EU unveils 4.7bn-euro investment package for South Africa

CAPE TOWN: EU chief Ursula von der Leyen announced Thursday plans to have billions of euros pumped into investments in South Africa, as Europe seeks to reassert its influence in a country in the crosshairs of the United States.

The investment package would mobilise 4.7 billion euros ($5 billion) for South Africa, von der Leyen said at a summit with European Council President Antonio Costa and South African President Cyril Ramaphosa.

Most of it – 4.4 billion euros – would go to funding clean energy projects, such as harnessing the wind and the sun, and through the production of clean hydrogen, the EU said in a statement.

“We want to strengthen and diversify our supply chains. But we want to do it in cooperation with you,” von der Leyen said.

“Some countries are interested in just extracting materials from the ground and exporting profits elsewhere. That is not our model. We want to support local jobs, local added value, and high environmental and labour standards.”

The investment would also spend 700 million euros on ramping up vaccine manufacturing in South Africa, the continent’s most industrialised economy.

“South Africa wants to protect the health of your people, as well as your autonomy and your local industries. We Europeans want to diversify some of our most critical supply chains. This is what I call a true mutual interest,” von der Leyen said.

South Africa is the EU’s largest trading partner in sub-Saharan Africa, exporting goods worth some 24 billion euros in 2023 to the bloc, mostly minerals and automotives.

The trade deficit is nonetheless tilted in favour of the EU, and total two-way trade was worth 49.5 billion euros in 2023.

EU foreign direct investment in South Africa was around 71 billion euros in 2022.

Both sides are grappling with dramatic policy shifts from Washington since the return of US President Donald Trump to the White House this year.

Trump’s government has targeted the South African government, freezing crucial aid and criticising several of its policies.

Washington has meanwhile imposed tariffs of 25 percent on steel and aluminium imports from EU. On Thursday, President Donald Trump threatened to impose 200 percent tariff on wine, champagne and other alcoholic products from the 27-nation bloc.