 m contribution to the Trust Fund.

    "The request for the €60m allocation from EDF 9 will be submitted for the EDF Committee to consider at its November meeting. I expect that objections from several Member States may delay its progress, because of their concerns about management arrangements for the Trust Fund. Approval of EDF 9 funding is critical to the Trust Fund proceeding. Without this it is not viable. Clearly there is limited time for the Trust Fund to demonstrate its value, particularly given the level of initial funding. It is likely, however, that decisions on future funding are likely to be based on a small number of criteria including the strength of the institutional arrangements for managing the Trust Fund, and its early portfolio quality.

    "With the expected increased level of funding for infrastructure in EDF 10, the Communication indicates the likely allocation of a substantial proportion going to the Infrastructure Partnership Trust Fund. I believe that it will be financially sustainable, as long as issues of management and early portfolio quality are addressed.

    "The European Commission and the European Investment Bank (EIB) will, over the next 2-3 months, confirm details of the arrangements and responsibilities for management and evaluation. There are signals from a number of Member States that they are awaiting clarification on these aspects prior to committing finance to the Trust Fund.

    "The UK will continue to reserve its position on funding until these outstanding issues have been addressed, and it is clear that the EIB has the capacity to effectively fulfil its role under the Trust Fund, recognising the increased challenges of developing sustainable infrastructure in Africa".

Conclusion

9.9 We are grateful to the Minister for this information, which we are bringing to the attention of the House because of the widespread interest in development issues in Africa.

9.10 It is, however, essentially an interim response. He has outlined the UK position, with which we agree. We should accordingly be grateful if he would write to us again, once the issues concerned have been satisfactorily resolved, so that we may report the final outcome to the House.


25   See headnote. Back


 
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Prepared 27 December 2006