The European External Investment Plan. Brussels,

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1 The European External Investment Plan Brussels,

2 The EIP> Highlights Why: To contribute to the attainment of the Sustainable Development Goals and, therefore, addressing root causes of migration. What: A long-term, integrated and holistic -3-pillar approach to boost sustainable investments and decent job creation in Africa and EU Neighbourhood. How: Supporting private (notably SMEs) and public (enabling infrastructure) investments in riskier environments (where investments would usually not happen). Where: Africa and EU Neighborhood 2

3 EIP> Internal and External Policy Coherence Addis Ababa Action Agenda on Financing for Development European Neighbourhood Policy JOIN(2015)50F Paris Agreement on climate change cop 21 COM(2015)81F/2 EU New Partnership Framework with third countries under the European Agenda for migration - COM(2016)385F Agenda for Change COM(2011)637F New proposed European Consensus on Development 3

4 The EIP> Where? 4

5 EIP> Rationale and Effectiveness E TOOLS PILLAR 1 European Fund for Sustainable Development PILLAR 2 Technical assistance PILLAR 3 Enhanced Investment Climate I ACTIONS Mobilising investments with the aim to improve the economic and social development in Africa and EU Neighbourhood P IMPACT CONTRIBUTING TO THE SUSTAINABLE DEVELOPMENT GOALS ADDRESSING THE ROOT CAUSES OF MIGRATION DECENT JOBS CREATION 5

6 EIP> a 3 Pillars Structure E I P European Fund for Sustainable Development (EFSD) To mobilise investments and improve access to finance through the Regional Investment Platforms (Africa + EU Neighbourhood) Blending Facilities Technical assistance To help developing bankable projects which could be financed under pillar 1 To support activities aimed at enhancing business climate under pillar 3 Enhanced Investment Climate Political and policy dialogue for economic reforms Support legal, institutional and regulatory frameworks Engaging with the private sector New EFSD Guarantee One-stop-shop / web portal 6

7 EIP> Pillar 1> resources from EU and leverage 7

8 EIP> Pillar 1> the EFSD Guarantee The EFSD Guarantee will be an unconditional, irrevocable guarantee on first demand. It serves as a risk mitigation mechanism to stimulate investments in Africa and the Neighbourhood. It provides guarantee capacity for credit enhancement - will ultimately benefit the final investments and allow risk sharing with other investors, notably private actors. Will leverage additional financing, in particular from the private sector (crowding in), by reducing the risk associated with specific operations. Will be cushioned by a guarantee fund (cash liquidity).

9 EIP> Pillar 1> the EFSD Guarantee> eligibility criteria Objectives, i.a. SDG and root causes of irregular migration for economic reasons Socio economic sectors Leverage private sector finance Eligible instruments/risks covered, i.a. Debt Equity Guarantees Capital market instruments Other criteria Additionality Economically and financially viable (with regard to specific circumstances) Technically viable Socially and environmentally sustainable

10 EIP> Pillar 1> EFSD governance "shall ADVISE the Commission on the STRATEGIC orientations and priorities of the EFSD guarantee investments including indicative and thematic coverage for investment windows" "shall also support overall COORDINATION, COMPLEMENTARITY and COHERENCE between the" regional investment platforms, the three pillars, the Union's efforts on migration and EIB's operations STRATEGIC BOARD "SUPPORTS the Commission in defining regional and sectorial INVESTMENT GOALS, regional, sectorial and thematic investment windows, formulates OPINION on the blending operation and discusses the use of the EFSD Guarantee in line with the investment windows to be defined" European Commission, HRVP Representative, EU Member States, EIB + European Parliament, IFIs, partner countries as observers OPERATIONAL BOARD EU Commission, EEAS & EU Member States AFRICA INVESTMENT PLATFORM NEIGHBORHOOD INVESTMENT PLATFORM SECRETARIAT Web Portal (one-stop-shop) External Expertise Commission Services Regional investment platforms for portfolios of investments in specific regions, countries or sectors 10

11 EIP> Pillar 1> the EFSD Guarantee> Application process and evaluation STEP 1: drafting a Proposed Investments Programs under a specific Investment Window IFI Proposal INVESTMENT WINDOW EDFI Proposal Priv. Sect. Proposal STEP 2: Submission of the proposals EFSD Secretariat One Stop Shop (Pre-screening) G-TAG (Financial Assessment) STEP 3: assessment Operational Board of the RIP (Opinion) DECISION BY THE COMMISSION STEP 3: Signature of Guarantee Agreements COM IFI Guarantee Agreem. COM EDFI Guarantee Agreem. COM Priv. Sect. Guarantee Agrem. STEP 4: Financing phase Final Beneficiaries Final Beneficiaries Final Beneficiaries Final Beneficiaries Other (mainly private) investors Final Beneficiaries Final Beneficiaries

12 EIP> Pillar 1> the EFSD Guarantee> Example 1: SME lending EU COM Guarantee Agreement LEAD FINANCIAL INSTITUTION PFI PFI PFI PFI PFI PFI PFI SME Borrowers X% guarantee provided to PFIs for their lending to SMEs (capped at X% of SME portfolio)

13 EIP> Pillar 1> the EFSD Guarantee> Example 2: Structured fund (Renewable Energy) EU COM Guarantee Agreement LEAD FINANCIAL INSTITUTION A SHARES Private investors & lenders B SHARES Public Finance Institutions C SHARES First loss tranche Renewable Energy Project Renewable Energy Project Renewable Energy Project Renewable Energy Project

14 EIP> Pillar 1> the EFSD Guarantee> Example 3: Direct guarantees to beneficiaries EU COM Guarantee Agreement LEAD FINANCIAL INSTITUTION X% guarantee provided to beneficiary (capped at X% of investment) Beneficiaries (e.g. agriculture business)

15 Pillar 3: Promoting a conducive investment & business climate 15

16 EIP> Summary: Key Innovations Integrated 3-pillar-approach Seizing Synergies Coordinating finance, TA and multi-stakeholder political and policy dialogue for promoting sustainable investments in our partner countries One-stop-shop and web portal Enhancing transparency, accessibility and efficiency Giving a single & simple entry point for partners, investors and private sector EFSD Guarantee Innovative instrument, providing more funds and more flexibility Leveraging additional financing Mitigating risks Crowding-in private investment 16

17 Thank you! European Commission, DG DEVCO 17