The Operational Board of the European Fund for Sustainable Development plus (EFSD+) has today given a positive opinion to €6.05 billion in financial guarantees to support 40 investment programmes in Sub-Saharan Africa, Latin American and Asia Pacific. The guarantees are expected to generate more than €50 billion in investments in key sectors of Global Gateway, such as renewable energy, digital infrastructure and climate resilience and health. The package also includes a new green bond programme. The programmes will be implemented by European Financial Institutions, such as the European Investment Bank, the European Bank for Reconstruction and Development, and national development banks. In total, 20 financial partners participate in the EFSD+ guarantee programme, seven of which for the first time. The EFSD+ is a financing tool of Global Gateway, and the financing arm of the EU’s Neighbourhood Development, International Cooperation Instrument (NDICI) – Global Europe. It de-risks investments with budgetary guarantees and thus attracts more private investment to emerging and developing country markets.
Main sectors covered by the new guarantee programmes under the EFSD+ are:
Connectivity: Twelve programmes in this area will support investment in renewable energy, the digital sector and transport and contribute to the digital and green transition in our partner countries.
MSMEs: Seventeen programmes will support the private sector and, in particular, the development of micro, small and medium-sized enterprises. Particular attention will be given to supporting financial inclusion of micro and informal enterprises, underserved sectors of the formal economy, on the demand side, and financial intermediaries, including banking and non-banking institutions, on the supply side.
Natural Capital: Six programmes in these areas aim to improve food security and nutrition, while protecting and restoring ecosystems, as well as helping ensure access to water and sanitation (WASH). A particular focus will be given to protecting partner countries’ natural resources and supporting their resilience against climate change as well as the global food crisis and supply chains disruptions, aggravated by Russia’s war of aggression against Ukraine.
Human Development: Two programmes supporting the health sector, including an initiative to eradicate polio, and enabling a variety of social actors to access long-term and affordable financing in support of the development of social infrastructure, e.g., social housing.
Sustainable Finance: A programme supporting green investment in partner countries, notably via the EU Global Green Bond Initiative, that will facilitate the flow of private capital into climate and environmental projects in partner countries. It will help EU partner countries develop credible green bond frameworks while promoting the EU sustainable finance agenda where feasible.
Sustainable cities: Two programmes will provide long-term and affordable financing for infrastructure-focused operations in sectors such as urban mobility, energy efficient buildings, public lighting, district heating, circular economy, and green urban areas.
Background
The European Fund for Sustainable Development Plus (EFSD+) is part of the EU’s investment framework for external action and ensures worldwide coverage for blending, guarantees and other financial operations. It is included in the EU’s long-term budget programme for external action – the NDICI-Global Europe.The EFSD+ Operational Board has been established under this budget programme.
EFSD+ is raising financial resources for sustainable and inclusive economic development from the private sector. It supports investment in partner countries to promote decent job creation, strengthen public and private infrastructure, foster renewable energy and sustainable agriculture, and support the digital economy.
The guarantees the instrument provides are used for de-risking activities and leveraging private investment, working together with the European Investment Bank (EIB) and other European financial institutions.
The EFSD+ guarantees are offered on favourable, highly competitive terms. They allow investors to finance projects in more challenging markets, by assuming the risks of more unstable environments while avoiding market distortions. Because the EFSD+ covers a share of the risks, the EU’s development finance partners can match the EFSD+ guarantees with their own resources, which in turn will attract additional investors. The instrument has €40 billion in guarantee capacity.
The investment programmes are implemented through two main paths:
In a partnership with the EIB, the EU is providing a €26.7 billion guarantee for financing to support investments in sectors such as clean energy, green infrastructure and health. The guarantee will have a maximum impact on Global Gateway investments in partner countries where sovereign and other public sector risks are still a major bottleneck.
Under the EFSD+ open architecture, the EU is providing an up to €13 billion guarantee cover until 2027. This will be deployed by a range of implementing partners, i.e. International Financial Institutions (including the EIB) and European development finance institutions aiming to mobilise private investments in support of our partner countries achieving the SDGs. Today’s €6.05 billion is the first allocation under EFSD+ Open Architecture programme.
Jutta Urpilainen, Commissioner for International Partnerships: “The guarantee programmes approved by the EFSD+ Board today will be key to deliver Global Gateway in partner countries and contribute to achieving the Sustainable Development Goals, by crowding in private sector funding. I look forward to working together with European Financial Institutions and our Member states development agencies, as Team Europe, to increase our impact on the ground, particularly in support of sustainable infrastructure as well as developing norms and standards, skills and innovation. These are the building blocks for a more prosperous, greener and fairer world.”
Photo: Jutta Urpilainen
