EU DEVCO blending facilities

EU REGIONAL
BLENDING
FACILITIES
EU-ASEAN CONNECTIVITY DIALOGUE
Brussels 27 February 2014
INNOVATIVE
FINANCIAL
INSTRUMENTS
Using grants strategically
to unlock additional
financing for development
The targeted use of grants can address
market inefficiencies and can make projects
with a high economic and social but
insufficient financial return possible.
In public investments, a grant element can
speed
up
processes,
increase
the
sustainability of the investment, bridge
financing gaps and reduce the debt burden of
the promoting partner.
In private investments, a grant element can
set incentives, address factors that hold back
investment such as risk and send out positive
signals to market actors
2
THE EU
APPROACH
The EU regional
blending facilities
Blending is one of the Commission's
instruments to achieve the EU's development
objectives (e.g. inclusive growth and poverty
reduction).
Seven EU regional blending facilities covering
almost all countries in the EU's area of
external cooperation have been set up since
2007 (plus an eighth for Western Balkans)
Combine grants from the EU Budget, EDF
and MS contributions with additional nongrant resources, taking into account debt
sustainability issues.
3
-4-
ITF: € 638 million from the EU and € 109
million from Member States
AIF: € 30 million, 2011 – 2012
FINANCIAL
CONTRIBUTIONS
From the EU budget and
Member States
IFCA: € 65 million, 2011 - 2013
LAIF: € 192 million, 2009 - 2013
NIF: € 767 million from ENPI & € 70 million
from Member States, 2007 – 2013
CIF: € 40 million, 2012-2013
IFP: € 10 million, 2012-2013
5
Grants used as direct investment and
interest
rate
subsidy
decrease
the
investment cost for the beneficiary.
TYPES OF
GRANT
SUPPORT
Grants as different
"financial tools"
Technical assistance can accelerate projects
and improve the quality, efficiency as well as
sustainability.
Risk capital (i.e. equity & quasi-equity) aims
at crowding in additional market financing for
development. Currently this is exclusively used
to support MSMEs.
Guarantee mechanisms aim at unlocking
market financing for development that is held
back by high risk perception.
8
Eligible Finance Institutions submit
project proposals (standard project
submission form) as Lead Financier
SUBMISSION OF
PROJECTS
Multilateral European Finance
Institution (eg EIB, EBRD, …)
European public national
development finance
institutions from Member
States (eg AFD, KfW, SIMEST)
Regional banks are full
members in some regional
facilities (AfDB in ITF, CDB and
IDB in CIF) and observers in
others (IADB, CABEI and CAF
in LAIF). (Not yet in Asia)
9
Every project proposal is subject to a
peer review among finance institutions
and a screening process led by COM.
SCREENING
PROCESS
EU development
objectives are always
paramount
Decisions taken on a case by case
basis, requiring among others the
following checks:
project is 100% in line with EU
development policy objectives
environmental
&
social
standards have been taken into
account
necessity of grant element has
been justified
sufficient analysis has been
made
to
avoid
market
10
distortions
POTENTIAL FOR
BLENDING
2014-2020
Carry forward gradual
increase in response to
the investment needs of
partner countries
The Commission's intention is to enhance
blending activities in all regions.
The decision on actual allocations are being
made in the context of the on-going
programming exercise.
Blending projects can be financed from
national and regional envelopes. Via regional
blending facilities, but also standalone
12
Asia Regional Indicative Programme
2014 – 2020
POTENTIAL FOR
BLENDING
2014-2020
Promotion of a Green Economy
energy, climate change, environment
and natural resources management,
including water management, disaster
preparedness and risk reduction, better
access to finance for Small and Medium
Enterprises, support investments in the
transport sector and contribute to the
ASEAN Connectivity Master Plan
13
http://ec.europa.eu/europeaid/where/latinamerica/regional-cooperation/laif/index_en.htm
http://ec.europa.eu/europeaid/where/neighbourhood/re
gional-cooperation/irc/investment_en.htm
USEFUL LINKS
http://www.eu-africa-infrastructure-tf.net/
More info
EuropeAid-CIF@ec.europa.eu
EuropeAid-NIF@ec.europa.eu
EuropeAid-LAIF@ec.europa.eu
EuropeAid-AITF@ec.europa.eu
EuropeAid-AIF@ec.europa.eu
EuropeAid-IFCA@ec.europa.eu
14