The European Commission signed today four guarantee
agreements worth €216 million that will help unlock €2 billion to invest in
renewables, urban infrastructure and start-ups in Africa and the Neighbourhood.
The guarantees were signed with the European Bank for Reconstruction and
Development (EBRD), the European Investment Bank (EIB), the German KfW Group
and the Spanish development cooperation agency, Agencia Española de Cooperación
Internacional para el Desarrollo (AECID), at the 4th Strategic Board
meeting of the External Investment Plan (EIP).
Commenting on these financial guarantees, Jutta Urpilainen, Commissioner for International Cooperation and Development, said: “The agreements signed today, worth €216 million, will aim to unlock €2 billion in new investment in Africa and the EU Neighbourhood. These guarantees share in the risk and help mobilise and attract public and private investments. They will help boost the supply of renewable energy to communities and businesses in Africa and the EU Neighbourhood, help small businesses invest and create jobs, and make African cities more resilient to growing populations and the effects of climate change. They are an example of how the EU’s new Green Deal initiative benefits citizens of our partner countries outside the EU”.
Commissioner for Neighbourhood and Enlargement Olivér Várhelyi added: “We want to ensure an investment boost that will drive forward growth and provide concrete benefits and opportunities to the people, for example when it comes to big infrastructure projects or the support to young entrepreneurs. The direct support to investment is a key element, but so are good governance and a conducive business environment that helps attracting investment, both domestic and foreign. This is why the External Investment Plan supports our partner countries also in developing more effective legal frameworks, policies and institutions that promote economic stability, sustainable investment and inclusive growth.”
guarantees, one goal: more investment where it’s needed the most
These guarantees will significantly boost investment
in renewable energy and increase access to finance for small businesses
(MSMEs), while also improving investment in urban infrastructure and services
in Sub-Saharan Africa and in the EU Neighbourhood.
· Resilient City Development (RECIDE)
This €100 million guarantee agreement is signed with
AECID, the Spanish development cooperation agency. It targets Sub-Saharan
Africa and the EU Neighbourhood. It will help cities develop public-private
partnerships and lower the risks for private investors involved in financing
urban infrastructure, focusing on: energy efficiency, flood protection, public
transport, water sanitation and solid waste treatment. The guarantee reassures
lenders that they will recover at least some of their investment in the event
of losses and lowers borrowing costs.
· Boosting Investment in Renewable Energy
This €50 million guarantee agreement with EBRD will
help to scale up investment in renewable energy in Ukraine and in the EU
Southern Neighbourhood, in particular in Jordan, Lebanon and Tunisia. It will
substantially boost renewable energy potential. The guarantee will help to
generate a total investment of up to €500 million and is expected to provide
340 MW of additional installed renewable energy capacity.
· Supporting Investment in Sustainable Energy
This €46 million guarantee agreement with the KfW
Group will help to expand the generation of renewable energy in Sub-Saharan
Africa and cut the region’s carbon emissions and increase energy efficiency. It
will partially cover the offtake risks in renewable energy projects, such as
windfarms and solar energy. This guarantee will give many more people access to
energy and reduce power shortages.
· SME Access to Finance
This €20 million guarantee agreement with EIB is
targeting Small and Medium Enterprises (SMEs) in the EU Neighbourhood, with a
particular focus on young entrepreneurs, women entrepreneurs and start-ups. It
will provide affordable funding to small businesses, with less access to
finance because local financial institutions consider them as riskier clients.
The guarantee is providing local banks and financial institutions a first loss
credit protection. This guarantee will sustain around 18,000 jobs and support
1,000 small businesses.
These guarantees are part of the External Investment
Plan, which aims to mobilize more than €47 billion by 2020 in public and
private investment for development in countries neighbouring the EU and in
Africa using €4.6 billion in EU funds.
The EU External Investment Plan has three pillars. The
first is finance. Through financial
guarantees, the EU mitigates the risk in countries with difficult environments
so that private investors and development banks will lend to entrepreneurs or
finance development projects. Three guarantee agreements had previously been
signed so far: Nasira Risk-Sharing Facility and FMO Ventures, with the Dutch
Development Bank and Archipelagos – One Platform for Africa, with Cassa
Depositi e Prestiti (CDP), the Italian Development Bank, and the African
Development Bank (AfDB).
The plan’s second part is technical assistance. This funds experts who help
authorities, investors and companies develop new projects. Technical assistance
may include, for example, market intelligence and investment climate analysis,
targeted legislative and regulatory advice, support to partner countries in
implementing reforms, chains and identification, preparation, and help to carry
out necessary investments.
The third pillar consists of investment climate support. The EU works closely with
governments in partner countries to help them improve the conditions which
investors need like a good business environment and
economic stability. The EU also brings together governments and business to
discuss investment challenges.
The External Investment Plan is a key part of the Africa-Europe Alliance for Sustainable Investment and Jobs,
launched in September 2018 with the objective of creating 10 million jobs in
five years, boosting investment and promote sustainable development. The von
der Leyen Commission intends to use the full potential of the External
Investment Plan to boost private capital and investment, including through
further guarantee agreements.