BRUSSELS — The European Commission has finalized just one of the 28 guarantees it is offering to development finance institutions under its External Investment Plan, though it hopes to ink more after a meeting next week.
The commission has allocated €1.54 billion ($1.74 billion) to encourage institutions such as the European Investment Bank, European Bank for Reconstruction and Development, and national development banks, to take on risky investments with high development impact in countries neighboring the European Union and in sub-Saharan Africa.
Under one element of the External Investment Plan, known as the European Fund for Sustainable Development, the EU will cover part of the DFIs’ losses if the investments — channeled through local lenders in areas such as microfinance, agriculture, and renewable energy — fail. The riskier the investment, the less the commission will charge DFIs to take advantage of the guarantee.