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European External Investment Plan

28 September 2017
by eub2 -- last modified 28 September 2017

The EU's External Investment Plan will support more inclusive and sustainable development in Africa and the European Neighbourhood. It will boost public and private investment and thus address some of the obstacles to growth in our partner countries.


How does the EIP work?

The External Investment Plan will attract private investors, where viable business proposals meet social needs, and where limited public funds can attract private money.

The EIP is a new, integrated tool based on three interlinked pillars. In order to foster sustainable development, Pillar 1 includes the launch of a new generation of financial instruments, such as guarantees, risk sharing instruments, as well as the blending of grants and loans. This way, the EU will increase the impact of each euro of taxpayers' money spent. Pillar 2 will provide a greater level of technical assistance which will help beneficiaries accelerate the development of financially viable projects and businesses ready for support by the new financial instruments. In Pillar 3, the EU will step up its dialogue with partner countries, as well as a structured private sector dialogue to improve the investment climate and the business environment in the respective partner countries.

The EIP's innovative and holistic approach builds on the Commission's blended finance instruments, bringing together lessons learned over ten tears of blending activities.

With a contribution of €4.1 billion from the European Commission, the External Investment Plan is expected to leverage more than €44 billion of investments by 2020.

Who can apply to the EIP guarantee and from which countries and how can an individual company submit a project?

Direct funding from the Commission can only go to eligible Financial Institutions (FIs) that were assessed by the Commission, such as the EIB, EBRD, AFD, KfW etc.

Businesses are encouraged to contact the Financial Institutions (FIs) managing the investment windows, to get informed about the available instruments for their project or if they are interested in investing. Any project will need to focus on sustainable development in the two regions targeted by the EIP/EFSD: the EU Neighbourhood and Africa.

A web portal and Secretariat specifically designed for the EIP will be operational once implementation begins and will provide a 'one-stop-shop' for all those interested in working with the EIP. This means that companies will also be able to request access to funding and a guarantee for an investment project directly with the EIP Secretariat, which will put the company in touch with an eligible Financial Institution, who will assess, develop and finance the project so that it is able to benefit from the guarantee.

Should the project not qualify for the EFSD, the Secretariat will suggest to the company a list of relevant financial institutions, which are active in the respective region of interest.

How can African and Neighbourhood companies benefit? How can European companies benefit?

The EFSD support will be implemented via partner Financial Institutions (FIs), such as the European Investment Bank, European Bank for Reconstruction and Development and bilateral European Financial Institutions.

The European Commission will consider project-based partnerships with private sector actors in Europe and in partner countries. Increasing the visibility of investment opportunities outside the EU, in cooperation with partner countries, will further benefit both European actors as well as those in partner countries.

Increased investment will be accompanied by targeted work to improve the business environment and investment climate in the partner countries, as well as significant technical assistance. This will create a "win-win" situation: for the local private sector to become more active and for EU companies who wish to do business in developing and neighbourhood countries.

Direct interaction with companies and their associations will also be sought through dialogue to encourage more private sector engagement and market-based solutions in sustainable agriculture and agribusiness, sustainable energy, infrastructure and social sectors.

What kinds of projects will be funded under the EIP? Can you give examples?

The EFSD Guarantee can cover specific risks in investment projects and thus encourage investors to participate. For example, in renewable energy projects, the EFSD Guarantee can help to alleviate short-term liquidity problems and this way encourage investors to get on board.

A successful example of a project previously supported by the Commission in the energy sector is the Electrification Financing Initiative, or ElectriFI. By addressing the lack of access to seed, mid- and long-term capital the project aims to facilitate access to reliable, affordable and sustainable electricity and energy services for populations in rural, underserved areas.

A similar project in the field of Small and Medium Enterprises is the SANAD Fund, which provides debt and equity financing to local partner institutions for on-lending to micro, small and medium enterprises (MSMEs) and thus fuels their growth in the Middle East and North Africa. As these enterprises account for 60% of GDP and 70% of employment, they are crucial to a vibrant economy and job market. SANAD provides financial instruments such as loans, subordinated debt, guarantees and equity to local partner financial institutions, but is not only limited to financial assistance. In addition, a Technical Facility, which is co-financed by the EU with €2 million, offers capacity building and support to Private Finance Initiatives, hence increasing the sustainability of the overall approach.

The Boost Africa initiative will use a combination of investment tools, technical assistance and entrepreneur training to attract investors and develop an efficient entrepreneurial infrastructure by maximising the support to MSMEs at the earliest and riskiest stages of their development.

The EURIZ project will help the financially underserved MSME (green, agricultural, women-owned, start-ups and others) to receive loans for business development and sustainable jobs by providing guarantees.

The European Commission will build on and replicate positive examples like these with the help of the EIP. Projects under the EIP will focus on key sectors identified as essential in the creation of decent, sustainable jobs, the development of partners' economies, and their integration into the global economy. Examples of such sectors include renewable energy, projects that aim to fight climate change, and support to local Micro, Small and Medium Enterprises. Other sectors such as agriculture are also likely to be included.

How is the Commission going to make sure that will actually translate into sustainable growth and decent jobs?

The European Commission will closely monitor the progress of the External Investment Plan and report annually to the European Parliament and the Council on the financing and investment operations covered by the EIP. A report will also be presented to the public to allow all relevant stakeholders, including civil society, to express their views.

In line with EU transparency policies, eligible counterparts shall proactively and systematically make publicly available on their websites information relating to all financing and investment operations covered by the EIP, taking into account the protection of confidential and commercially sensitive information. Through its website and dedicated EIP webpage and by all other means, the Commission will communicate with citizens and stakeholders alike, publishing information on the essential elements of its operations.

Factsheet: External Investment Plan (EIP)

Source: European Commission