External Investment Plan

External Investment Plan

Instability and conflicts in Africa and the EU Neighbourhood have been aggravated by the global economic crisis, reducing access to finance for much needed investment. Instability and conflict have also exacerbated the ongoing migration crisis with more people than ever on the move in Africa and in Neighbourhood countries.

The EU’s ambitious External Investment Plan encourages investment in our partner countries in Africa and the EU Neighbourhood region. It will promote inclusive growth, job creation and sustainable development and so tackle some of the root causes of irregular migration. The External Investment Plan is adapted to the specific needs of partner countries and builds on the very successful model used within the EU, where the ‘Juncker Plan’ has already triggered €209 billion of investment.

The European Union and its Member States are collectively the world’s biggest providers of development assistance, providing €75.5 billion in 2016, or almost 60% of global assistance. But development cooperation needs to evolve. Traditional assistance in the form of grants remains essential – but must be complemented with other tools and sources of finance in order to reach the ambitious targets set by the Sustainable Development Goals.

 

THE EXTERNAL INVESTMENT PLAN WILL:

  • Contribute to achieving sustainable development in our partner countries in a coherent and consistent manner.
  • Mobilise investment and leverage funds, to reach countries where investments are currently difficult, and facilitate investments by private actors that would otherwise invest less or not at all.
  • Target socio-economic sectors, in particular sustainable infrastructure (including energy, water, transport, information and communications technology, environment, social infrastructure, human capital), and provide finance for micro-, small- and medium-sized enterprises with a particular focus on on decent job creation.
  • Assist in developing economically and financially viable projects to attract investment. Help to improve the business environment in partner countries by supporting reforms and economic governance.
  • Contribute to address the root causes of irregular migration and strengthen our partnerships in Africa and the EU’s Neighbourhood countries.

 

The European Fund for Sustainable Development

 

The new European Fund for Sustainable Development (EFSD) is the central piece of the Union's External Investment Plan which aims to boost private and public investment in our partner countries in Africa and the European Neighbourhood in order to address some of the obstacles to growth and the root causes of irregular migration.

The EFSD is an integral financing mechanism to support investments by public financial institutions and the private sector.

The EFSD is composed of two Regional Investment Platforms (Africa and the Neighbourhood). They will combine existing investment facilities (€2.6 billion indicative budget) and a dedicated financial guarantee instrument (€1.5 billion) in order to attract additional financing of some €44 billion or more by 2020, in particular from the private sector. The new EFSD guarantee will reduce specific risks in investment projects and could absorb potential losses. 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.

The EFSD guarantee will have a number of thematic or geographic investment windows, under which partial guarantees to investment will be provided. These windows define priority sectors for the EFSD guarantee, identified as essential for the creation of decent and sustainable jobs in Africa and the EU Neighbourhood.

The EFSD Strategic Board includes the EU Member States and the European Investment Bank, as well as the European Parliament as observer.