Introduction

The EU Global Gateway, launched in December 2021 seeks to enhance Europe’s connectivity with the rest of the world, with a major focus on developing countries. It is a measure for Europe to maintain its autonomy as relates to its economic and political relations ( Gili & d’Ambrosio Lettieri, 2023 ). Through its Global Gateway Investment Package, the EU will drive up to €150 billion in investments in Africa, half of its 300Bn target investment across the world. It will seek to strengthen key sectors like transport, health, and education and find avenues to accelerate sustainable growth and decent job creation.

• Key Investments or projects under the program on the continent

The EU Global Gateway has been able to engender key initiatives to strengthen Africa’s economy and drive sustainability. For instance, the Africa-Europe Digital Innovation Bridge will enhance the digital and innovation ecosystems on the continent, to forge a single market for digital innovation between both continents. The Africa-Europe Green Energy Initiative will seek to foster electricity production within the confines of sustainability.

The Global Gateway fosters partnership on both regional and country levels, through the scales of its operations. The sub-Saharan partnership promotes sustainable investments in infrastructure, health, education, and skills, as well as climate change and the environment. As a key national partner, Cameroon is set to benefit from significant investments aimed at boosting its economy. The EU has pledged over CFA 12Bn  for entrepreneurship and electricity access support in Cameroon with an additional projected investment of CFA60Bn in Key Infrastructure Projects in Cameroon

1. Impact on Businesses in Central Africa 

a). Lower Trade Costs

The EU global gateway programme aims to lower trade costs by supporting efficient and safe infrastructure , as well as regional integration. As part of the EU-Africa strategic corridors, the EU is financing the construction of the Logone bridge, which will cross the Logone river linking Cameroon and Chad, which will boost trade between the two countries (ADB, 2018).

Furthermore, the construction of an 89 km Yaoundé Bypass Road is currently in work and will reduce journey times and transport costs for businesses trading in the Kribi/Douala-Ndjamena strategic corridor. This will increase access to the Douala and Kribi ports, enabling more businesses to export while enjoying lower trade costs. Lower trade costs will free up capital for SMEs to invest in developing their products

b). Access to Training & Funding

Cameroon relies on an import from the EU to feed its population, hence its persistent deficit. To support local businesses and products, the EU is supporting young businesses by supporting the entrepreneurial ecosystem and small businesses. Cameroon is one of the pilot countries of the continental flagship program. Investing in Young Businesses in Africa (IYBE). Investing in Young Businesses in Africa  (IYBA) is supported by Team Europe to help young businesses and entrepreneurs in Africa, especially women, to launch, consolidate, and grow sustainable, strong, and inclusive businesses and create decent jobs.

Investing in Young Businesses in Africa (IYBE) program offers;

• Trainings for  better professional integration of young people and women in green economy sectors, and access to energy in rural areas in the Northern regions
• Support for very early-stage businesses and entrepreneurs needing the earliest rounds of financing (known as ‘pre-seed financing’).
• Support for early-stage businesses and entrepreneurs needing early rounds of financing (known as ‘seed capital’ and ‘Series A’ or ‘Series B’ equity financing).
• Support for the ‘entrepreneurship ecosystem’ – public and private organizations providing either finance or other forms of business support to early-stage companies and entrepreneurs.

It is important to note that Under that framework, the EU allocated €178 million in grant funding to the partnerships with Cameroon over 2021-24 (European Commission, 2024)

c). Boost Exports and encourage diversification via improved Energy Access

In order to diversity exports and support the agri-processing sectors, the EU is boosting access and production of renewable energy in Cameroon. Decentralised solutions can enable millions of rural businesses to operate effectively and scale their activities hence the push to support rural electrification aiming at improving the access to energy of more than 558 rural localities throughout the territory. Under the EU Global Gateway program, they are supporting the construction of Nachtigal (EUR 150 million), a 420 MW hydropower plant and dam that will increase electricity supply by 30% in the country (AFD, 2018). So far, over 2,500 women entrepreneurs have been trained under the Global Gateway program and they have received seed funding of $5,000 to grow their business (EU Commission, 2024).

2. Challenges in the implementation of the EU Global Gateway

a). Slow engagement from member states

The success of the Global Gateway hinges majorly on the level of engagement from various stakeholders. It will follow a Team Europe Approach mobilizing engagement from member states, public development banks and development finance institutions, and the private sector. However, the level of engagement varies across different member states with some being more apprehensive about utilizing more of their resources towards the 300Bn investment target (Teevan, 2022). This can be attributed to the economic slowdown experienced by member states due to Covid 19 and other domestic concerns raised by issues such as the Russian invasion (Kaca, 2022). There are reports of EU member states already diverting aid budgets in response to the war (Gavas & Pleeck, 2022). Public institutions being increasingly burdened with additional expenditure on healthcare and economic aid may have less capacity to invest in infrastructure development  (Kaca, 2022) in Africa.

b). Limited private sector involvement

While governments play a crucial role in achieving the objectives of the Global Gateway, their capabilities and budgets alone are insufficient. This underscores the need for greater involvement of private sector actors to provide both funding and expertise. However, the involvement of private players has been relatively slow. The  European Fund for Sustainable Development Plus (EFSD+) supports the Global Gateway’s investment plan with a targeted leverage ratio of 10. This target implies that every €1 in public finance is expected to mobilize up to €10 in private finance  (Teevan, 2022).

This is however challenging to achieve as private investors’ decisions to invest are based on factors such as the type of project, country, and the size of the funding body.  Also, for EU companies that seek to internationalize, they prioritize opportunities within the Single Market which is considered less risky (Karaki et al, 2022). This is in contrast to markets in Africa which have higher systemic risks like climate or political-related risks. The risk-averse approach adopted by private players results in a significant slowdown in private sector participation.

c). Application of new EU Deforestation law (potentially increases bureaucracy)

The EU’s  Deforestation Law is a measure to potentially reduce deforestation or forest degradation. It’ll require companies trading in cattle, cocoa, coffee, oil palm, rubber, soya, and wood, to examine their value chains to ensure their products are not linked to recent (post 31 December 2020) deforestation, forest degradation, or breaches of local environmental and social laws (Forwood et al, 2023). While this is a positive move towards the Global Gateway’s focus on sustainability, it brings an added layer of bureaucracy which slows down its implementation.

Importers will need to perform a due diligence procedure on their value chains and submit a due diligence statement (DDS) to access EU markets (European Commission). The due diligence process which constitutes risk assessment and mitigation procedures, coupled with waiting times to file and obtain the DSS has the potential to increase bureaucracy for partners. This poses a potential challenge to the implementation of the Global Gateway

3. Policy Recommendations

a). The EU Global Gateway should work with a pool of companies and start-ups that have the potential to thrive in EU markets, to support exports and accelerate trade under the Economic Partnership Agreement. This should include ventures that can manage competition in EU markets and those that are already ahead in meeting the sustainability guidelines characteristic of the Global Gateway. Building on such local ownership will accelerate trade by engaging with companies whose products have the potential to perform well in the EU. It will also limit slowdowns due to bureaucracies involved in newer firms seeking to expand into the EU market.

b). The EU should disclose more detailed information on infrastructural projects carried out and their targeted development impact. This should include the number of jobs created, implementation stages, and contributions to SDGs, and equally share how they are transferring capacity and technology to Cameroonian engineers. This will ensure that these projects generate long-term positive implications for the Cameroonian economy. This will also promote greater transparency and improve monitoring and evaluation initiatives. Such monitoring and evaluation are necessary to ensure infrastructure serves its purpose and does not end up as white elephants that generate no value for the economy. Furthermore, the execution and monitoring of these projects should be stringent to serve as guidelines for local actors who execute public contracts such as energy and infrastructure.

c). The EU through its implementation of the Global Gateway should also promote a learning-by-doing approach that ensures that engineers are trained on new and emerging technologies. This will build a pool of competent and advanced engineers in Cameroon who would ensure the Global Gateway maintains its long-term investment focus. Such skill development will also be important to cover the skills gap present, especially in the digital market, making the investment environment more conducive for foreign players. This will engage more risk-averse private investors who may have been reluctant to invest in the country due to concerns over the availability of local expertise.

d). The implementation of the “Team Europe Approach” or the EU’s “whole of government approach” should take into consideration the national dimensions of member states’ involvement in the Global Gateway. This is especially important for companies that need the backup of their home countries to invest in and implement various flagship projects. The EU can foster the creation of institutional frameworks at the national level, with closer coordination amongst national ministers, agencies, and private companies. This will drive up private sector engagement and ensure the Global Gateway can be beneficial to all involved stakeholders.

Conclusion

With the right reforms, the EU Global Gateway emerges as an alternative to the Belt & Road Initiative (BRI) with the potential to lower trade costs and boost the competitiveness and exports of Cameroon and Central African SMEs. However, a clearer roadmap and greater monitoring will enable stakeholders to gauge the results and adapt as needed. The proposed reforms of greater transparency, learning-by-doing, and a better understanding of the context in which local businesses operate will make the Global gateway into a long-term win-win partnership.

List of References

1. African Development Bank. (2024). Global Gateway: European Commission and African Development Bank Group unlock new funding for African infrastructure projects. Available at: https://www.afdb.org/en/news-and-events/press-releases/global-gateway-european-commission-and-african-development-bank-group-unlock-new-funding-african-infrastructure-projects-68243 (Accessed: 30 November 2024).
2. Agence Française de Développement. (2018). Cameroon: AFD Group signs a EUR 150m financing agreement for the construction of the Nachtigal Hydropower Plant, AFD. Available at: https://www.afd.fr/en/actualites/communique-de-presse/cameroon-afd-group-signs-eur-150m-financing-agreement-construction-nachtigal-hydropower-plant (Accessed: 30 November 2024).
3. Business in Cameroon. (2024). Eu pledges over CFA12bn for entrepreneurship and Electricity Access Support in Cameroon. Available at: https://www.businessincameroon.com/public-management/2803-13683-eu-pledges-over-cfa12bn-for-entrepreneurship-and-electricity-access-support-in-cameroon (Accessed: 30 November 2024).
4. Business in Cameroon (2024) EU to Invest CFA60bn in Key Infrastructure Projects in Cameroon. Available at: https://www.businessincameroon.com/public-management/1811-14321-eu-to-invest-cfa60bn-in-key-infrastructure-projects-in-cameroon
5. Calleja , R. et al. (2022). A global development paradigm for a world in crisis, Policy Papers 275, Center for Global Development.
6. European Commission.(2024). Africa-Europe Green Energy [Online]. Available at: https://international-partnerships.ec.europa.eu/policies/global-gateway/africa-europe-green-energy_en (Accessed: 30 November 2024).
7. European Commission. (2024). EU-Africa: Global Gateway Investment Package. Available at: https://international-partnerships.ec.europa.eu/policies/global-gateway/initiatives-region/initiatives-sub-saharan-africa/eu-africa-global-gateway-investment-package_en (Accessed: 30 November 2024).
8. European Commission. (2024). EU-Africa strategic corridors [Online]. Available at: https://international-partnerships.ec.europa.eu/policies/global-gateway/transport/eu-africa-strategic-corridors_en (Accessed: 30 November 2024).
9. European Commission. (2024). Investing in Young Businesses in Africa [Online]. Available at: https://international-partnerships.ec.europa.eu/policies/global-gateway/investing-young-businesses-africa_en (Accessed: 30 November 2024).
10. European Commission. (2024). Team Europe Initiatives. Available at: https://international-partnerships.ec.europa.eu/policies/team-europe-initiatives_en (Accessed: 30 November 2024).
11. Forwood, G. et al. (2023). 10 key things to know about the new EU deforestation regulation, White & Case LLP. Available at: https://www.whitecase.com/insight-alert/10-key-things-know-about-new-eu-deforestation-regulation (Accessed: 30 November 2024).
12. Gili, A. & d’Ambrosio, L. F. (2023). EU’s Global Gateway: Africa under a new spotlight Available at: https://www.welthungerhilfe.org/global-food-journal/rubrics/development-policy-agenda-2030/eus-global-gateway-africa-under-a-new-spotlight (Accessed: 30 November 2024).
13. Kaca, E. (2022). The EU’s Global Gateway Strategy: Opportunities and Challenges, pl. Available at: https://www.pism.pl/publications/the-eus-global-gateway-strategy-opportunities-and-challenges (Accessed: 30 November 2024).
14. Karaki, K., Bilal , S. & van Seters, J. (2022). Engaging the European private sector in EU development … Available at: https://ecdpm.org/application/files/6316/7022/0959/Engaging-European-Private-Sector-EU-Development-Cooperation-Finance-ECDPM-Discussion-Paper-333-2022.pdf (Accessed: 30 November 2024).
15. Teevan, C. et al. (2022). The global gateway: A Recipe for EU geopolitical relevance?, The Global Gateway: A Recipe for EU Geopolitical Relevance? Available at: https://ecdpm.org/application/files/4616/5779/4869/Global-Gateway-recipe-EU-geopolitical-relevance-ECDPM-Discussion-Paper-323-2022.pdf (Accessed: 30 November 2024).

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