The EU’s digital talk in 2022 needs financial walk

On 1 December, the European Commission and the European External Action Service (EEAS) launched the Global Gateway, a grand connectivity strategy aimed at helping the European Union (EU) compete with China on global infrastructure investment, including in the digital sector. Adding more political firepower, French president Emmanuel Macron has also included Europe’s digital transformation as a top priority for the upcoming French presidency of the Council of the EU. But how is the EU planning to deliver on its global digital ambitions through its financial instruments, and what are the challenges it should consider in the months to come?

What's on this page
    6 minutes
    % Complete

      Over the past two years, the European Commission has made its geopolitical ambitions clear. It wants to strengthen Europe’s role in the world by marking the green and digital transitions as key priorities at home and abroad. These ambitions were on show with the EU’s recently launched Global Gateway, which is by and large a repackaging of existing initiatives and processes. In this strategy too, digital transition is one of the five priorities, yet the EU has relatively little to show for compared to other big global powers like China and the US.

      Still, it hopes to become a global leader on digital governance and infrastructure in the longer term. But the EU will need to make more strategic and effective use of its external financial instruments, ensure a stronger commitment from member states, and make an offer that is in line with actual demand from partner countries.

      The EU’s financial instruments

      With the Global Gateway, the EU aims to mobilise up to €300 billion in investments between 2021 and 2027, which will require member states and their financial institutions to help mobilise additional private investment.

      In the absence of much-needed additional financial firepower, the European Commission and the EEAS will rely on the following financial instruments: the €79.5 billion Neighbourhood, Development and International Cooperation Instrument (NDICI-Global Europe) for 2021-2027, and the related European Fund for Sustainable Development Plus (EFSD+) and the External Action Guarantee.

      Under the NDICI-Global Europe, the EU wants to mainstream digitalisation in its international cooperation with a human-centric approach seen as part of its potential added value. In the process of allocating NDICI-Global Europe resources to specific activities and initiatives, EU delegations in partner countries have been instructed to focus on digital transition, as one of the five priorities. But compared to other priorities, the NDICI-Global Europe regulation, approved in June 2021, does not specify a spending target for digital transformation, nor is there a strong track record of the EU institutions in funding work in this area.

      The Global Gateway communication does include a new non-legally binding ambition to spend 10% of NDICI-Global Europe resources on a digital transition. However, much of the digital-related activities financed under the NDICI-Global Europe will be mainstreamed into other priorities or specific objectives in human and economic development, rather than feature as a standalone goal. Without proper markers, it will be hard to track EU digital spending and easy to repackage funding as meeting multiple goals.

      To complement the NDICI-Global Europe and its global ambitions, the European Commission created the new Digital 4 Development (D4D) Hub as the main institutional framework to bring together digital knowledge and resources of the EU institutions, member states and European development finance institutions, under the Team Europe banner.

      Although the D4D Hub is a commendable coordination effort, it will need to be complemented by stronger financial support from EU member states for it to deliver. At present, it appears member states want to position themselves for a slice of the NDICI-Global Europe resources, rather than put additional resources on the table for new joint initiatives.

      Over the coming years, as the D4D Hub works to develop further collective Team Europe Initiatives (TEIs), it will be essential that member states are willing to speak and act as one, which includes adding their own resources and branding their own initiatives as D4D. As member states are both collaborators and competitors on digital transition, this is not always straightforward.

      The EU programming process in action

      Recent ECDPM insight has revealed that the integration of digital ambitions in the NDICI-Global Europe programming has brought up considerable challenges. However, digital transition appears to be mentioned in 80% of the draft multiannual indicative programmes (MIPs) for partner countries (this percentage excludes EU neighbourhood countries). The MIPs should be published in 2022. Until then, we will not know what the EU’s digital priorities at the country and regional levels or top-line spending allocations will be, or if these priorities match partner countries’ varied objectives. Over the next six years, the EU will continue to design digital projects and initiatives – hopefully with a good level of ownership from partners – based on the rather top-level priority areas and general cross-cutting mentions of digital transition included in the MIPs.

      There are some country and region MIPs that include digital transition as a stand-alone priority area, whereas in others it is more of a mainstream consideration as part of the implementation of other human, economic and social development objectives. Digital transition is likely to feature strongly in TEIs that the EU is putting together with member states and European development banks, with stand-alone digital TEIs more common in middle-income countries. Yet the real winner of NDICI-Global Europe priorities and resources will be green, not digital transition.

      At the regional level for Africa, digital transition will also feature significantly. The preliminary consultation document of the MIP notes support for the development of regional/continental digital governance mechanisms and harmonised legal and regulatory frameworks, and for access to affordable, secure and quality digital infrastructure. Yet a more private sector and digital regional TEI is also expected for Africa.

      Figure 1: NDICI-Global Europe programming process for the period 2021-2027

      Moving forward: Matching expertise with ambition

      Since digital transition is new in EU international cooperation, the EU institutions have had to move rapidly to build their capacity – both at EU headquarters and in the EU delegations – and to respond to growing political aspirations. After the European Commission’s Directorate-General for International Partnerships (DG INTPA) set up a science, technology, innovation and digitalisation unit, the EEAS created a new division for connectivity and digital transition.

      DG INTPA is running training courses in D4D for its staff, and slowly developing its operational guidance in certain areas, such as the link between inequalities and digitalisation. However, EU delegations, through which digital initiatives at the country level will have to be designed, have limited expertise. Even if the EU has a particular added value on issues such as data protection and digital market regulation, it’s not sure if delegations will be fit to the task of sharing that experience with partner countries and digital actors. Given this important gap, the EU needs to invest more in expanding its own capacity if it hopes to fulfil its geopolitical and development related ambitions.

      Processes worth watching and engaging with

      As the EU moves to the final and critical phase of the programming process, there are still opportunities to shape its digital agenda, in particular in helping the EU and its partners target where the need for investment is at. As analysis by ECDPM and the European Think Tanks Group has indicated, matching European and African digital ambitions won’t be straightforward, but tangible initiatives are key to building trust, as reflected in the ambitions of the last AU-EU Joint Ministerial meeting in October. The coming year will offer some specific opportunities to demonstrate this.

      (1) EU implementation  In 2022, the EU will move from the strategic programming stage – where it should have been working with partners to define shared priorities at the macro level – to the implementation phase of the NDICI-Global Europe (see figure 1). Here, there are significant opportunities to better align the EU’s high-level digital ambitions with partners’ ambitions and capacity. Beyond rhetoric, designing specific initiatives that are responsive to the great digital demand in partner countries will help the EU remain a credible development actor. Balancing and reconciling the interests and expectations of partner countries will be a real test for the EU in the digital field in the coming years. The implementation phase of the EU’s Team Europe Initiatives – linked to NDICI-Global Europe – on digital transition will also begin in 2022, and the quality of these too will be a test of the EU’s credibility.

      (2) Europe-Africa relations – The highly anticipated EU-AU Summit scheduled for February 2022, if it goes ahead, will be a strategic event. The EU plans to announce specific initiatives on digital transition and engage with African leaders on a potential regional connectivity initiative. There is high political pressure for EU bureaucrats to come up with some bigger ‘joint wins’ to put on the table. Indeed, across all NDICI-Global Europe spending over the next six years, there is a desire to tie initiatives and projects with political priorities and commitments being made at high-level events, as well as in ongoing political and policy dialogues at the country level. However, matching political and planning calendars will not be straightforward.

      All in all, there is a lot to ‘play for’ in this increasingly important area of international cooperation from the EU in 2022.

      The views are those of the authors and not necessarily those of ECDPM.

      Loading Conversation