You are here: Home > Activities > Africa

Africa

European contractors have a long tradition of delivering key infrastructure assets in Africa, both in the Maghreb region and Egypt as well as in Sub-Sahara Africa.

However, whereas total international turnover of EIC's member companies continued to climb to an all-time high of €167.6 billion in 2012, member firms carried out less than 9% of overseas works in Africa in 2012 compared to 15% in 1990.

A number of reasons have led to this gradual withdrawal:

In the 1990s, the international donor community sharply reduced resources allocated to infrastructure and erroneously expected the private sector to step in. However, the risks associated with building privately financed infrastructure in developing countries proved too high for investors to engage in these types of projects.

Multilateral and Bilateral Development Banks aligned their development policy and shifted financial support from project aid to budget support. In terms of procurement rules, this lead to a switch from internationally harmonised Standard Bidding Documents to a rather diverse range of Country Procurement Systems.

With growing pressure from shareholders and increasing corporate governance requirements, European infrastructure providers need to focus more on profitability, making developing countries with high political and economic risks an unattractive target market.

Competition is tightening as new players from emerging countries are winning market share. European contractors are often at a disadvantage: While they comply with OECD regulation on financial, environmental, social and ethical standards their new competitors often do not.

In order to reverse the situation EIC is in close contact with the European Commission and the European Investment Bank and proposes to review the rules underlying the EU-Africa Infrastructure Trust Fund (ITF). The EIC Working Group “Africa” developed a concept for a revised Infrastructure Blending Mechanism in order to strengthen the position of European construction companies on the African infrastructure market. The concept proposes to modify the EU-Africa Infrastructure Trust Fund (ITF) regulation to allow for blending EU Official Development Assistance (ODA) with ECA-covered commercial finance for transport infrastructure projects carried out in Africa by the European construction industry. In July 2014, the EIC proposal was the subject of a Roundtable hosted by the European Commission, at which several Development Finance Institutions, Export Credit Agencies and industry representatives participated.

EIC President Philippe Dessoy met on 7 September 2015 in Brussels with the EU Development Commissioner Neven Mimica to present the EIC concept for a revised Blending Mechanism. EU Commissioner Mimica invited EIC to present its concept at one of the next meetings of the EU Platform for Blending in External Cooperation (EUBEC).