BRUSSELS — At the end of their meeting last week, officials from the major institutions in European development finance raised a glass of champagne. The occasion? The signing of four new budget guarantees under the European Union’s External Investment Plan.
The €216 million ($238 million) allocated by the EU may not seem much, but the low-key fête reflected the pressure the European Commission is under to prove that its plan to spark high-impact public and private investment in low-income countries by taking some of the risk itself, actually works.
The commission claims the four guarantees signed Wednesday will help unlock €2 billion in investments in renewables, urban infrastructure, and start-ups in Africa and countries neighboring the EU. In all, the investment plan launched in 2017 allocated €1.54 billion for 28 guarantees that will partially compensate development banks and private investors should projects proposed in traditionally risky areas, including microfinance and digitalization, fail.