The EU has an ambitious plan to create a “single market for digital innovation” with Africa, and is promising millions in investment to make it happen. But a vast gulf between the two continents’ data governance regimes and China‘s closer economic ties mean the EU has its work cut out to make the African-European Digital Innovation Bridge a success.
What is the African-European Digital Innovation Bridge?
In February 2022, the EU announced a plan to invest up to €150bn in Africa over the next seven years. This investment will be directed towards five priority areas, including accelerating the digital transition. Some of this money, which includes both public and private investment, will go towards digital infrastructure including submarine fibre cables connecting the two continents, as well as cable networks across Sub-Saharan Africa, a satellite communications programme, and green data centres.
But perhaps the most ambitious part of the plan is the African-European Digital Innovation Bridge (AEDIB), which aims to establish a “single market for digital innovation” between the EU and Africa. This would involve helping African start-ups grow and funding digital innovation hubs across the continent.
The AEDIB “will link European and African innovation ecosystems and supports joint cooperation projects,” said German minister Dr Bärbel Kofler on the plan’s unveiling. “It will facilitate the scale-up of innovative African small and medium-sized enterprises and will support them on their digital transformation path.”
The benefits of such a tie-up are clear. Africa’s start-up ecosystem is ripe for growth, according to a recent report by Boston Consulting Group, thanks to rising internet penetration and a culture of entrepreneurship. And investment is surging: 359 African tech start-ups received financial backing in 2020, more than double the amount in 2018.
The continent’s internet economy is also projected to grow exponentially. A decade ago, internet services contributed $30bn to the continent’s total GDP, approximately 1.1%. By 2025, this figure is expected to reach $180bn, 5.2% of Africa’s total GDP, according to analysis from Google and the International Finance Corporation.
Today, though, both African and European technology companies are minnows in the global digital economy. Together, they account for just 5% of the value of the top 100 digital platforms, according to a UN study, compared to 29% in Asia and 67% in the Americas. Closer integration between the two markets could help close the gap.
African-European Digital Innovation Bridge: challenges to integration
But while the EU is keen to tap into the continent’s future digital potential, experts foresee several obstacles in establishing a seamless single market for digital innovation between the two continents.
One significant barrier is a stark discrepancy in data governance frameworks between the two geographies. Just 14 African countries have ratified the Malabo Convention, a regulatory framework for cybersecurity and personal data protection. Meanwhile, approximately half of the continent’s counties lack any form of data protection and privacy policies, according to research from the International Association of Privacy Professionals, and those countries with data protection laws lack the institutional capacity to enforce them.
“The African Union doesn’t have the same mandate as the EU to enforce privacy infringements,” says Faten Aggad, a senior adviser to the African Climate Foundation and former adviser to the AU’s representative to the EU. “So enforcing privacy infringements has to be done on a national level which is difficult as the legal capacity of African countries to do so is extremely weak.”
African fintechs have expressed concern that political realities would prevent them from adhering to, for example, GDPR, should the EU require it, Aggad says. In countries blighted by authoritarian governments, terrorism and political instability, it would be difficult for them guarantee compliance with strict data collection and retention requirements, she explains.
“There needs to be a deeper conversation into how the EU’s standards are applied in an African context where the reality is very different from Europe,” she adds.
The China question: is the EU too late?
Some observers have described the EU investment plan as an opportunity to fill in the gaps left by China’s declining investments and loans in Africa.
In 2019, the total amount of loans provided by Chinese banks stood at $7.6bn, almost four times less than the amount provided in 2016, according to data from the China-Africa Research Initiative at John Hopkins University. And this amount is likely to stagnate or decline even further as African countries reach their borrowing limit.
But China’s historic relationship with Africa and the amount of goodwill it has amassed through decades of close economic ties are likely to prevail, according to Professor Shirley Ze Yu, director of the China-Africa Initiative at the London School of Economics. European officials were reportedly dismayed when recent survey results showed that Africans preferred China to European countries as partners for development.
The difference in how China and the EU came to the continent’s aid during the height of the pandemic will also play a key role in determining future relationships in the digital realm and wider infrastructure projects in the continent.
European countries have so far resisted calls to waive patents for vaccine technologies to Africa, leading the South African president Cyril Ramaphosa to describe such inequities as “vaccine apartheid”.
“China has offered a billion vaccine doses to Africa, far surpassing all the donations from all the other countries combined, so China will continue to project itself as a global public goods provider in Africa going forward,” Professor Yu says. “The China-Africa relationship is already much deeper than simple state-led investments.”