EIB boss: Europe should lose its naiveté on open procurement

DAKAR, Senegal — The president of the European Investment Bank has called for a rethink of European Union procurement rules in order to boost the bloc’s “strategic autonomy” — citing his concern over Chinese companies winning contracts for development projects backed by the EU.

“I think when it comes to procurement procedures, I go a little bit out of my way here now, but we have to lose a little bit this certain naiveté,” Werner Hoyer told Devex at the bank’s Africa Day in Dakar, Senegal, last week.

“It is certainly not in the interests of [Europeans’] ‘autonomie stratégique’ that at the end of the day we collect our forces in order to finance Chinese companies building roads and bridges. So we have to think about this. This is something that goes beyond my remit. I have to live with the procurement rules that we have.”

The German was responding to a question on the Bus Rapid Transit Dakar project, where EIB financing of €80 million ($88.9 million) will cover about 22% of the cost of a new bus route designed to ease congestion in the Senegalese capital. China Road and Bridge Corporation won the contract to build the system, which is also financed by €211 million from the World Bank and €17 million from the Green Climate Fund, with the rest coming from the Senegalese government (€21.59 million) and the private sector (€40 million).

Amadou Hott, Senegal’s minister for economy, planning, and international partnerships, told reporters in Dakar that the infrastructure contract for the bus system was subject to an international tender.

“[CRBC] had the same expertise but the price was better so they won it,” Hott said. “[The tender was] organized by the World Bank and our government, so you cannot have something more transparent than that. And they won it, you know, so we just work with them, even if the funding this time didn’t come from China. But remember though, China is a shareholder also of the World Bank. It’s a shareholder of African Development Bank. So their companies also have the right to bid for all these projects.”

Projects outside the EU made up around 12% of EIB’s investments in 2019. These are generally co-financed with other multilateral development banks and must meet EIB’s procurement rules, which follow the fairness and non-discrimination principles set out in the Treaty on the Functioning of the EU.

San Bilal, head of trade, investment, and finance at the think tank ECDPM, told Devex that EU procurement is generally open to companies from all countries in order to maximize efficiency.

“There is no economic reason to rule out Chinese companies,” Bilal said. “But from a geostrategic perspective, the EU may want to become more savvy in the types of projects and companies it supports, better reflecting EU strategic interests.” The risk, Bilal added, is ending up with “EU tied aid, or in this case, EIB tied loans, if European companies were given an explicit advantage.”

In March 2019, the European External Action Service and the European Commission released a “strategic outlook” on EU-China relations, including procurement. It noted that the EU’s open procurement rules are not always reciprocated and suggested pushing for this to create new opportunities for EU businesses. It added that not only price but also high levels of labor and environmental standards should be taken into account for procurement and that the bloc should address the “distortive effects” of foreign state ownership on competition. Neither the EEAS, nor DEVCO, the commission’s development department, responded to request for comment on their follow-up to the document.

Andrew Lebovich, a visiting fellow at the European Council on Foreign Relations, told Devex that the procurement issue “demonstrates some of the ways in which European institutions are still adapting to their own increased expectations for not only how projects are managed, but how they might fit into an expanded European foreign policy, particularly in Africa.” 

Editor’s note: The reporter’s travel to Dakar was supported by EIB. Devex maintains full editorial control over the content.