San Bilal

While multilateral debt reform has been slow since the pandemic, debt-for-nature swaps are emerging more and more as a unique tool to address liquidity problems and foster investments in e!ective climate action. Karim Karaki, Alfonso Medinilla and San Bilal propose three ways to scale up debt-for-climate swaps in developing countries.

In a world in crisis, there is a dire need for food security and climate-resilient and sustainable food systems, but without significant additional public and private resources, achieving this will not be possible. We argue that rechanneling and effectively implementing special drawing rights, as well as issuing new ones, should be part of the solution.
https://ecdpm.org/work/using-special-drawing-rights-climate-resilient-food-systems-and-food-security

The recent Global Gateway Forum provided an opportunity to highlight progress on the Global Gateway, the European Union's (EU) global connectivity strategy, which is two years old this week. The initiative aims to increase EU external investment and provide a more streamlined way to package EU international cooperation and investment, while in practice providing an alternative to China's Belt and Road Initiative and strengthening the EU's global influence. With around 160 flagship projects identified for 2023 and 2024, the Global Gateway has begun to gather steam, but challenges remain.

In this brief, we look at how the Global Gateway can make real progress towards operationalising a much-needed reorientation of EU international cooperation objectives and instruments to meet partners’ needs and to respond to current geostrategic realities. Achieving its investment target of €300 billion is crucial for the EU’s credibility. To do this – and possibly surpass it in the future – the EU and member states will need to enact a genuine shift in business practices. This includes rethinking their collective development cooperation objectives and taking a whole-of-government approach. This can happen through a series of political and technical evolutions, including on the narrative, the policy direction, the approach to partners, and the toolbox.
https://ecdpm.org/work/global-gateway-two-implementing-eu-strategic-ambitions

The European Union (EU), its institutions and member states are united in supporting Ukraine following Russia's war of aggression, providing about €76 billion to Ukraine and its people to date. To continue to respond to Ukraine's mounting needs, and with the EU's budget under stretch, the European Commission proposed an additional financial package of €50 billion for 2024-2027, the Ukraine Facility, currently under negotiations with the Council and the European Parliament. It is important that they do not water down the laudable proposal by the European Commission, but seek to further improve it. Specific attention should notably go to ensuring that the Ukraine Facility can help mobilise public investments, which are critical for the recovery and reconstruction of Ukraine. The European Investment Bank (EIB), as the EU Bank fully aligned to and promoting EU values, standards and interests, is uniquely placed to do so. In line with the European Fund for Sustainable Development Plus (EFSD+), the EIB should have a specific investment window in the Ukraine Facility. This would allow the EU to take advantage of the EIB's added value in public investments-EIB's core business, in a way that would also support Ukraine in the perspective of its accession to the EU. The EIB can also be instrumental in anchoring a Team Europe approach through the Ukraine Facility, partnering with other key European, international and local financiers and development actors, and the private sector, to support Ukraine's recovery and reconstruction through comprehensive public and private endeavours.
https://ecdpm.org/work/ukraine-facility-building-team-europe-and-european-investment-bank

The Finance in Common Summit 2023 brought together some 1,500 participants from the broad landscape of 520+ public development banks (PDBs) and their stakeholders (including financiers, government officials, experts and civil society) in Cartagena from 4 to 6 September. I am convinced that the annual summit was more than ever a laudable effort and worthwhile exercise, despite its limits. First and foremost, it helps shape an international community of development and climate finance stakeholders, linking global and local agendas and MDBs with national and sub-national development banks and sharing experiences and insights. https://ecdpm.org/work/stepping-finance-common

In a context where sustainability goals become overarching principles, what then distinguishes public support instruments to business that are more development-oriented from those that are more commercially-oriented, along economic diplomacy objectives?

To shed light on this process, ECDPM mapped instruments focused on engaging the private sector for development, and those supporting own businesses with commercial objectives in order to better understand their challenges, opportunities and synergies. We also examined EU matchmaking instruments with development cooperation and commercial interests.

This synthesis note summarises some of the key findings of our analysis so far, and presents implications and an outlook on what that means for public support instruments to better engage businesses for inclusive and sustainable development. It provides policy recommendations along the dimensions of institutions, instruments and criteria.

Key messages
Public instruments to support the private sector, for both development and commercial interests, have similar objectives and take similar forms. They, therefore, offer
potential synergies to achieve more sustainable development outcomes, while sharing risks, costs and resources.
ECDPM research points to a lack of consistent sustainability and development criteria for businesses to access public support instruments. While this is important for
development cooperation, commitments to both the 2030 Agenda and policy coherence for sustainable development also raise their importance for commercial instruments.
As development and commercial objectives are increasingly sought through private sector engagement at EU and national levels, there is a need for a more integrated approach to tackle global challenges: one that explicitly recognises the similarities between commercial and development instruments and draws lessons from both.
Systematically applied, sustainability criteria could increase the effectiveness and impact of all public support instruments to businesses and help ensure that firms actively contribute to development outcomes, beyond ‘doing no harm’.

https://ecdpm.org/bn90

The Economic Partnership Agreements (EPAs) concluded by the European Union (EU) with regional blocs of African countries (and certain individual African countries) are supposed to do more than just boost trade between the EU and African countries. They are meant to promote sustainable development and poverty reduction, including through supporting regional integration processes in Africa, promoting the gradual integration of African economies into global markets and enhancing African countries’ ability to leverage trade opportunities for economic growth. Given the internationalisation of production processes, with 70% of global trade involving intermediate goods or services, increased participation in regional and global value chains has become a crucial part of African countries’ economic transformation and sustainable development strategies. It is therefore relevant to consider how EPAs might affect the ability of African producers and services providers to integrate into such value chains.

Key messages
The Economic Partnership Agreements (EPAs) negotiated between the EU and regional blocs of African countries are meant to promote the gradual integration of African economies into global markets, including by supporting African businesses to increase their participation in regional and global value chains.
However, these EPAs do not significantly alter market access conditions relevant to many African producers and services providers, and are thus unlikely to have major direct impacts, either positive or negative, on their prospects for participating in regional and global value chains.
EPAs could have beneficial indirect impacts on African producers and services providers by encouraging investment and by facilitating support to interventions and initiatives that boost the capacity of African businesses to participate in regional and global trade, but such support will not automatically materialise through the conclusion of EPAs.
There is thus need for development partners and other actors to complement EPA implementation with support for value chain development initiatives and awareness-raising and capacity building to ensure African business can take advantage of EPA-related opportunities, and for the establishment and use of effective mechanisms to monitor EPA impacts.

https://ecdpm.org/dp213

Poor or inappropriate policies, governance and institutional structures have commonly been blamed for the resource curse that plagues so many developing countries. Instead of focusing on mainly technical remedies, more effort should be dedicated to designing reforms that are incentive-compatible with key stakeholders that can drive or hinder such reforms, and to promoting initiatives that can enhance domestic incentives towards a pro-development path in resource-rich countries. When properly managed, natural resources can effectively contribute to sustainable and equitable development. Yet too often, resource-rich countries have failed to capitalise on the benefits and transformative potential of their natural endowment. The poor performance of some resource-rich countries can be explained by a number of economic factors, including possible negative effects through the terms of trade, the cyclical long term price fluctuation of commodities, short term high price volatility of commodities, the crowding out of manufacturing and the Dutch disease, according to which the natural resources sector grows at the expense of manufacturing, and associated notably with real exchange rate appreciation. Poor macroeconomic management and budgetary processes, as well as the absence of coherent long-term strategic approaches, policies and mechanisms are other common factors. Power relations and institutional settings also often explain the resource curse. Natural resources create rents, which affect incentives and behaviour of political and economic actors. Political elites play a central role in the collection and allocation of these rents and the distribution of revenues generated directly and indirectly by the exploitation of natural resources. Accordingly, they may pursue self-interest objectives rather than development goals in the management of natural resources, and thus capture these rents. Economic actors are also more likely to engage in wasteful rent-seeking activities, thus diverting resources away from the productive sector. Rents in turn affect the economic structure, political framework, institutional setting and power relations within a country, particularly where patronage prevails. Foreign partners, governments or companies, in the pursuit of their own interests, have also at times contributed to reinforce these negative tendencies and the associated resource curse. The competition for the control and allocation of natural resources and the revenues they generate may lead to political instability, conflicts and authoritarian regimes. In other words, power relations, politics and governance matters a great deal!

Africa Works’ was the somewhat provocative title of a book published in 1999. With the subtitle “disorder as a political instrument”, the problem cited is that it often ‘works’ in a perverse way, and to the benefit of a select few. This was brought to mind by a more recent arrival entitled: ‘Making Africa Work’, authored by Chief and Ex-President Obasanjo of Nigeria, Greg Mills and Dickie Davis from the Brenthurst Foundation and Jeffrey Herbst (well known for his book on states and power in Africa). Obasanjo, Mills and Davies were at ECDPM in Brussels last week for closed-door discussions with high-level development officials, framed in the context of the upcoming AU-EU Summit. The discussion was followed by a public launch of their ‘handbook for economic success’, jointly organised by Brenthurst Foundation, ECDPM and the European External Action Service (EEAS). Though a welcome, forward-looking compendium of successful examples from around the world, with ‘Africa Works’ in mind the question arises: how much can a handbook offer if the current system ‘works’ for those in power?

Mobilising Investments for African Structural Transformation is one of the key areas that the African Union (AU) wants to discuss at the 5th AU-EU Summit in Côte d’Ivoire on 28-29 November 2017. Indeed this may well underpin the other proposed focal areas of governance, peace and security and investing in people. The Summit will be meaningful only if it initiates new concrete efforts by Africa and Europe to mobilise more effectively sustainable investment for Africa’s transformation, building on common interests, to the benefits of all.

Mobiliser les investissements pour la transformation structurelle en Afrique est l’un des thèmes clés que l’Union africaine (UA) veut discuter lors du 5ème Sommet UA-UE en Côte d’Ivoire les 28 et 29 novembre. En effet, cela pourrait bien étayer les autres domaines d’intervention proposés en matière de gouvernance, de paix et de sécurité et d’investissement dans le capital humain. Le Sommet n’aura de sens que s’il initie de nouveaux efforts concrets de la part de l’Afrique et de l’Europe pour mobiliser plus efficacement des investissements durables pour la transformation de l’Afrique, en s’appuyant sur des intérêts communs, pour le bénéfice de tous. ECDPM Talking Point 27.11.2017

The European Union (EU) has committed to ambitious energy-related objectives that shall contribute to inclusive, sustainable development. It therefore has put a number of financial instruments in place that support energy access in sub-Saharan Africa. Beyond traditional grants (still the bulk of EU funding), the EU increasingly uses its Official Development Assistance (ODA) to leverage loans and private investments from Development Finance institutions (DFIs) and the private sector, as also envisioned in the recently agreed European External Investment Plan (EIP). Through blended finance and smart technical assistance, there is a huge potential to develop and finance more energy projects that are currently (perceived) too risky and do not attract purely private investment. The EIP, through its 3-pillar approach and the setting of a dedicated 'sustainable energy' investment window, offers the opportunity to boost public and private investments in a more coherent, coordinated, and differentiated manner, and to foster impact investments, including towards the poor and enhancing their access to energy. Blending is however not a silver bullet, as it only works in certain areas and conditions, and cannot compensate for a lack of bankable and economically viable projects, particularly in less developed areas, where access rates are usually the lowest and the private sector is least interested and attracted. There will therefore be a continued need for i) grant funding for not fully economically viable projects, including when reaching some of the remote and poorest areas, ii) the right mix of public and private support instruments depending on context and need, and iii) more patience to see results. Besides, while many of the policy documents and instruments, most notably the EC's Africa Investment Facility and ElectriFI, make specific reference to enhancing access to energy, there is little information on results and impact, in particular for remote areas and poor segments of the population. The lack of transparency and data makes it often difficult to identify best practice and lessons learnt.The EIP also offers an opportunity for the EC to reconsider its monitoring and reporting results framework, and adapting expectations on impact, over a longer time horizon. ECDPM Discussion Paper 218 http://ecdpm.org/publications/eu-financial-instruments-access-energy-sub-saharan-africa/

The Southern African Development Community (SADC) overarching objective is to foster peace, sustainable development, freedom and social justice, and the eradication of poverty for the people of Southern Africa, by creating the enabling environment for deep regional integration and cooperation. The vision is clear and ambitions are high. Yet, progress is slow. It is with the aim of addressing this issue that the Council decided to hold a Strategic Ministerial Retreat on 12-14 March 2017, to review the state of affairs of SADC and identify remedies to speed up progress towards ‘The SADC We Want’. A number of institutional challenges have often been identified for SADC, including issues such as the lack of supranational SADC institutions, the vulnerability of institutions to power games, the influence of external partners, the lack of funding, the lack of non-state actor involvement, the lack of Parliamentary scrutiny, the vagueness of mandate and procedures, the inflexible decision-making procedure by consensus, and the incoherence of overlapping regional initiatives. While these provide some possible pointers for institutional reforms, it is important to keep in mind some guiding principles and observations about institutional arrangements. Discussions around institutional settings, and more generally about regional integration processes, tend to be quite prescriptive, with many preconceived ideas about what regional integration should or should not be, and what institutions are desirable or not. In reality, there is no ‘one-size-fits-all’, best practice model of institutional configuration for regional integration, or one predetermined trajectory that needs to be followed. Analysing the dynamics of integration in Africa, Vanheukelom et al. (2016) identify several key findings of particular pertinence for institutional reforms. They note that while regional organisations adopt institutional forms to foster regional integration, these institutions often do not serve their stated functions. Focusing on institutional functions rather than forms should thus be at the heart of any institutional reform process. They have also warned about the tendency for actors to pretend that major reforms are being undertaken where there is a strong degree of dependency on external funders. In such circumstances, member states are incentivised to signal their support for regional policies, programmes and institutions even when implementation is not a domestic priority, as illustrated by numerous examples in different RECs. In this context, the position of larger member states and coalitions of member states tend to play a major role in shaping (i.e. driving or hindering) regional outcomes. Coalitions of stakeholders, civil society actors or businesses, can also become important factors influencing regional dynamics. The tendency in many RECs, as in SADC, to focus mainly on state actors with little active involvement of non-state actors may also explain some of the problems in pursuing effective regional integration. Besides, integration dynamics are very sector or thematic specific, and can be perceived very differently in each country. Given the broad scope of sectors and integration issues on the SADC agenda, some will have more traction than others, depending on the sector characteristics and specific institutional and interest dynamics within each country around each issue. Finally, the availability and allocation of resources to pursue the broad regional agenda also dictates the dynamics and speed of progress of the different thematic areas. In this respect, the role of donors in terms of the quantity and quality of support they provide to regional organisations such as SADC presents opportunities but also profound challenges depending on whether donors support home grown institutional reforms or drive the process. What does it mean for the SADC institutional reform? First, institutions should not be designed or reformed in a vacuum. This means that institutional adjustments are not a technical, or merely capacity issue, but first and foremost a political process, which requires political leadership, meaning take political responsibility for making choices and prioritising in the face of resources scarcity. Second, institutional arrangements and processes should not be considered in an ideal form, but should respond to realities, at the regional and national levels. This means that SADC institutions should respond to the interests and incentives of the SADC Member States. They should also accommodate financial constraints. Besides, overdependence on external support raise the risk of donors driving rather than supporting reforms, reducing the ownership and ultimately the commitment of regional leaders to their own institutions. Third, institutional arrangements should foster a greater connection with key domestic stakeholders in the SADC Member States, building on their incentives and interests, so as to harness their potential to drive, support or accompany integration processes. This means adapting institutional arrangements to include (and structure) private sector and civil society voices, at all stages of the regional policy cycle, i.e. in agenda setting, decision-making, implementation and monitoring & evaluation processes. Therefore, identifying institutional reforms requires addressing issues of sovereignty and power relations, focusing on key priorities and building on national interests to stimulate regional coalitions. In terms of institutional setting, this would require for instance to strengthen the coordinating and facilitating role of the SADC Secretariat, to dedicate greater efforts to strengthen the SADC National Committees, and to structure and support non-state actors’ coalitions (business and civil society) at national and regional levels. In this optic, the role of the SADC Parliamentary Forum could also be enhanced. Given the traditionally strong role given to national ownership in the SADC construction, SADC leaders might rightly be more inclined to strengthen the SADC capacity to pursue effective intergovernmentalism, while aspiring in the longer term to more powerful regional institutions. In practice, institutional reforms can take an hybrid form, combining some features of each of the options.

Negotiations on the future of the EU finances post-2020 are a unique occasion to reconsider the financial instruments of the European Union, for both internal and external actions. They are also a chance to address more systemic issues. In a turbulent world, with the EU in need of new momentum, this window of opportunity should not be wasted. In particular, it is time to rethink how grants, and more generally public finance, can better stimulate investment (inside and outside the EU) for sustainable and inclusive growth. And in doing so, how leveraged finance can contribute to and be accompanied by efforts to improve an enabling environment and sustainable ecosystem.

Key messages: • Sub-Saharan Africa will need to create 18 million jobs each year until 2035, to accommodate young labour market entrants. • The AU-EU Summit of November 2017 was right: this is a top priority, for Africa, and for development cooperation. • The EU has the desire and the instruments needed to support the efforts African countries themselves will need to lead. • But the EU needs an approach which is smarter and better targeted: a rapier not a blunderbuss. • Supporting structural transformation is the long term priority, helping the creation of new jobs in sectors with higher productivity, with special attention to youth and women, and making low carbon development central. • Quality education and business-oriented skills development are needed, better linked to investment promotion. • However, the informal sector also needs support. • And special programmes, including more social protection, are needed for the most vulnerable. • Every country needs a strategy – but different countries need different strategies. European Think Tank Group Policy Brief https://ettg.eu/wp-content/uploads/2018/02/ETTG-Paper.pdf http://ecdpm.org/publications/why-eu-must-do-better-supporting-african-job-creation/

Leveraging more impactful private investments will be key to address current development challenges and for promoting sustainable development in line with the UN 2030 Agenda. Raising to the challenge of addressing the root causes of migration, creating decent jobs and fostering sustainable and inclusive growth, the European Union (EU) launched at the end of 2017 the European External Investment Plan (EIP). Building on the EU’s over-a-decade long experience with blended finance (notably in their regional blending facilities), it intends to use aid in a ‘smarter’ and more strategic way to spur sustainable private investments by providing a new guarantee mechanism, tailored technical assistance and dedicated action to promote the investment climate. Perhaps even more importantly, the EU aims to do so by taking a comprehensive and integrated approach, combining financial and non-financial support to address current shortcomings and increase overall effectiveness and coherence of the EU support. The EIP intends to respond to the need to be more ambitious in terms of mitigating risk and fostering greater development impact through blended finance, in particular in least developed and more fragile countries. It will seek to do so by harnessing the potential of (mainly European, but not only) development finance entities, given them additional tools (blended finance, guarantees, technical assistance) to do more and better, while enhancing the enabling environment. Five priority areas are covered under dedicated investment windows: renewable energy, Micro, Small and Medium Enterprises financing, sustainable agriculture, sustainable cities and digitalisation for sustainable development. The EIP is a most opportune and timely initiative. Yet, to be really successful, the EIP will need to have a systemic impact on the way the European institutions and their partners effectively manage to work together in a more coherent and complementary manner.

With the ambition to move from billions to trillions in line with the 2030 and Addis Agendas, there is a need to shift towards using public interventions and finance in a smarter way, including leveraging private investments for inclusive and sustainable development. This does not only mean to integrate a private sector dimension in development cooperation.

Le Plan d’investissement extérieur (PIE) de l’Union européenne (UE) propose un cadre de stimulation des investissements privés attrayant et différent, plus propre que les pratiques actuelles à favoriser une croissance durable et inclusive et à créer des emplois décents. Il pourrait incarner un changement de paradigme majeur dans la politique de développement de l’UE et influencer le positionnement de l’UE après 2020, au moment où celle-ci cherche à conférer une valeur stratégique à son aide et à son influence politique afin de mobiliser les investissements privés de manière totalement intégrée. La concrétisation de ces aspirations louables soulève néanmoins plusieurs défis au niveau de la mise en oeuvre : i) opérationnaliser l’approche intégrée à trois piliers du PIE ; ii) mieux impliquer les entités de financement du développement (européennes) dans l’agenda de l’UE et les ODD ; iii) concilier l’impact sur le développement, les niveaux de risque et les impératifs de décaissement avec la nécessité d’afficher rapidement des résultats ; iv) adopter un mécanisme efficace et transparent pour suivre et mesurer les résultats ; v) favoriser la complémentarité et la cohérence avec d’autres instruments et initiatives ; vii) mieux prendre en compte la dynamique de l’économie politique sur le terrain. Le principal écueil à surmonter sera donc celui de l’inertie institutionnelle, une tendance naturelle que pourrait accentuer l’attitude plutôt conservatrice de nombreuses entités financières, surtout lorsqu’il s’agit de développement. Il faudrait donc immédiatement s’atteler à cinq points pour éviter de retomber sur les pratiques habituelles: 1) mieux tenir compte des expériences de financement mixte (de l’UE) et les leçons qui ont pu en être retirées ; 2) assurer la complémentarité et l’articulation avec d’autres acteurs, stratégies et instruments ; 3) avoir de meilleures principes et pratiques de suivi et d’évaluation, de même que des critères prudents d’éligibilité et de sélection des projets ; 4) assurer les liens avec le contexte et les dynamiques de l’économie politique et leur intégration ; 5) mieux intégrer les stratégies et les institutions (de financement) africaines. S’atteler à ces cinq points permettrait sans doute au PIE de changer la donne en développant une réserve de projets durables et en étant un trait d’union efficace entre l’appui financier et non financier.

What does Brexit mean for trade relations between third countries and the current 28 member states of EU? And how will Brexit affect future trade with the UK and EU 27? The simple answer is increasing uncertainty. And, as we know, markets do not like uncertainty, nor do policymakers, except perhaps some British ones. All EU trade partners are on the alert. However, specific consideration is needed for developing countries. Brexit could significantly impact their economic development through its impact on their trade relations. Uncertainty Until 29 March 2019, the UK continues to be an EU member, and thus current EU trade and regulatory regimes apply. However, economic operators and traders may adjust their activities in anticipation of Brexit, so trade and investment flows may be affected earlier. Transition period The UK and EU 27 are working towards a transition agreement covering the period from 30 March 2019 until end 2020. Should they fail to conclude or ratify such an agreement, there will probably be a "hard Brexit" (a "no deal" Brexit). In terms of trade, this means that the UK will be out of the EU customs union and out of the single market, will have no trade agreement in place with the EU 27, and will have to establish its own trade regime towards third countries. To avoid a shock and allow time for the UK and EU 27 to define their new trade regimes, the UK could remain in the EU customs union and EU single market during the transition. This would mean that trade relations between third parties and the UK would continue to be determined by the EU 27's various trade regimes: its bilateral free trade agreements (FTAs), unilateral trade preferences (GSP, GSP+, and EBA), and most favoured nation (MFN) tariffs at the World Trade Organization (WTO).

While Prime Minister Theresa May was in South Africa, Kenya and Nigeria for the first time since the beginning of her mandate, her government back in London was stepping up preparations for a possible cliff-edge Brexit. The need for greater clarity on the impact of a no-deal on trade, particularly with Africa, grows. What are the contingency plans in place? A deal, at least on a transition until 2020, would allow for more consideration of issues that are too big to be glossed over.

La prise en charge des défis de développement contemporains et la promotion du développement durable dans l'esprit du Programme d'action à l'horizon 2030 des Nations Unies passeront forcément par la mobilisation d'investissements privés plus porteurs d'effets. Pour s'attaquer aux causes profondes de la migration, créer des emplois décents et favoriser une croissance durable et inclusive, l'Union européenne (UE) a lancé fin 2017 son Plan d'investissement extérieur (PIE). Celui-ci va s'appuyer sur plus de dix années d'expérience de l'UE en matière de financement mixte (au travers notamment des mécanismes régionaux de mixage) pour utiliser l'aide de manière plus « intelligente » et plus stratégique et stimuler des investissements privés durables, en déployant un nouveau mécanisme de garantie, une assistance technique sur mesure et des actions spécifiques en faveur du climat d'investissement. Mais ce qui importe surtout, c'est que l'UE compte y parvenir au travers d'une démarche globale et intégrée, qui conjugue les appuis financiers et non financiers pour combler les lacunes actuelles et accroître l'efficacité et la cohérence globales de l'appui communautaire. Le PIE entend satisfaire le besoin d'une ambition plus forte en termes d'atténuation des risques et d'amplification des effets sur le développement au travers du financement mixte, en particulier dans les pays moins développés et plus fragiles. Pour ce faire, il exploitera le potentiel des entités de financement du développement (principalement mais pas uniquement européennes), en leur fournissant des outils supplémentaires (financement mixte, garanties, assistance technique) afin de faire plus et mieux, tout en créant un environnement plus porteur. Cinq secteurs prioritaires se verront attribuer des fenêtres d'investissement spécifiques : les énergies renouvelables, le financement des micros, petites et moyennes entreprises, l'agriculture durable, les villes durables et la numérisation au service du développement durable. Le PIE arrive à point nommé. Pour réussir, il devra toutefois produire des effets systémiques qui aident les institutions européennes et leurs partenaires à travailler de façon plus cohérente et plus complémentaire.

In the European Commission proposal for the next long-term budget 2021-2027 of the European Union (EU), the proposed Neighbourhood, Development and International Cooperation Instrument (NDICI) Regulation introduces an innovative unified financial architecture to crowd in private sector investment outside the EU, based on three pillars: the European Fund for Sustainable Development-plus (EFSD+), a unified budgetary guarantee-the External Action Guarantee (EAG), and financial assistance. The EFSD+ is conceived as a flexible mechanism, but some of its features remain too sketchy. These features could be not only much better specified but also better connected to a range of important issues, such as climate objectives, gender equality and women's empowerment principles, youth focus, linkages to business environment, geographical balance, targeting of fragile and poorer countries, specification of investment windows, provision of grievance mechanisms, and addressing tax governance issues. The governance of the EFSD+ could also be much more elaborated. The current proposal delegates great power to the European Commission on shaping these questions during the implementation of the EFSD+. Careful attention should also be given to systemic issues related to the EU architecture for investment outside the EU. This includes the place and role of the European Investment Bank (EIB) as the EU bank, unspecified in the proposed regulation. It also relates to the coherence and synergy of the EFSD+ proposal with broader reform ambitions for the EU architecture for external investment. Building on an open and flexible system, the European Commission proposal for the EFSD+ and EAG is an important step in the right direction towards a more effective EU financial architecture. It benefits from the Multiannual Financial Framework (MFF) and NDICI momentum, an opportunity which should not be missed. The EU has an opportunity to show it can innovate in a responsive manner to changing times and increasing challenges. This requires collective efforts, within the EU, but also in partnership with multilateral institutions and initiatives, and most of all partner developing countries. Ensuring that major concerns are addressed in the NDICI Regulation should thus be a priority if the EU is to use in a timely fashion the opportunity of leveraging its next budget for more effective sustainable development finance.

Objectives, interpretations, practices and incentives of public and private partners are often diverse, leading to the question of who leads whom, and how?  Closer convergence of incentives, actions and understanding of possible multi-stakeholder partnerships is necessary to achieve sustainable development. The future of partnerships within the post-2015 development agenda must build on a greater recognition of developing countries own strategies to drive and finance their own structural transformation. Private investments and finance are likely to be the key engine for growth but there needs to be greater focus on sustainable and inclusive outcomes harnessed to the developing countries’ own development agenda.

While global adaptation finance has more than doubled since 2016, from USD 10.1 billion to USD 28.6 billion in 2020, it is still inadequate to meet the costs of adaptation. European DFIs and PDBs have the potential to lead in closing the adaptation financing gap. However, they encounter challenges related to often low, unclear, and missing adaptation finance objectives, limited synergies in the adaptation financing space, and a lack of bankable projects. This paper recommends that European DFIs and PDBs should more actively advance blended adaptation finance approaches, develop a pipeline of bankable projects, adopt innovative financing mechanisms for climate adaptation and resilience, strive for result-oriented adaptation partnerships, and adopt a systematic approach to measuring adaptation risks to support developing countries in adapting to climate change, thereby also reducing negative cascading spill-over risks to Europe. https://www.cascades.eu/publication/mobilising-european-development-finance-for-climate-adaptation-and-resilience/

International financial institutions (IFIs) and development finance institutions (DFIs) play a key role in promoting sustainable and inclusive development in developing countries. In doing so, they operate in challenging contexts, often involving significant sustainability risks. To address these risks and foster their development impacts, DFIs have put in place policies and procedures to ensure that investments do not harm people or the environment. They also show a growing commitment to embrace a human rights-based approach (HRBA) to their investments. Yet, regarding adopting the HRBA, progress is uneven across DFIs, including in Europe. This partly reflects the diversity of DFIs in size, strategies and capacities. This paper sets out to better understand human rights-based approaches, highlight good practices among DFIs and discuss some of the challenges linked to their operationalisation. The paper concludes by presenting ten recommendations for European DFIs to strengthen their approach to human rights, clustered into five main areas: (1) policy commitment and mandate; (2) management of negative impacts; (3) human rights promotion; (4) integration of HRBA principles and toolboxes in DFIs' operations; (5) the case of co-financing. The paper also argues that the EU is well placed to take a leading role in this endeavour, building on the EU regulatory and institutional value-based setting. The European Development Finance Institutions Association (EDFI), together with the European Commission blended finance and guarantee mechanisms, can play a catalytic role in enhancing DFIs' HRBA in a coherent and collaborative way.

ECDPM Discussion Paper No.353 https://ecdpm.org/dp353

In the dynamic landscape of development cooperation, international finance institutions (IFIs) and development finance institutions (DFIs) are playing an increasing role in supporting the implementation of policies. In doing so, they operate in challenging contexts involving sometimes significant sustainability risks and impacts. To address these risks and foster their development impacts, DFIs have put in place complaint mechanisms, which can be used notably by people affected by projects financed by DFIs. These mechanisms offer a platform to raise voices on social and/or environmental issues and obtain remediation. This paper sets out to better understand and highlight good practices among DFI complaint mechanisms, and discuss some of the challenges linked to their operationalisation (including in the case of co-financing). It concludes by presenting a set of recommendations for European DFIs to keep improving their complaint mechanisms. Given the importance of co-financing between European DFIs, the paper argues that there is a merit in fostering coherence and coordination between complaints mechanisms at the European level, by leveraging the association of European Development Finance Institutions (EDFI). Such a coordinated approach should reflect EU values and principles, therefore serving the objectives of EU policies and strategies, including under the Global Gateway.

ECDPM Discussion Paper No. 352 https://ecdpm.org/dp352

Providing better, faster and stronger support towards sustainable development is necessary to foster partner countries' capacities to develop their economies in a green, inclusive and gendersensitive way. To address this challenge, the EU should exploit the full potential of its networks and strengthen cooperation and coordination between its institutions, member states, development finance institutions, implementing agencies, public commercial institutions and the private sector as part of the European financial architecture for development (EFAD). In the past years, European policymakers have acknowledged the importance of stronger cooperation and coordination under the EFAD-not in the least as a way of improving relations between Europe and Africa. In this paper, we look at recent progress made in terms of strengthening the EFAD, zooming in on the EU's 'Team Europe' approach and its Global Gateway strategy, and on cooperation between development finance institutions and between implementing agencies. We analyse the challenges that prevent further cooperation and highlight several recommendations for EU policymakers to ensure that the EFAD is set up effectively and can achieve greater and more transformative impact. ECDPM Discussion Paper 351 https://ecdpm.org/dp351

The European Union (EU), its member states and financial institutions for development have been at the forefront of the international community efforts in supporting Ukraine's defence against the Russian aggression, providing humanitarian aid and supporting Ukraine's recovery and reconstruction efforts. This paper looks at the different ways of mobilising investments for Ukraine and argues for stronger Team Europe efforts in Ukraine aligned with the EU interests, from geostrategic, security, political and economic perspectives. The overall EU support, estimated at around €53 billion, takes many forms, including a significant macro-financial assistance package worth €18 billion. The EU is also a pivot actor in the Multi-agency Donor Coordination Platform, and European financial institutions for development, including the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB), have collectively already mobilised nearly €7 billion for Ukraine. Yet, Ukraine's needs are gigantic and the EU should do more and more effectively, notably with the private sector. The EU should actively seek to strengthen its Team Europe approach in Ukraine, better harnessing its broad range of development, commercial, public and private institutions and initiatives to mobilise at-scale strategic public and private investments for the reconstruction of Ukraine. This should include adopting stronger coordination platforms and co-investment mechanisms, notably through the EIB and EBRD, combined with appropriate risk-mitigation mechanisms, including private reinsurance. Further, the EU support efforts should be aligned with the needs and priorities of Ukraine and the EU values, principles, standards and geostrategic, security and economic interests. ECDPM Discussion Paper 349, with a contribution from Germain Gauthier. https://ecdpm.org/dp349

Building a possible shared European vision on main priorities on the international development financial architecture is key for the European Union (EU) and its member states, given their political and economic weight in the international financial institutions (IFIs) and fora, and their responsibilities as key implementing actors in countries of operations. The EU context illustrates that the type of reforms for the MDBs and international financial architecture for sustainable development on the table has, in fact, long been discussed in various forms and for a. But there is, this year, a conducive platform to address these burning issues and concretely deliver on a substantial reform agenda. Europeans should be central to making it happen. Broad support already emerges on a number of issues and there will be numerous occasions to finetune them throughout the year. If an EU coalition of the willing can emerge from this process to concretely and urgently implement some of the proposed actions and join progressive coalitions with countries from the South, this would go a long way in the European attempt to restore trust and credibility with partners throughout the world. By Elise Dufief (IDDRI), Daniele Fattibene (ETTG), Niels Keijzer (IDOS), San Bilal (ECDPM) and Frederique Dahan (ODI). In Bilal, S. ed. (2023), European development finance in perma-crisis, ECDPM. Ch.6, pp.26-29.

Our world is in deep trouble. We are experiencing what IMF Managing Director Kristalina Georgieva described as the era of shocks, and the ECB President Christine Lagarde and others referred to as an age of perma-crisis. The compound shocks and permanent crises range from climate change, the COVID-19 pandemic, and the Russian war in Ukraine to the rising prices of energy, food and fertilisers, persistent inflationary pressures, rising debt burden and tightened monetary policy. While this crisis-ridden era confronts advanced economies with multiple challenges, they have drastic consequences for many developing countries, putting in grave jeopardy the 2030 Agenda for Sustainable Development. Yet, in the words of UN Secretary-General António Guterres, “in the face of these cascading crises, we are far from powerless. There is much we can do, and many concrete steps we can take to turn things around. [...] Let’s come together, starting today, with ambition, resolve and solidarity, to rescue the Sustainable Development Goals [SDGs] before it is too late.” This is precisely what the European Union (EU) has been doing: adopting ambitious agendas and plans for action, vigorously mobilising its policies and instruments to tackle the challenges of our times at home and abroad. A strengthened European Financial Architecture for Development (EFAD), combined with reforms of the international financial system, provides the opportunity for the EU and its Member States, their financial institutions and development agencies to pursue more strategic approaches to development finance and sustainable investment aligned to European values and principles, goals and priorities, based on a ‘policy-first’ approach. The Team Europe approach and Working Better Together process allow the EU and its Member States to better coordinate their efforts, within the EU budget and beyond, to mobilise at-scale development resources for greater impact in a more (geo-)strategic and complementary way, including in poorer, more fragile and conflict-sensitive countries. The Global Gateway strategy should allow Europe to better project itself abroad, articulating a vision for quality infrastructure development anchored in European strategic objectives, including other geo-political actors. By pursing a reform agenda, European actors can help foster a more effective and impactful European and international development finance agenda, in line with developing countries' needs, priorities and ownership. In Bilal, S. ed. (2023), European development finance in perma-crisis, ECDPM. Ch.1, pp.2-11.

ECDPM’s San Bilal edited this e-book which features insights, also from external contributors, on ways the EU, its member states and their (financial) institutions for development can best respond to the multiple global challenges we are facing in the context of the international and European financial architecture for sustainable development.
Table of content
Chapter 1: European development finance in the crisis-ridden era: Team Europe and the EFAD for a greener and more sustainable impact San Bilal, Senior Executive and Associate Director, ECDPM
Section II. European financial institutions for development in action
Chapter 2: Adjustments needed in Team Europe and European financial architecture development (EFAD) efforts Bruno Wenn, Outgoing Chairperson of the Board of Directors, Association of the European Development Finance Institutions (EDFI)
Chapter 3: Development finance: Tackling multiple crises while addressing resilience and global challenges Lionel Rapaille, Director for Lending Operations in EU Neighbouring Countries, EIB Chapter
Chapter 4: In times of crisis, development banks move even closer together Christian Garve and Dr. Jennifer Lenk, KfW Development Bank/European Affairs, Presidency of Joint European Financiers for International Cooperation (JEFIC)
Chapter 5: International development financing: A triple revival Rémy Rioux, Chief Executive Officer Agence Française de Développement (AFD), Chairman of the International Development Finance Club (IDFC), Chair of Finance in Common (FIC) executive board, representative of the Joint European Financiers for International Cooperation; Thomas Mélonio, Executive Director of Innovation, Strategy, and Research, AFD; and Jean-David Naudet, Advisor to the Executive Director of Innovation, Strategy, and Research, AFD
Chapter 6: Building a shared European vision on the reforms of the international financial architecture for sustainable development Elise Dufief (IDDRI), Daniele Fattibene (ETTG), Niels Keijzer (IDOS), San Bilal (ECDPM) and Frederique Dahan (ODI)
Chapter 7: The EU’s Global Gateway and the European Financial Architecture for Development Jeroen Kwakkenbos, Deputy Head of EU Office and Senior Aid Policy and Development Finance Advisor at Oxfam
ECDPM e-book, San Bilal editor https://ecdpm.org/work/european-development-finance-perma-crisis

Our poly-crisis world has led to rising debts, threatening the sustainable recovery and development of many countries in the Global South. Debt swaps, a financial transaction where creditors forgive a portion of a country's sovereign debt in exchange for investment in sustainable development, are praised as one of the innovative solutions to provide additional resources in support of developing countries. While there may be some enthusiasm to further the implementation of debt swaps, it should be done in a way that addresses some of its main limitations, and in particular, the lack of scale. This paper puts forward three main avenues that European governments, financial institutions, civil society organisations and private financiers should explore if they want to upscale debt swaps involving both commercial and bilateral public creditors: (1) adopt a multi/plurilateral approach to debt swaps; (2) leverage and pool guarantees for debt swaps; and (3) attract co-financing. The paper provides an overview of the underlying main challenges and opportunities and highlights some key reflections to consider to maximise sustainable development impact. ECDPM Discussion Paper 343 https://ecdpm.org/dp343

The Carbon Border Adjustment Mechanism (CBAM) is often perceived as a direct threat to industrialisation in the Global South, but if implemented correctly, it could boost a low-carbon revolution outside of the European Union (EU). Yet, investment in low-carbon technology and a wider green transition abroad will not happen automatically with CBAM – it requires additional steps, including active investment, technology and policy support to accompany low-carbon transition in developing countries. In the months leading up to the CBAM rollout, the EU must double down on its global leadership by channelling its CBAM boldness towards accelerating the low-carbon innovation our world urgently needs. Only by showcasing how the CBAM can be beneficial to other parts of the world, will the EU be able to gain the credibility required to raise the bar on emissions reductions worldwide. https://ecdpm.org/work/eus-carbon-border-tax-can-accelerate-low-carbon-revolution-if-done-right

The current multi-crises context is gravely affecting the African continent (and especially SubSaharan Africa), and the EU must critically mobilise and expand the range of tools to support African initiatives for greater resilience, and sustainable and inclusive recovery and transformation. Some of Africa’s sources of external finance, such as foreign direct investment or trade, are following a downward trend, and debt pressure experienced by African countries is accentuating. It is thus crucial to boost the role and impact of African and European public development banks to mobilise sustainable and transformative investment. Africa and Europe should implement trade-inducing initiatives such as avoiding new barriers or supporting the African Continental Free Trade Area negotiation and implementation process. They should cooperate to explore innovative and tailored debt solutions together. This can include adopting common positions in multilateral fora and contemplating different debt-swap mechanisms. The European Union should collectively commit to speedily rechannelling 30% of their special drawing rights, through the International Monetary Fund and innovative leveraging mechanisms. Other sources of African external finance, namely official development assistance, migrants’ remittances and development finance, should be strengthened, and their development impact leveraged. This can be achieved through stronger cooperation and a renewed commitment also by European actors to understand the current state of affairs, engage with all actors involved and contemplate appropriate solutions. Such a cooperative mindset can also contribute towards the fight against illicit financial flows.

https://ettg.eu/wp-content/uploads/2023/01/ETTG-Report_Europe-%E2%80%93-Africa-relations-in-a-multi-crises-world.pdf 

With Iliana Olivié (RIE) and María Santillán O’Shea (RIE)

In ETTG e-book: Europe – Africa relations in a multi-crises world: Turning the page after COVID-19, the EU-AU Summit and the war against Ukraine  Publisher: European Think Tank Group (ETTG)

Making policies work It is high time for the remaining member states of the European Union (EU,) who have not yet done so, to ratify the Economic Partnership Agreements (EPAs). The first ones have already been concluded with some African, Caribbean and Pacific (ACP) countries in 2007. This is the case, for instance, for the interim EPAs with respectively Cameroon, Côte d'Ivoire and Ghana, which are considered in this paper. These free trade agreements have generated controversial discussions for years and may not be perfect. But they have not only maintained, but also secured and improved the preferential access of these countries to the EU, vital for some of their major exports. The EPAs have not led to the feared negative impacts that some had predicted. Their potential benefits, however, are highly dependent on the way they are used and the reform dynamics and support measures that accompany their effective implementation. The EU, with the EPAs and beyond, intends to stimulate local and regional economic transformation pathways by stimulating domestic production and promoting value addition for local, regional, and international value chains, in particular with the EU. In doing so, increasing attention is given to sustainability, inclusive and gender dimensions, as is the case for sustainable forestry and cocoa initiatives in Cameroon, Côte d'Ivoire and Ghana. Development assistance, in the form of not only traditional aid, such as technical assistance, but also blended finance and guarantees, as well as policy dialogues, multi-stakeholder engagement and improvement of the investment climate, are key pillars of the EU support. Such a comprehensive approach is critical, not only for the implementation of the EPAs, but especially to accompany African own reform and transformation processes. This includes the African Continental Free Trade Area and other regional integration dynamics, as well as the response to the COVID-19 crisis, with the aim to build back better, greener and in a more sustainable, inclusive and gender-sensitive way. ECDPM Discussion Paper No.304, September 2021

The Council of the European Union (EU) finally adopted long-awaited conclusions to set clear directions on how to enhance the European financial architecture for development (EFAD). Strengthening the EFAD is timely, given the devastating health and socioeconomic effects of the COVID-19 pandemic, the high climate and environmental ambitions of the EU, and the need to mobilise more developmental resources for greater sustainable and more inclusive impact, in particular in poorer, more fragile and vulnerable countries. While containing all the right words, the Council Conclusions fall short of the needed ambitions. More can and must be done to enhance European development finance in times of COVID-19. It is high time to come up with significant concrete reform proposals and actions. ECDPM Talking Points 21 June 2021 https://ecdpm.org/talking-points/beauty-contest-over-high-time-reform-european-financial-architecture-development/

The global scale of the COVID-19 crisis threatens micro-, small-, and medium-sized enterprises, which dominate employment around the world — especially in lowest-income countries. At a time when business as usual will not suffice, shareholders and leadership should act decisively to unleash the potential of DFIs. Here are four suggestions: 1. Blend and guarantee more, 2. Increase DFIs’ capital, 3. Collaborate and syndicate more, 4. Team up with local actors. An innovative way to unleash the collective DFIs’ potential to do more for MSMEs, combining some of the above features, would be to set up a joint MSME financing facility as a new vehicle. The pandemic and its economic effects pose fundamental challenges to DFIs and their shareholders. It will not be enough simply to put more capital into the existing DFI system. The depth and the duration of the crisis require building real and proactive collaboration within that system and a much stronger capacity to manage risk for greater scale and impact. We encourage DFIs and their shareholders to support this ambitious approach by signing up to the Tri Hita Karana Statement on The Role of DFIs, MDBs and Shareholders in Building Back Better in the Wake of Covid-19. devex.com Opinion piece https://www.devex.com/news/opinion-how-can-dfis-do-more-to-help-msmes-survive-covid-19-98566

Limited fiscal space in many developing countries demands collective efforts and EU leadership to help improve their macro-economic conditions and attract more investments for a higher impact and sustainability for recovery from COVID-19. Recovery from COVID-19 will require the capacity to mobilise sustainable, green, inclusive and gender-sensitive investments to achieve sustainable development goals. Given the dramatic socio-economic consequences of the protracted pandemic crisis, efforts to build back better must be carried out collectively, in a cooperative and inclusive manner. Given the limited fiscal space of many developing countries, collective efforts to help improve their macro-economic conditions, and in particular more forcefully addressing their unsustainable debt vulnerabilities, has become ever more urgent. So has the need to tackle illicit financial flows, which deprive developing countries from much-needed resources for recovery. The EU is well placed to take the lead in these endeavours. International and national financial institutions for development, including those in Europe, have stepped up their efforts to respond to the crisis. But to truly unleash their potential to leverage private finance at the right scale, in a truly countercyclical and more impactful manner, their approaches must be adjusted, building on better practices and encouraging innovation in a cooperative and collaborative manner based on local needs, dynamics and actors. There too, the EU has the potential to play a more catalytic role, mobilising its wide array of instruments and institutions in a more coherent and complementarity manner, and in partnership with developing countries, notably in Africa, so as to stimulate sustainable, transformative and inclusive investment at the right scale. Elcano Royal Institute, ARI 142/2020 http://www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari142-2020-bilal-collaborative-efforts-to-stimulate-sustainable-investment-for-covid-19-recovery-in-developing-countries

This technical note focuses on the financing dimension of sustainable agrifood value chains. The development of such value chains critically depends on the capacity to mobilize adequate sustainable finance. Yet financing agriculture value chains remains a major challenge in many developing countries. While focusing on the four countries Burkina Faso, Ethiopia, Kenya, and Niger, and the specific agri value chains identified in the AgrInvest-FS project for their high potential in these countries, we seek to outline approaches and opportunities for unleashing the much-needed finance and investments in these value chains. The mapping of the financial structure for the four countries, according to some key indicators, provides a clear sense of some of the systemic opportunities and limitations within each country for financing agri value chains.

Is climate change a financial risk that financial institutions need to worry about? Despite the rapid increase in climate financing and the rise of the dominant discourse on the importance of climate change and environmental, social and corporate governance (ESG) criteria, financial markets do not seem to show much sensitivity to the increasing climate risks. The problem arguably lies in the fact that the markets seem to have difficulties estimating the specific costs of climate change, which, although potentially high, often remain long-term and uncertain. The benefits of adjusting to climate risks also seem harder to quantify for shorter-term investments. Most international actors that provide development finance seem to have difficulty estimating the specific costs of climate change risks. Climate risks can be low or high, short-term or long-term, and more or less uncertain. Yet, understanding the particular nature of climate risks clearly could help in pricing climate-risk finance and the proper allocation of funding for climate action. In particular, investments in climate adaptation, which are perceived by many financial actors as a costly endeavour, could become financially more attractive if the corresponding reduction in climate risk exposure were not only qualitatively considered, by explicitly priced. This would have serious implications for development finance institutions and their incentive to invest in climate adaptation operations in developing countries most affected by climate change, with a high socio-development impact. This paper considers why effective climate risk assessment should matter for financial institutions. We present different approaches to measuring climate risk used by some European financial institutions with a public mandate, including a multilateral development bank (MDB) - the European Investment Bank (EIB), development financial institutions (DFIs) - the British International Investment (BII) and the Dutch entrepreneur development bank (FMO), national promotional and development banks - the German Kreditanstalt für Wiederaufbau (KfW) and Italian Cassa Depositi e Prestiti (CDP); and export credit agencies - the Atradius Dutch State Business (Atradius DSB), and French Bpifrance. These institutions have adopted climate, and often explicit ESG, approaches and climate risk assessments. Increasing efforts are also dedicated to further improving their approaches. Yet, they encounter several difficulties and limitations in their attempt to assess climate risks. Limitations encountered in climate risk assessment that could lead to mispricing include: 1. Underestimation or overestimation of the climate risks 2. Lack of proper methodologies to measure climate risks 3. Assessments are generally done at the macro-level 4. Data on climate risk variables is usually missing 5. Lack of a central database providing data on all climate risk indicators 6. No harmonised industrial standards and a proper regulatory framework It is essential to overcome the challenge of climate change mispricing (over- and under-estimation) of the risks to ensure that physical and transition risks are precisely predicted. This necessitates that financiers and investors, in general, alter their strategies, incentives and approaches, including by exploiting the opportunities provided by climate risk assessment models and strategies. Development financiers can play a pioneering role in that respect. MDBs like the EIB and DFIs like BII and FMO should not only continue their respective current endeavours to further enhance their overall climate/ESG, and climate-risk assessment approaches. They should also coordinate their efforts to lead the (European) development finance community in better addressing climate change, improve risk assessment approaches and try to explicit price climate risks. By doing so, they can also leverage private finance actors and have a catalytic demonstration effect on how to better climate risks. While climate finance has significantly increased for mitigation, it is seriously lagging for adaptation. In particular, in Europe, financial institutions for development have generally failed to invest at scale in climate adaptation, often arguing that they are not enough bankable projects. Improving climate risk approaches, explicitly pricing climate risks, can play a significant role in boosting private and public finance to tackle climate change, including for adaptation. In terms of physical climate risk, there is a need to adopt proper methodologies to assess the risk from chronic and acute shocks on a highly granular level and connect asset-level physical risks to firms’ and investors’ financial risks. Such enhanced approaches could usefully draw on Bressan et al. (2022). They developed the first comprehensive methodology that logically connects asset-level physical risks to financial risks for firms and financial actors and, more broadly, to systemic risk for the financial system. It does so by translating economic losses on physical assets and sectors from chronic and acute climate physical risks into financial losses and shocks on prices in the market. It allows for a dynamic, asset-level assessment of physical climate risk, considering the cascading losses through the ownership chains of firms and investors. Key policy recommendations for financial institutions that could lead to better assessment and improved climate risk pricing include: 1. Develop a reliable database to provide information on climate-related risks 2. Improve the transparency of the risk assessment methodologies 3. Develop harmonised climate risk assessment methodologies 4. Support the establishment of project-level climate risk assessment 5. Exploit the potential of insurance companies 6. Address the information asymmetry and knowledge gaps 7. Enforce climate-related regulation at all levels 8. Embody climate risk assessment in overall sustainable investment strategy and use concessional financing to cover high climate risks 9. Explicitly price climate risks and net returns from climate adaptation. This work was conducted in the European Commission H2020-funded CASCADES (CAScading Climate risks: towards ADaptive and resilient European Societies) project, Grant agreement number 821010. https://www.cascades.eu/publication/climate-risk-mispricing-why-better-assessments-matter-in-financing-for-development/

The European Investment Bank (EIB) cooperates with the European Union (EU), its member states and their development agencies at both the strategic and operational levels. In terms of governance, the EU member states, as shareholders, are members of the EIB Board and of the Advisory Group consulted on the Bank’s outside-EU activities. To better respond to global challenges, the EIB established ‘EIB Global’ on 1 January 2022 as a branch re-grouping EIB’s activities outside the EU. By bringing EIB resources and expertise together for those countries and regions, EIB Global intends to take a more focused approach to development finance and international partnerships, especially in the context of the Team Europe initiatives. Through EIB Global, the Bank also aims to strengthen its local presence in offices around the world by bringing in more technical and financial experts. These experts should help identify and deliver projects on the ground and thus enhance EIB Global’s impact and contribution to the United Nations Sustainable Development Goals. ETTG study conducted for the Practitioners’ Network for European Development Cooperation. This study is part of a series of analyses covering 8 European case studies (Germany, France, the Netherlands, United Kingdom, Spain, Italy, and the European Bank for Reconstruction and Development – EBRD) as well as a synthesis report. https://ettg.eu/institute/ecdpm/the-eib-and-european-donors-coordination-working-in-partnership-with-the-eu-bank/

The international trade scene is in turmoil: trade conflicts and tensions are generating uncertainty for businesses and undermining the rules-based global trading system. Trade and trade policy have long been central elements of EU external policy. Trade policy is used to pursue multiple objectives, including economic interests as well as political, developmental, environmental and values-based objectives. EU trade agreements not only aim at reducing foreign market access barriers but condition the terms of preferential access to the European single market on non-trade regulation in partner countries in areas such as social and labour standards. Is this an effective strategy? Does it come at the cost of attaining economic objectives? Has the emphasis on bilateral and preferential trade arrangements come at the expense of multilateral cooperation? This collection of essays brings together different perspectives on some of these questions. The diversity of approaches and views illustrate the complexity of the EU trade-related policy agenda and suggest that trade-offs might not always be properly assessed, and the balance struck could be improved.

CEPR Press, VoxEU.com ISBN: 978-1-912179-24-4

This eBook has been supported by funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 770680 (RESPECT: Revitalizing Europe’s Soft Power and External Cooperation and Trade).

https://voxeu.org/content/perspectives-soft-power-eu-trade-policy

Many development finance institutions (DFIs) want to strengthen their frameworks and capacity for the measurement of development impact and engage in initiatives to harmonise impact measurement across DFIs and beyond. The incentives for harmonisation relate primarily to comparability and credibility, the sharing of experiences and best practices, and cost sharing. Different harmonisation initiatives can flourish in parallel, for different metrics at different levels and at different speeds, while some degree of coordination and complementarity among different initiatives is desirable. Europe is well placed to play a leadership role in harmonisation efforts, with the Association of European Development Finance Institutions and the European External Investment Plan as important rallying points.

Chapter 18 in Attridge, S., D.W. te Velde and S.P. Andreasen eds (2019), Impact of DFIs on sustainable development: An essay series, ODI and EDFI https://www.odi.org/publications/11431-impact-development-finance-institutions-sustainable-development

eBook edited by San Bilal and Bernard Hoekman

The international trade scene is in turmoil: trade conflicts and tensions are generating uncertainty for businesses and undermining the rules-based global trading system. Trade and trade policy have long been central elements of EU external policy. Trade policy is used to pursue multiple objectives, including economic interests as well as political, developmental, environmental and values-based objectives. EU trade agreements not only aim at reducing foreign market access barriers but condition the terms of preferential access to the European single market on non-trade regulation in partner countries in areas such as social and labour standards. Is this an effective strategy? Does it come at the cost of attaining economic objectives? Has the emphasis on bilateral and preferential trade arrangements come at the expense of multilateral cooperation? This collection of essays brings together different perspectives on some of these questions. The diversity of approaches and views illustrate the complexity of the EU trade-related policy agenda and suggest that trade-offs might not always be properly assessed, and the balance struck could be improved.

This eBook has been supported by funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 770680 (RESPECT: Revitalizing Europe’s Soft Power and External Cooperation and Trade). https://voxeu.org/content/perspectives-soft-power-eu-trade-policy

Une revue des approches et instruments locaux employés par des institutions de financement du développement (IFD)

Note d'information relative aux sessions d'apprentissage entre pairs en faveur du Pacte du G20 avec l'Afrique 12 septembre 2019