THE European Union (EU) is due to extend a €100m grant to Southern Africa for infrastructure projects in transport, energy, water and telecoms. This was revealed on Wednesday in an announcement meant to coincide with the EU-South Africa summit in Pretoria.
The grant, which is small in terms of South Africa’s requirements, will be used to leverage larger amounts from development finance institutions like the Development Bank of Southern Africa. The money would be channelled through the European Investment Bank (EIB), Kreditanstalt für Wiederaufbau and Agence Française de Dévelopment (AFD).
By way of an example, Andris Piebalgs, member of the European Commission in charge of development, told Business Day of a project in Burkino Faso that was 40% funded from a grant, with the rest coming from the AFD.
In this case, he said the EU’s grant was higher than it would normally be, due to Burkino Faso’s high risk. For South Africa, it would be lower.
Mr Piebalgs said the funding would support the preparation of projects, management and implementation of projects, along with feasibility studies. It would also be used as a source of direct grants for large infrastructure projects.
Black Business Council CEO Xolani Qubeka welcomed the funding saying it represented a strengthening of relations between Europe and South Africa. He was at the summit to hand over a declaration signed between SA and European business at the second SA-EU business forum, hosted by the Department of International Relations and Co-operation. The declaration was presented to President Jacob Zuma and his counterparts, European Commission president Jose Manuel Barroso and European Council president Herman Van Rompuy.
However, Mr Qubeka said Southern Africa needed much larger funding commitments. "The needs of continent are great. More resources would yield faster development."
According to the EU its development support amounts to €980m, which spans 2007-13.
The South African Institute of International Affairs said the EIB alone has been an active lender since 1995 with investments topping €2bn by December 2011.
The funds have largely been used for municipal infrastructure, small and medium enterprise development, roads, telecommunications, water and renewable energy.
