This past September, the European Union launched the European Fund for Sustainable Development (EFSD), a tool to support investment in the countries bordering Europe as well as Africa at large. The goal of the EFSD is to create stability through economic development, which may reduce the flow of displaced people across borders.
In many ways, the rationale behind the EFSD is similar to the one underlying the push for humanitarian safe zones by American politicians across the spectrum, from senators Tim Kaine and John McCain to Donald Trump and Hillary Clinton. The goal of both is to shore up economic and aid resources for those who need them most, while stemming the tides of refugees that have sparked political tumult in both Europe and America.
But, while safe zones seem most suited to war-torn countries like Syria, the EFSD can potentially have a much wider reach in terms of where and how it can help.
The EFSD aims to use “public funding as a guarantee to attract public and private investment to create real jobs,” in the words of European Commission President Jean-Paul Juncker. Devex reports that this involves underwriting loans and guarantees by trusted financial institutions to any entity, public or private, that invests in development in Africa or the countries bordering Europe.
Lawmaker Claude Turmes of Luxembourg called the EFSD the “best EU initiate ever.” Its €4.1 billion in spending until 2020 is expected to generate €44 billion in investments. According to the joint website of the European Council and the Council of the European Union, that number could be doubled if member states match EU donations.
That money can have a big impact. The ONE Campaign reports that foreign direct investment in Africa is by far the lowest of any region. Just three cents of every dollar of global foreign direct investment went to the continent in 2016, and most of those funds went to resource-rich countries.
Accordingly, some worry that an EFSD focused more on reducing refugee traffic than investing in development will continue to funnel money to resource-rich countries bordering Europe, like Morocco and Tunisia, while neglecting more remote nations like Mali and Chad, which present riskier investments. ONE recommends that fragile states be made a priority when the EFSD Strategic and Operational Boards meet to set investment windows.
Sustainable development in Africa and other nations bordering Europe is only possible if funding is allocated strategically yet fairly. Energy investment stands to electrify the region, as investors feel secure enough to put their money into projects like wind farms and solar panels. Hopefully, the increased wealth will both build more stable societies and reduce the need for refugee migration.
– Chuck Hasenauer