07/11/2018 | Press release | Distributed by Public on 07/11/2018 08:39
The EU's External Investment Plan (EIP), launched in September 2017, is expected to leverage by 2020 €44 billion of investments for sustainable development for Africa and the EU Neighbourhood, through an EU contribution of €4.1 billion.
It aims to promote inclusive growth, job creation and sustainable development and in this way tackle some of the root causes of irregular migration.
What is the state of play on the External Investment Plan?
Less than a year after the EIP's official launch, the EU is on the right track towards achieving its commitment to leverage €44 billion of public and private investments in sustainable development, with an input of €4.1 billion from the EU for blending operations (mixing public grants and loans) as well as guarantee operations.
On 10 July, the EU took a milestone decision to mobilise €800 million in guarantee operations, which is expected to trigger investments of €8-9 billion.
This adds to the €1.6 billion that were mobilised for blending operations (i.e. the mixing of public grants and loans), which will mobilise up to €14.6 billion.
Overall, this will therefore translate into over €22 billion public and private investments. This will support much needed investment in sustainable development and decent job creation particularly in Africa.
Each of the Investment Programmes presented on 10 July is accompanied by substantial technical assistance to support partners in developing good projects. Policy dialogue with partner countries at all levels is ongoing.
What is the target of the EIP and how much has already been achieved?
The Plan's financial arm, the €4.1 billion European Fund for Sustainable Development (EFSD), comprises two parts:
Overall, this will translate into over €22 billion public and private investments. This will support much needed investment in sustainable development and decent job creation particularly in Africa.
What was decided on 10 July concerning the European External Investment Plan?
On 10 July, the Strategic Board of the European Fund for Sustainable Development (i.e. the financial fund underpinning the EU's External Investment Plan) gave its green light for twelve EU guarantees worth around €800 million. The Board comprises representatives of: EU Member States, the European Parliament (as observer), the European Commission (who chairs the meeting), the European External Action Service and the European Investment Bank. Partner countries and regional stakeholders can also join as observers.
The guarantees lower the risk of investing in projects in countries neighbouring the EU and in Africa. The guarantees will cover operations in several areas: financing for small businesses, including ones involved in agriculture; sustainable cities; sustainable energy and connectivity; and access to the internet and digital services.
The guarantees will help bring in private sector investment because they can:
What are the next steps?
The agreement on 10 July on first guarantee programmes paves the way for signing the first contracts for guarantee agreements already in the second half of 2018. The European Commission is expected sign the first EIP guarantee agreements with eligible partner financial institutions later this year. These institutions will then use EU guarantees to finance new development projects and attract additional private investments.
Financial institutions should then start to roll out projects in early 2019.
What sectors are covered by these guarantees?
The EU had in September 2017 identified five areas of intervention, in which the External Investment Plan can have the highest impact for sustainable development. The first four are covered by the guarantee programmes approved on 10 July:
Furthermore, the Commission will review proposals in the field of agri-business in autumn 2018.
Can you give some examples of the new guarantee programmes:
oPeople who have been forced to flee other parts of their countries (internally displaced people) or to leave their country all together (refugees)
oThose who had fled but have recently returned to rebuild their lives (returnees)
oWomen and young people aged 18-30
o Cut carbon emissions by an estimated 2-3 million tonnes per year
o Create an additional 1.5 - 2 Gigawatts of renewable energy
o Increase power production from renewable energy sources to 4,500-6000 GWh/year.
Can you give some examples of blending operations?
The EU has been supporting development and growth in partner countries through blending operations (mixing public grants and loans), for example:
How did you estimate the EIP leverage?
In the EIP context, leveraging is the use of EU grants and guarantees to enable and increase the overall size of investment. Leverage allows going to scale and delivering enhanced development impact.
Based on experience with EU‑supported financial instruments since 2007, the EFSD guarantee and blending (i.e. mixing of public grants and loans) are expected to reach an average leverage of around x11. The total EU contribution of €4.1 billion is therefore expected to result in a total investment of €44 billion.
How can we monitor the progress of the EIP's implementation?
The European Commission will closely monitor the progress of the EIP. It will report annually to the European Parliament and the Council on the EIP financing and investment operations. The Commission will communicate the progress to citizens and stakeholders through its website and dedicated EIP web portal.
Reports will also be presented to the public and all relevant stakeholders, including civil society.
What are the conditions to qualify for support under the EIP?
Projects must have a clear sustainable development objective for Africa or the European Neighbourhood. They should contribute to economic and social development, with a focus on sustainability and job creation, particularly for youth and women.
Investment proposals have to provide adequate risk sharing, be economically and financially viable, socially and environmentally sustainable. They must not distort market competition or crowd out commercial funding and they should address market failures or sub-optimal investment situations. Operations should be additional - i.e. in areas where financing would otherwise not be available, due to high or perceived high risks.
If I want to take part and submit a project proposal or invest through a guarantee tool, how can I find out more?
Businesses that want to benefit from the EIP are encouraged to:
For more information