BRUSSELS — Although the raison d’être of the new European Fund for Sustainable Development is to boost private investment in the EU neighborhood and Africa, NGOs also have a role in ensuring its success, two leading officials said during a Devex webinar last week.
The EU’s 4.1 billion euro ($4.84 billion) External Investment Plan aims to trigger 44 billion euros ($51.9 billion) of investment by 2020, especially in countries previously dismissed by the private sector as too risky. It does this partly through a new EFSD Guarantee, worth up to 1.5 billion euros ($1.8 billion), whereby the European Commission will cover part of the risk taken by trusted financial institutions, mostly development banks, as they help finance projects in five broad areas, or “investment windows,” such as renewable energy and sustainable agriculture.
The EU is casting a wide net, inviting companies from around the world to invest in portfolios of projects developed and overseen by the development banks, and approved by experts from the European Commission and European Investment Bank. As Devex reported previously, the more risky the country, the less the development bank will have to pay to secure the guarantee from the commission.
Maria Shaw-Barragan, director of lending in Africa, Caribbean, Pacific, Asia and Latin America at the EIB, told the webinar that, at present, “there are areas where the [private sector] will not go,” either for security reasons or due to access issues. “It could very well be that we are going to have to concentrate in areas where the private sector is willing to go, and what they need is just that push, that companion that will come with them and ease some of the risks,” Shaw-Barragan said.