Philippe van Damme looks at one of the EU’s ‘flagships’ under the Global Gateway strategy – the Nachtigal dam in Cameroon. He argues that often-celebrated projects like this falter when political economy realities and sector reforms are overlooked, risking that the EU’s ambitious investments fall short of their promised transformational impact.
Earlier this month at the European Investment Bank (EIB) Forum, the EIB pledged one billion euros for renewable energy projects under Mission 300, a joint initiative with the African Development Bank and World Bank, to bring electricity to 300 million additional people in Africa. The European Commissioner for International Partnerships, Jozef Sikela, commented that this ‘shows how Team Europe turns partnerships into real opportunities’. Yet, commitments alone don’t guarantee transformative impact on the ground. Drawing on the Nachtigal dam in Cameroon, it shows how projects celebrated as ‘flagships’ under the Global Gateway strategy can falter due to a narrow focus on the infrastructure works and a neglect of the political economy aspects.
An ambitious agenda
In the aftermath of the COVID-19 crisis and the successful rollout of a new ‘Team Europe’ response to it, the European Commission was looking more broadly for successful development partnerships – ‘flagships’ – between the EU and member states that could be sold as incarnations of this ‘new’ Team Europe spirit. And once the Global Gateway concept had elaborated and integrated this new approach into a ‘strategy’, these ‘Team Europe initiatives’ (TEI) could be relabelled as Global Gateway (GG) initiatives as well.
The rebranding of the EU’s development and international cooperation policies worked well and was soon upgraded to a cornerstone of its external policy. Ursula von der Leyen, the president of the European Commission, announced an ambitious financial target of €300 billion to be mobilised by the EU, its member states and their private sector by 2027, half of which in Africa; a target which – as she proudly claimed – was reached already by September 2025, two years ahead of time. Yet, some argue that the GG so far often was merely a repackaging of old projects, while building a pipeline of new projects which meet the ‘transformational’ promise of the strategy, is much more laborious, in particular in more challenging environments in Africa.
From pledges to reality: Insights from the Nachtigal dam
Nachtigal dam-photo-by-philippe-van-damme.jpg The funding of the huge Nachtigal hydroelectric dam in Cameroon illustrates both the ambition and the challenges the EU’s Global Gateway strategy faces. The project seemed to tick all the boxes to make it a European ‘flagship’ project. A $ 1,2 billion, green infrastructure project with a huge – the EU prefers ‘transformational’ – potential impact (a 420 MW production capacity, one-third of the existing capacity in the country), and the involvement of several EU member state partners, both private and public, plus the EIB. The International Financial Corporation (IFC) was a major partner and guarantor of the project, a quality label and illustration of the European openness to other partners.
It also made good progress and, at only a 90-minute drive from Cameroon’s capital, offered a great photo opportunity for European high-level public servants and politicians visiting the country.
That the project had started years before without new – the EU would say ‘innovative’ – investment guarantees or blending mechanisms (the project didn’t rely on EU grant money), was a detail that couldn’t spoil the good news about the TEI and GG approach. It was also not much of a problem that the Cameroonian energy sector suffered from years of mismanagement and structural problems: the Cameroonian government had made commitments to restructure the sector, and the World Bank was involved in supporting those reforms. So when the ‘360-degree’ approach was added to the GG strategy to differentiate it from the more traditional Chinese Belt and Road initiative and to give it a reassuring ‘good governance’ flavour, this box could be ticked off as well.
Except that, while the works progressed, the reforms stagnated or were delayed at best. The ‘last mile’ is often the most challenging part in infrastructure projects, ensuring that people have access to and benefit from the new infrastructure.
In this case, the problem was double. One, at the technical level, was how to interconnect electricity grids, develop the electricity networks up to the final consumer and prevent leakages in electricity supply (as a result of maintenance problems or illegal electricity diversion, according to official data presently at 30% of electricity distributed).
The other, at the economic level, was how to ensure viable electricity delivery while energy prices were set too low and ex post invoice payments were at least ‘irregular’ (including by public institutions and enterprises). To avoid this commercial risk, the main commercial investor in the project and ultimate manager of the dam’s electricity production, EDF France, had asked for not so innovative but, on the contrary, classic commercial guarantees, an‘offtake’ guarantee and a counter-guarantee by the IFC in case the government didn’t respect its commitments.
The offtake guarantee commits the government to making monthly payments of a fixed minimum amount (FCFA 10 billion or €15,2 million) for electricity potentially produced, regardless of the actual electricity produced once the dam becomes operational.
The lack of progress in the sector reforms and the resulting lack of financial viability of the public electricity supply monopoly in Cameroon, ENEO, pushed its main private shareholder to withdraw, and in late 2025, the government had to buy him out. This didn’t change the sector’s financial health. ENEO has accumulated FCFA 500 billion in suppliers’ debts and cannot pay for the energy supplied by the Nachtigal dam. But to cover its budget deficit and refinance its foreign debts coming due this year, the government has to preserve its access to regional and international capital markets and cannot easily afford a sovereign credit rating downgrade or the suspension of the World Bank’s outstanding $1 billion development portfolio.
Hence, the absolute necessity to find ways to timely pay for all electricity supplied by the Nachtigal dam operator (or to pay the monthly offtake guarantee if the value of the electricity supplied falls below the FCFA 10 billion threshold) in order to avoid defaulting on its commitments, which would force the IFC to activate its counter-guarantee and the World Bank to reconsider and possibly suspend its support to the country. Yet it now desperately seeks to refinance the sector, pressuring the local commercial banking community to come on board before the next debt repayment deadlines.
But without further sector-wide reforms and a more viable electricity price setting policy, this situation is unsustainable and will not only jeopardise the health of the local and regional banking sector but also future Global Gateway projects, including another ‘transformational’ hydro-electric dam a bit further down the same Sanaga river on which the Nachtigal dam was built, for which EDF had started mobilising an investment consortium.
The Nachtigal dam isn’t a GG ‘flagship’ but, on the contrary, a good example of Africa’s investment potential spoiled by a narrow focus on the infrastructure works and a neglect of the political economy aspects.
Governance for success
The Nachtigal dam isn’t a GG ‘flagship’ but, on the contrary, a good example of Africa’s investment potential spoiled by a narrow focus on the infrastructure works and a neglect of the political economy aspects of the project, of the sector and even more broadly of the country, including regulatory and institutional as well as ‘last-mile’ poverty considerations. The EU’s strategic interest doesn’t lie in participating in the construction of a dam, but in contributing to the development of a reliable, resilient country-wide electricity sector, lifting a major constraint to competitiveness, investment and decent job-creation.
The (renewable) energy sector should be commercially viable and one of the easiest to attract private sector capital investments. But as pointed out by the latest OECD-DAC peer review of the EU’s development cooperation, the GG strategy can only succeed with a credible, truly comprehensive 360-degree approach, putting good governance and transparency at its core and, in this way, making development investable, as discussed at the EIB Forum.
About the author:
Philippe Van Damme is a ECDPM fellow and head of the EU delegation to Cameroon and Equatorial Guinea between 2021 and 2023.