As part of its External Investment Plan, the EU gave its green light to a package of financial guarantee programmes worth around €800 million on 10 July. This will help leverage an estimated €8-9 billion in public and private investment in Africa and the Neighbourhood.
Yesterday’s decision is a major milestone towards delivering investments in Africa and the Neighbourhood through the EU’s External Investment Plan (EIP), which is expected to leverage €44 billion of investments through an EU contribution worth €4.1 billion.
The EIP aims to promote inclusive growth, job creation and sustainable development and in this way to tackle some of the root causes of irregular migration.
One of the new programmes for example will benefit people who currently have difficulty borrowing money at affordable rates, such as internally displaced people, refugees or returnees. Another programme will enable over 25,000 small businesses to access mobile accounts and long-term credit, in order to support the financial inclusion driven by diasporas, migrants’ families and returnees.
The External Investment Plan’s financial pillar consists of two parts:
- Guarantee Fund (for a total of €1.5 billion by 2020): On 10 July, the EU allocated €800 million from the Guarantee of the European Fund for Sustainable Development. This is expected to leverage €8-9 billion of public and private investments. The guarantees will cover operations in several areas: financing for small businesses, including ones involved in agriculture; sustainable cities; sustainable energy and connectivity; and access to the internet and digital services.
- Blending Facilities (for a total of €2.6 billion by 2020): Since 2017, the EU has made available a total of €1.6 billion for interventions mixing EU grants with loans (so-called blending). This will help to leverage up to €14.6 billion in investments. These programmes will cover areas such as transport, energy, environment, agriculture, urban development sectors and also improve access to finance for local micro, small and medium enterprises.