The European Fund for Sustainable Development (EFSD) is the heart piece of the EU’s new External Investment Plan (EIP). Its role is to help boosting private and public investment in our partner countries to address some of the obstacles to growth and some root reasons for irregular migration.
The EFSD Strategic Board includes the EU Member States and the European Investment Bank, as well as the European Parliament as observer.
At its first meeting yesterday, it discussed rules of procedure, strategic orientations and proposals for concrete areas for investment, the so-called “investment windows”. 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 Strategic Board has sent a strong message about the EU’s firm commitment to rapid and efficient implementation of the EIP.
First windows to be announced soon
The first investment windows are expected to be approved shortly, so that the EIP can start to make a real difference for beneficiaries on the ground.
At the launch stage, five windows are considered essential :
“Sustainable Energy and Sustainable Connectivity“: targeting sectors such as renewable energy, energy efficiency and transport, enhancing energy security and sustainable development, while addressing climate change risks and helping countries deliver on their commitments to implement the Paris Agreement.
“Micro, Small and Medium Enterprises (MSMEs) Financing“: addressing the main constraints hampering MSMEs development by adopting a differentiated approach. This will result in increased jobs opportunities, especially in countries affected by conditions of fragility, whilst promoting the progressive graduation of businesses from the informal economy.
“Sustainable agriculture, rural entrepreneurs and agroindustry“: responding to the lack of financing mechanisms adapted to farmers and agri-entrepreneurs, particularly for smallholders, cooperatives and agribusiness MSMEs, in the aim of promoting inclusive and sustainable growth.
“Sustainable cities”: exploring innovative mechanisms to address the challenges of sustainable urban development faced by partner countries.
“Digitalisation for Sustainable Development”: focussing on innovative digital solutions, especially those addressing local social needs and financial inclusion and promoting decent job creation.
The EU Agenda for Change emphasises the support of inclusive growth and job creation as a key priority of EU external cooperation. In this context, blending is recognised as an important vehicle for leveraging additional resources and increasing the impact of EU aid.
The European Commission proposed on 14 September 2016 an ambitious External Investment Plan (EIP) to encourage investment in our partner countries in Africa and the EU Neighbourhood region, to strengthen our partnerships and contribute to achieve the Sustainable Development Goals, helping to address some root causes of migration.
Part of the EIP is the new European Fund for Sustainable Development (EFSD) as an integral financing mechanism to support investments by public financial institutions and the private sector.
Moving ahead with the EIP’s rapid implementation, the first Strategic Board of the European Fund for Sustainable Development (EFSD) met in Brussels on 28 September, on the same day that the entry into force of the regulation establishing the European Fund for Sustainable Development.
The European Investment Plan (EIP) was proposed by President Juncker in September 2016. Already a year later, the EIP is becoming operational.
In order to foster sustainable development, the EIP will integrate a new generation of financial instruments into more traditional forms of assistance such as grants – namely guarantees, risk sharing instruments, as well as the blending of grants and loans.
Substantial technical assistance will help beneficiaries producing more mature and financially viable projects and businesses. The EU will also 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 years of blending activities.