9 EU-Africa Infrastructure Partnership
| (27705)
11682/06
COM(06) 376
+ ADDs 1-2
| Commission Communication: Interconnecting Africa: the EU-Africa Partnership on Infrastructure
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| Legal base | — |
| Department | International Development
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| Basis of consideration | Minister's letter of 25 November 2006
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| Previous Committee Report | HC 34-xxxvii (2005-06) para 34 (11 October 2006)
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| Discussed in Council | 16 October 2006 General Affairs and External Relations Council
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but further information requested (reported on 11 October 2006). Now provided. Further information again requested.
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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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