Webinar: How NGOs can engage with the European Fund for Sustainable Development

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. She added that although the fund was not designed to finance NGO-run projects, civil society organizations could be involved in two main ways. First, she said NGOs could contact the financial institutions implementing the EFSD — which the EIB part of — to give “their views, their guidance, their opinion on where needs are and what are the right ways of addressing them.” She explained: “During the project design phase, there will be public consultations and particularly local NGOs can get involved in that process.” Second, Shaw-Barragan said NGOs could assist in monitoring efforts once projects begin. “We are talking about investment and projects that will have social and environmental aspects to be looked after,” she said. “We will be carrying out due diligence and we will be doing our own monitoring. But in that process, the NGOs that are present on the ground can also be incorporated … There are some kinds of projects where we would be able to use the local presence and capacity of NGOs who would contribute by quantifying or assessing the implementation of the projects.” Kay Parplies, head of unit in charge of multi-country programs at the commission’s development arm, DEVCO, also gave participants the latest timings on the roll out of the fund. Financial institutions will have until January 31, 2018, to submit their indicative investment proposals to the EFSD secretariat under the themes of “sustainable energy and connectivity,” as well as “micro, small and medium sized enterprise financing.” Submissions under the remaining investment windows (sustainable agriculture, sustainable cities, and digital for development) are not due until March 31. “The distinction is because we feel that in renewables and SMEs we have more experience, our partners also have more experiences, and the guarantee products are somewhat more advanced and more mature already,” Parplies said. “Whereas for the other three windows, probably a bit more time is needed.” The proposals will then be evaluated by experts from the commission and EIB. Parplies said the commission is aiming to sign guarantee agreements in the first half of next year to allow development banks to offer the instruments on the market by summer. As for the development banks who are supposed to make use of this guarantee, Parplies said their feedback has been positive. “This guarantee will enable the financing institutions to provide products … that perhaps don’t make it through their normal risk procedures,” he said. “We see a lot of interest for these windows and we are quite hopeful and confident that we will get some pretty innovative instruments across these five windows.” That confidence was reinforced by positive feedback Shaw-Barragan and Parplies said they received at the AU-EU Business Forum in Abidjan last week — although Parplies said “the picture is slightly different at the political level at the African Union.” “It’s more mixed there simply because the notion of private sector development is perhaps a little less established at the political level,” he said. “But even there we are hopeful and the intention obviously is to show that these kinds of guarantee instruments can make a real difference.” Read more Devex coverage of the European Fund for Sustainable Development