European Union Commission on Wednesday announced a new European External Investment Plan (EIP), which it said would boost investments in Africa and EU neighbourhood countries.
The EIP is part of a €315 billion investment plan for Europe, the European Fund for Strategic Investments (EFSI), which has already raised €116 billion in investments in its first year of operation and is targeted at jobs and sustainable growth, both in Europe and globally.
It is particularly intended to support social and economic infrastructure and small and medium-scale enterprises (SMEs) by addressing obstacles to private investment through an input of €3.35 billion from the EU budget and the European Development Fund.
“Europe must invest strongly in its youth, in its jobseekers, in its start-ups. The €315 billion Investment Plan for Europe has already raised €116 billion in investments in its first year of operation. And now, we are going to take it global,” said Jean-Claude Juncker, president, EU Commission during his 2016 state of the union address.
A legal extension was also announced that would bring EIP’s initial three-year period (2015-2018) with a target of €315 billion to at least half a trillion Euros investments by 2020, a period representing the end of the current Multiannual Financial Framework.
Leveraging on this, the EIP will then support innovative guarantees and similar instruments in support of private investment, enabling the EIP to mobilise up to €44 billion of investments.
However, if member states and other partners match the EU’s contribution, the total amount could reach up to €88 billion
By unlocking investments in partner countries, the EIP will contribute to implementing the 2030 agenda on Sustainable Development Goals (SDGs) and the Addis agenda on financing for development.
It will also provide a key contribution to addressing the root causes of migration, reinforcing our partnerships and looking at the long term drivers behind the large movements of population.
In addition, the European Investment Bank’s (EIB) lending operations form an integral part of the EIP, and for this purpose, the commission says it will expand the EU budget guarantee under the EIB External Lending Mandate by a total of €5.3 billion.
In total, the EIB will lend up to €32.3 billion under the EU guarantee between 2014 and 2020.
The EIP offers an integrated framework enabling full cooperation among the EU, Member States, partner countries, international financial institutions, donors and the private sector.
It is intended to improve the way in which scarce public funds are used and the way public authorities and private investors work together on investment projects.
“If we look at the Middle East and Africa, we see regions with a huge potential that are being held back by war, poverty, the lack of infrastructure, and weak governance. Our European Union is already the first donor worldwide: we invest more in development cooperation than the rest of the world combined,” said Federica Mogherini, who is EU’s high representative for foreign affairs and security policy/vice-president of the EU Commission.
According to her, European firms are already creating jobs and growth in our entire neighbourhood and in Africa, for the benefit of our partners and of the European citizens.
“While creating the conditions for Europeans to expand their business and move into new countries, the new External Investment Plan will support our partners’ economies and societies, as well as our strategic foreign policy goals, from security to global development,” Mogherini said.