March 16, 2025
4 mins read

EU announces a $5 bn investment in South Africa  

Donald Trump’s cancellation of millions in aid to the country left a massive funding gap. The EU’s investment package includes funding to boost vaccine manufacturing and for a transition to clean energy  

The European Union will invest $5 billion (€4.7 billion) in South African aid and development projects, EU chief Ursula von der Leyen announced Thursday. 

The majority of the investments will go to supporting the transition to clean energy, such as improving wind, solar and hydrogen power production. The funds will also be put into vaccine manufacturing. 

“South Africa wants to protect the health of [its] people… 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. The announcement came at the first bilateral summit between the bloc and South Africa, the continent’s most advanced economy, in seven years. 

The summit in Cape Town was called to strengthen ties between the bloc and South Africa, the EU’s largest sub-Saharan trading partner. 

South African President Cyril Ramaphosa said the meeting came at a time of increasing “global uncertainty … characterized by rising unilateralism, economic nationalism,” a reference to the impact of US President Donald Trump’s policies.  

The United States’ decision to ax nearly all aid to South Africa has sparked concerns about funding gaps in critical areas, such as HIV/AIDS treatment. 

“What is going on in the world is even going to strengthen our resolve to remain partners in order to tackle the many challenges that are arising,” Ramaphosa told reporters. Some countries are interested in just extracting materials from the ground and exporting profits  elsewhere. That is not our model,” von der Leyen said at the summit. We want to support local jobs, local added value, and high environmental and labour standards.” 

Meanwhile, emphasising on the “momentous and dangerous” times and ‘grave nature of the threats” faced, European Commission President Ursula von der Leyen on Tuesday announced a plan to boost Europe’s defence spendings throughout the European Union.  

Addressing reporters in Brussels, Von der Leyen said that she has written a letter to leaders ahead of Thursday’s European Council, outlined the ‘ReArm Europe Plan’ which features a set of proposals on how to use all of the financial levers at disposal in order to help EU Member States to quickly and significantly increase expenditures in defence capabilities. 

“In the various meetings in the last few weeks – most recently two days ago in London – the answer from European capitals has been as resounding as it is clear. We are in an era of rearmament. And Europe is ready to massively boost its defence spending. Both, to respond to the short-term urgency to act and to support Ukraine but also to address the long-term need to take on much more responsibility for our own European security,” said European Commission President while suggesting a proposal to provide EUR 150 billion of loans to the Member States for defence investment. 

ReArm Europe, she said, could mobilise close to EUR 800 billion for a safe and resilient Europe even while continuing to work closely with partners in NATO. 

The first part of this ReArm Europe plan, European Commission President detailed, is to unleash the use of public funding in defence at national level. 

“Member States are ready to invest more in their own security if they have the fiscal space. And we must enable them to do so. This is why we will shortly propose to activate the national escape clause of the Stability and Growth Pact. It will allow Member States to increase significantly their defence expenditures without triggering the Excessive Deficit Procedure. 

“The second proposal will be a new instrument. It will provide EUR 150 billion of loans to Member States for defence investment. This is basically about spending better – and spending together. We are talking about pan-European capability domains. For example: air and missile defence, artillery systems, missiles and ammunition drones and anti-drone systems; but also to address other needs from cyber to military mobility for example. It will help Member States to pool demand and to buy together,” she mentioned. 

European leaders have also been considering sending troops to Ukraine in a “coalition of the willing” as part of a proposal to help and enforce a peace deal between Ukraine and Russia. Russia has earlier stated that it would oppose the presence of European troops on the ground. 

It came under consideration after the rift between the United States and Ukraine escalated following last week’s confrontation between Ukrainian President Volodymyr Zelensky and US President Trump in Washington. 

Trump has now halted all aid to Ukraine till as much time as it takes to determine Zelensky’s commitment to ending the war with Russia, according to multiple US media reports. 

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