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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... more
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... more
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... more
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... more
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... more
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... more
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... more
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... more
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!
Chapter in Jones, Emily and Conrad Copeland eds (2017)., Making UK trade work for development post-Brexit, https://www.geg.ox.ac.uk/sites/geg.bsg.ox.ac.uk/files/Making%20UK%20trade%20work%20for%20development%20post-brexit.pdf
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... more
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... more
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... more
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... more
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... more
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.... more
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... more
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... more
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.
The European External Investment Plan (EIP) provides an attractive framework to leverage private investments differently, improving on current practices to foster sustainable and inclusive growth and to create more decent jobs. It can... more
The European External Investment Plan (EIP) provides an attractive framework to leverage private investments differently, improving on current practices to foster sustainable and inclusive growth and to create more decent jobs. It can represent a major paradigm shift in EU development policy and influence the way the EU will position itself beyond 2020, as the EU seeks to use more strategically its aid and policy-clout to leverage private investments in a fully integrated manner. Yet, to turn commendable aspirations into reality, a number of implementation challenges have to be addressed: i) operationalising the integrated EIP’s three-pillar approach, ii) better harnessing (European) development finance entities to the EU agenda and the SDGs, iii) reconciling development impact, risk levels, and disbursement requirements with the pressure to show results, iv) adopting an effective and transparent monitoring and results measurement system, v) fostering complementarity and coherence with other instruments and initiatives, vi) building on African own initiatives and institutions, and vii) better taking into account political economy dynamics on the ground. The EU’s biggest challenge will thus be to overcome a natural tendency towards institutional inertia, which could be compound by the rather conservative attitude of many financial entities, not least when dealing with development. We propose five areas that should immediately be addressed to avoid ‘business-as-usual’: 1) better reflecting on past (EU) blending experiences and lessons learnt, 2) ensuring complementarity and linkages with other actors, strategies and instruments, 3) better monitoring and evaluation practices and principles, and prudent project selection/eligibility criteria, 4) ensuring linkages to and integration of political economy dynamics, and 5) better integrating African strategies and (finance) institutions. Addressing those can further help the EIP to be the game changer in developing a sustainable pipeline of projects and effectively connecting financial and non-financial support.
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... more
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.
Migration is a local reality. People may migrate voluntarily, but migration can also be an imperative necessity. Approximately 30 million people are currently considered refugees or internally displaced people, two-thirds of whom live in... more
Migration is a local reality. People may migrate voluntarily, but migration can also be an imperative necessity. Approximately 30 million people are currently considered refugees or internally displaced people, two-thirds of whom live in urban areas. Forced migration and refugee inflows into cities are taking place within the broader context of global urbanisation. And large camps such as Zaatari in Jordan and Dadaab in Kenya are increasingly considered as cities in their own right. KEY MESSAGES 1. Temporary displacement should be thought of as long term 2. Most displaced people and refugees live in towns and cities – either because that is where they have moved, or because long-term camps become like towns. 3. Both humanitarian and development actors need to engage more forcefully with the urban aspects of displacement. 4. The private sector will be at the heart of a comprehensive response, and will need new norms, standards and regulation. 5. The EU has set a progressive policy framework and now needs to deliver.
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... more
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... more
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... more
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... more
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.
http://www.tradeforum.org/news/Brexit-trading-uncertainties-for-third-countries/ What Brexit means for trade relations between third countries, the UK and the EU
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... more
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.
The negotiation of Economic Partnership Agreements (EPAs) between the European Union (EU) and the African, Caribbean and Pacific (ACP) states to replace the trade provisions of the Cotonou Partnership Agreement (CPA) has been... more
The negotiation of Economic Partnership Agreements (EPAs) between the European Union (EU) and the African, Caribbean and Pacific (ACP) states to replace the trade provisions of the Cotonou Partnership Agreement (CPA) has been controversial and given rise to many (sometimes wild) claims about the likely development effects. Until now such arguments have been speculative because the final details of the agreements were unknown. But now, following the conclusion of a full EPA with the CARIFORUM region and interim EPAs (IEPAs) with some African and Pacific states, it is possible for the first time to analyse what has actually been agreed and to assess the potential development effects. This book provides a comprehensive analysis of the African IEPAs as they stand in early 2009. It also establishes the negotiations that remain to be completed and the challenges facing Africa in implementation, some of which require support from Europe. It provides both a summary of the principle features of very complex documents and also the foundations for the many follow-up studies that will be needed to look in more detail at specific country, sectoral and other specific features of the IEPAs.
Research Interests:
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... more
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... more
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... more
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... more
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... more
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... more
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... more
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... more
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... more
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... more
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,... more
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... more
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,... more
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... more
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,... more
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.... more
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... more
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.
Notes prepared for the Roundtable on Innovative Finance for Development, Strengthening and scaling up innovative and blended finance for development impact, Dutch Ministry of Foreign Affairs, 31 March 2022.
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... more
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... more
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 current multi-crises context is gravely affecting the African continent (and especially Sub-Saharan Africa), and the EU must critically mobilise and expand the range of tools to support African initiatives for greater resilience,... more
• The current multi-crises context is gravely affecting the African continent (and especially Sub-Saharan 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 tradeinducing 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.

ETTG paper. https://ettg.eu/publications/implications-of-covid-19-and-russias-war-in-ukraine-for-eu-africa-relations-development-finance/
The Global Gateway was launched with great fanfare a year ago, on 1 December 2021, by the European Commission and the High Representative for Foreign Affairs and Security Policy. It is presented as a positive offer by the European Union... more
The Global Gateway was launched with great fanfare a year ago, on 1 December 2021, by the European Commission and the High Representative for Foreign Affairs and Security Policy. It is presented as a positive offer by the European Union (EU) to boost smart investment in quality infrastructure development around the world, “a template for how Europe can build more resilient connections with the world”. The focus of this new EU strategy is on supporting clean and secure, hard and soft infrastructure in digital, energy and transport sectors and strengthening health, education and research systems across the world. Two main dimensions particularly captured the headlines and international community attention. The first relates to the rivalry with China and the declared geostrategic ambitions of the EU, with the Global Gateway strategy cast as a positive, value-driven, quality alternative to the Belt and Road Initiative. The Global Gateway reflects the frustration of the EU for the lack of recognition and political reward from being, collectively with the EU member states, the main global provider of development assistance and a major trade and investment partner of developing countries. The second headline concerns the €300 billion investment tag attached to the Global Gateway for the period 2021-2027, half of which is destined for Africa. While public attention is focused on the overall amount, it is the approach that really matters. The Global Gateway puts a strong emphasis on mobilising quality investment, actively engaging the private sector and leveraging private finance. To do so, the EU and its member states pursue a Team Europe approach, relying on their institutions for development, including their public development banks (PDBs) and financial institutions for development (DFIs), at national and EU levels. It is with this ambition that the EU seeks to engage more actively with the private sector in the Global Strategy. While the EU needs urgently to walk the talk on the Global Gateway, the question is whether it currently walks on one leg only. So far, the Global Gateway rests mainly on development cooperation instruments and finance. This is the one leg. To achieve the geostrategic ambitions of the Global Gateway, based on the EU values and interests, a ‘whole-of-government’ approach would be needed, which in the European context would imply a ‘whole-of-the-EU’ approach, drawing on a range of policies, institutions and instruments at the EU level and its member states. ECDPM blog. This article was first published by GIZ as a contribution for a GIZ event on the Global Gateway strategy, organised on 30 November 2022. https://ecdpm.org/work/eu-global-gateway-one-year-how-partner-private-sector
The climate emergency, the Covid-19 pandemic and the Russian war in Ukraine are illustrative of our new era of permanent multiple crises. Development finance frameworks and institutions are not fit to address such tumultuous times. They... more
The climate emergency, the Covid-19 pandemic and the Russian war in Ukraine are illustrative of our new era of permanent multiple crises. Development finance frameworks and institutions are not fit to address such tumultuous times. They must adjust their modus operandi to be more reactive and impactful in the face of greater risks and uncertainty. The Progressive Post. https://progressivepost.eu/reforming-development-finance-to-address-crisis-times/
Europe’s private sector should help deliver on the objectives of the EU’s Global Gateway strategy. This paper looks at how the EU can best engage the private sector in its development policy and financial set-up. Donors have made private... more
Europe’s private sector should help deliver on the objectives of the EU’s Global Gateway strategy. This paper looks at how the EU can best engage the private sector in its development policy and financial set-up. Donors have made private sector engagement in development a strategic priority, recognising the role it can play in development, and acknowledging that governments’ budget and capabilities will not be sufficient to achieve the SDGs. At the EU level, the private sector is expected to help deliver on the objectives of the Global Gateway strategy, based on a Team Europe approach. This paper aims to shed light on the place of the European private sector in EU development cooperation and development finance, notwithstanding the fact that supporting the European private sector is not an end, but a means to foster more sustainable and impactful development in partner countries. It provides concrete recommendations for EU policymakers on how the European private sector engagement could be best articulated in the Global Gateway strategy to achieve development (economic and geostrategic) impacts. Moving forward, the EU should prioritise four areas to engage the European private sector, which include: 1. ensuring that the principle of untied aid remains a key principle of EU development cooperation; 2. coordinating better the public support for development objectives and for European economic and commercial interests while respecting a clear separation of mandates; 3. ensuring the inclusiveness of the European private sector engagement in development by strategically involving small and medium-sized enterprises and smaller EU member states’ private sector; and 4. providing pragmatic mechanisms and clear strategic entry points for the European private sector to engage in development activities. ECDPM Discussion Paper No.333. https://ecdpm.org/work/engaging-european-private-sector-eu-development-cooperation-finance
The unprecedented scale of the crisis generated by the COVID-19 pandemic calls for greater empowerment of international, European and regional financial institutions for development, development finance institutions (DFIs) and public... more
The unprecedented scale of the crisis generated by the COVID-19 pandemic calls for greater empowerment of international, European and regional financial institutions for development, development finance institutions (DFIs) and public development banks. They all need to step up their efforts, to ‘build back better’, in a greener, more inclusive and gender-sensitive manner. This paper suggests ways to do that, adjusting the current business model of financial institutions for development to align and coordinate European investments for development. The European Union (EU) and its member states are well placed to help ‘build back better’ by building on their strategic approaches, (financial) institutions, instruments and initiatives. To unlock this potential, however, it is important to further strengthen the European financial architecture for development (EFAD), in particular by enhancing coordination, joint and complementary investments and approaches among European financial institutions and with other development actors and institutions. The paper recommends the creation of enhanced European co-investment vehicles and investment platforms, embedded in the EU’s overall framework, and it explores the focused use of Team Europe and new Team Europe-Partner countries and regions (starting with Africa) for sustainable investment. RESPECT project (EU H2020) ECDPM Discussion Paper No.294, March 2021 https://ecdpm.org/dp294
The European Union (EU) has responded promptly to the unprecedented crisis caused by the COVID-19 pandemic-within, but also beyond its borders. The EU global response to COVID-19 includes quickly reallocating EU support to developing... more
The European Union (EU) has responded promptly to the unprecedented crisis caused by the COVID-19 pandemic-within, but also beyond its borders. The EU global response to COVID-19 includes quickly reallocating EU support to developing countries to address immediate COVID-19 challenges, amounting to some €20.8 billion. The 'Team Europe' approach adopted provides ample opportunities for cooperation and synergies among EU institutions, member states and their development finance institutions, as well as with international actors. These are vital first steps. Given the global economic contraction resulting from COVID-19, very sharp in Europe as well, the capacity to mobilise public resources is too limited to support the huge emergency and recovery needs of the most vulnerable countries and people. A strategic countercyclical response is required. The EU and its member states should thus seek to move towards a collective and well-coordinated global response 2.0, building on the initial one, and following in the footsteps of the proposed €2.4 trillion recovery plan for Europe. This collective EU global response should aim to mobilise additional resources more effectively, better leveraging private finance, and to stimulate greater cooperation and synergies among EU and with international actors, notably development finance institutions, supporting developing countries' own initiatives. It should include initiatives to stimulate risk capital, promote investment coordination platforms, enhance economic governance, and support debt restructuring and reduction. The 'Team Europe' approach should be a rallying point for the active engagement of EU member states and financial institutions, to respond to the COVID-19 crisis and achieve the Sustainable Development Goals. While keeping its priorities, notably towards a value-based approach, resilient health systems, a greening of the recovery and digitalisation, the EU should put greater emphasis on food security and sustainable food systems. Moreover, women should have a central place in the EU's global response 2.0. https://ecdpm.org/publications/towards-eu-global-covid-19-response-2-0-boosting-smarter-finance/
Trade and investment promotion tools such as the Enterprise Europe Network (EEN) can contribute to making better use of trade policies and agreements to deliver real results for consumers, workers and businesses, with respect for the... more
Trade and investment promotion tools such as the Enterprise Europe Network (EEN) can contribute to making better use of trade policies and agreements to deliver real results for consumers, workers and businesses, with respect for the planet and human rights. https://ecdpm.org/great-insights/square-pegs-round-holes-trade-policy/potential-trade-investment-europe-network/ European Centre for Development Policy Management (ECDPM)
The primary research question addressed herein is how development finance organizations are adapting to country conditions. The paper provides recommendations for enhanced local approaches, which would in turn, lead to expanded financing... more
The primary research question addressed herein is how development finance organizations are adapting to country conditions. The paper provides recommendations for enhanced local approaches, which would in turn, lead to expanded financing opportunities. Many blended finance projects have strong local ownership, responding directly to local demands, resulting from broad consultations, and entailing explicit positive spill-overs at the local level. These provide opportunities to learn from good practice. The analysis also reveals that while all blended finance projects stem from local development considerations, they may be generated from external institutions or follow a standardized approach, and with insufficient considerations for local context and dynamics. They may also be client-driven, but with little consultation with local stakeholders. Recommendations The research identified numerous areas where DFOs can do more to provide financing in developing countries, particularly taking into account local contexts and conditions. These recommendations are not exhaustive but point to areas where enhanced efforts can lead to greater development impact. Organizational Insights: If not already in place, DFOs should make policy on local context explicit and intentional, following from good global practice. If not already the norm, DFOs should develop country or sub-regional strategies that are aligned to national development strategies and avoid adhoc investment choices. Insights on Partnering with Local Actors: DFOs should deepen partnering arrangements with local DFIs, national development banks, Sovereign Investment Funds (SIFs) and local pension funds to better scale-up activities and tailor to the local context. Additional country-specific research is needed on the extent that local investors, institutional investors, financial institutions are being crowded in to blended finance operations. Where local DFIs or development banks do not exist, DFOs should explore options for providing technical know-how and financial support to create new local institutions. Blended Financing Insights: There is a clear need to increase the gross and proportional amount of finance in local currency. Efforts to improve the capacity of issuing local currency securities have shown results, yet the demand for cost-effective foreign exchange (FX) solutions to mitigate foreign currency risk for international investors far exceeds the supply. More research is needed on what instruments are best suited to local approaches or which instruments are most effective at crowding in capital in local currency. This note has been prepared as a background knowledge document to inform the peer-to-peer learning events of the Group of 20 (G20) Compact with Africa (CwA), in collaboration with the Organization for Economic Cooperation and Development (OECD). Knowledge Brief for G20 CwA Peer Learning Event September 12, 2019, in Abidjan, Côte d'Ivoire. https://acetforafrica.org/publications/multi-country-studies/strengthening-the-local-dimension-of-blended-finance/
While the EU weeps over the slow progress in the preparation of the EU-Africa Summit in October – partly slowed down by the COVID-19 pandemic – China and African leaders held an ‘Extraordinary China-Africa Summit on Solidarity Against... more
While the EU weeps over the slow progress in the preparation of the EU-Africa Summit in October – partly slowed down by the COVID-19 pandemic – China and African leaders held an ‘Extraordinary China-Africa Summit on Solidarity Against COVID-19’ last week. Thirteen African leaders took part in this virtual event, including South Africa’s President and African Union Chairperson, Cyril Ramaphosa, and Moussa Faki Mahamat, Chair of the African Union Commission. The Summit focused on addressing the health and economic impact of COVID-19 through the China-Africa partnership. Nothing groundbreaking was announced on these two topics. Yet it is noteworthy that the leaders at the Summit laid out political alignments between China and Africa, with reciprocal support and commitment, and sent implicit geopolitical messages to outside listeners, namely the US. https://ecdpm.org/talking-points/china-africa-summit-covid-19-geopolitical-economic-considerations/
The EU’s response package of aid, development finance, trade and business should be a crucial part of a more ambitious G20 action plan that addresses the socioeconomic cost of coronavirus in developing countries. • The EU should step up,... more
The EU’s response package of aid, development finance, trade and business should be a crucial part of a more ambitious G20 action plan that addresses the socioeconomic cost of coronavirus in developing countries. • The EU should step up, fast-track, front-load and leverage its aid and development finance, and foster coordination. With the global economy going into a steep recession, developing countries are facing considerable financing shortfalls. The UN Conference on Trade and Development warns of a $2.5 trillion finance shortfall; Asian forecasts are down by 5–10 percentage points; Africa is already facing major impacts. The UN SecretaryGeneral has called for a $2.5 trillion fund for developing countries. African finance ministers have called for $100 billion. The average fiscal stimulus in Europe so far (12% of gross domestic product) is 15 times higher than in the poorer African countries (0.8%) – as the latter cannot afford it. This note discusses EU actions to support developing countries to address the coronavirus crisis.
The expansion of European small and medium enterprises beyond EU borders will not only be important for competitiveness, economic growth and innovation, but also for the promotion of EU values and interests, including environmental... more
The expansion of European small and medium enterprises beyond EU borders will not only be important for competitiveness, economic growth and innovation, but also for the promotion of EU values and interests, including environmental sustainability and social inclusion. This is even more important in light of the COVID-19 pandemic, as it hits the economy hard and European economic isolation is unlikely to help turn the economic tide. Initiatives to promote business, trade and investment such as the Enterprise Europe Network (EEN) can contribute to making better use of trade policies and agreements to achieve concrete results for consumers, workers and businesses – all while respecting the planet and people. The network’s role in the EU’s sustainable trade agenda has become increasingly significant in recent years, but its potential remains largely untapped. Three ways to make better use of the EEN are: (1) extend its geographical scope, including in Africa; (2) strengthen its social and environmental criteria and support, to serve both EU values and economic interests, in line with the European Green Deal; and (3) reinforce the network to use trade opportunities more effectively, better identify trade challenges and collect feedback from businesses when it comes to formulate trade policies. There is also a need to better connect initiatives that promote business, trade and investment and development cooperation activities with low-income countries outside of Europe. Development cooperation funding could help local business support organisations to join EEN and empower their work. The driver behind all this should be EU institutional coordination. This joined-up thinking and working for sustainable trade is fully in line with the priorities and directions taken by the incumbent European Commission led by Ursula von der Leyen. https://ecdpm.org/bn115
Alors que les tensions commerciales et pressions protectionnistes se propagent sur la scène internationale, l’Afrique en prend le contre-pied en établissant la plus grande zone de libre-échange du monde par le nombre de ses membres, la... more
Alors que les tensions commerciales et pressions protectionnistes se propagent sur la scène internationale, l’Afrique en prend le contre-pied en établissant la plus grande zone de libre-échange du monde par le nombre de ses membres, la Zone de libre-échange continentale africaine (ZLECA). Une fois mise en œuvre, la ZLECA pourrait remodeler les relations économiques en Afrique et entre l'Afrique et ses principaux partenaires commerciaux. Pour les cinq États membres de l'Union du Maghreb arabe (UMA) - Algérie, Libye, Mauritanie, Maroc et Tunisie – la ZLECA offre des possibilités de renforcer leur commerce extérieur avec l'Afrique. A moyen et long terme, la création de la ZLECA pourrait également avoir un impact sur ses relations commerciales et d'investissement avec l'Union européenne (UE), de loin le principal partenaire commercial des pays du Maghreb. Mais même à court terme, et avant sa mise en place effective, la ZLECA offre déjà à l'UE de nouvelles possibilités de s'engager avec le Maghreb (et l’Afrique subsaharienne) sur des questions liées au commerce et à l’investissement.
As the 25th Conference of the Parties (COP25) in Madrid calls for the full operationalisation of the Paris Agreement, Europe is committing to green its policies both within and beyond the European Union (EU). Boosting green finance will... more
As the 25th Conference of the Parties (COP25) in Madrid calls for the full operationalisation of the Paris Agreement, Europe is committing to green its policies both within and beyond the European Union (EU). Boosting green finance will be critical. European top financial institutions such as the European Central Bank (ECB), the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), which are in a position to advance the European agenda, are joining the battle to curb climate change. This decision follows calls for a Climate Bank at the European level and the recommendation by the High-Level Group of Wise Persons that the EU should adopt a common approach to its external financial architecture and establish a single entity, the so-called European Climate and Sustainable Development Bank. Although global climate financing has increased by 60% over the period 2013-2018, this is not enough. Besides, more resources should be dedicated to climate adaptation, which has been neglected, in particular by European finance institutions. Multilateral Development Banks (MDBs), including EIB and EBRD, allocated only 30% of their 2018 climate financing to adaptation. EBRD and EIB allocated as low as 11.8% and 7.6% respectively to adaptation in developing countries. The consequences of climate change, including droughts, floods, plummeting biodiversity and the loss of human lives, are undermining low-income and fragile countries' development prospects. EU efforts to boost its climate action and finance should encompass not only the vital mitigation endeavour, but also greater attention to climate adaptation, as a means to foster climate justice and to achieve the SDGs also in low-income countries, and in Africa in particular. The new European Green Deal will have to live up to this challenge. EU Horizon 2020 project CASCADES, https://ecdpm.org/publications/boosting-eu-climate-finance-mitigate-more-without-neglecting-adaptation-poorer-countries/
The European Investment Bank (EIB) has set off to become the EU climate bank, after having pioneered the green bonds market over a decade ago. Now, in this new leading role, the bank is asking institutions, civil society and the general... more
The European Investment Bank (EIB) has set off to become the EU climate bank, after having pioneered the green bonds market over a decade ago. Now, in this new leading role, the bank is asking institutions, civil society and the general public to share their views, to be integrated into the EIB Group Climate Bank Roadmap. We joined the discussion and put forward eight concrete recommendations on how the EIB can better support climate change efforts in Africa. https://ecdpm.org/talking-points/eight-ways-european-investment-bank-help-tackle-climate-change-africa/
Because of the coronavirus pandemic, Africa’s private sector is facing a very large recession, the likes of which has not been seen for 25 years. This is putting more than 20 million jobs and many livelihoods at risk and pushing millions... more
Because of the coronavirus pandemic, Africa’s private sector is facing a very large recession, the likes of which has not been seen for 25 years. This is putting more than 20 million jobs and many livelihoods at risk and pushing millions into poverty. The authors of this paper argue that development finance institutions are uniquely placed to provide financial support and lead the eventual recovery. European Development Finance Institutions (DFIs) and their shareholders must step up with additional resources and use their links with the domestic banking sector and their competencies to channel liquidity to Africa’s private sector. Also, European DFIs support millions of jobs in Africa, often highly productive ones that have strong interlinkages with the rest of the economy. These direct and indirect jobs must be protected in the recession as they will be crucial to Africa’s bounce-back. For that, European DFIs need to immediately boost the liquidity support for investee firms, increase their risk tolerance, relax debt servicing requirements where necessary, provide scarce foreign exchange when needed, come up with innovative support mechanisms including credit guarantees to deliver countercyclical support, and set up a bounce-back better and recapitalisation vehicle to inject equity into otherwise viable firms hit by the crisis. This will require new capital, increased risk tolerance, temporary suspension of minimum return requirements and new credit lines and guarantees from donors of between € 2-5 billion. This will allow European DFIs not only to protect the jobs they support but also to prevent the loss of jobs in otherwise viable firms. https://ecdpm.org/wp-content/uploads/Saving-Jobs-During-Pandemic_te-Velde-et-al_15-April-2020.pdf
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... more
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…
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... more
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/
In recent years and in the aftermath of the world financial crisis, economic slowdown in Europe has encouraged European governments and the European Union (EU) to set up support programmes and instruments that can stimulate national... more
In recent years and in the aftermath of the world financial crisis, economic slowdown in Europe has encouraged European governments and the European Union (EU) to set up support programmes and instruments that can stimulate national economies and help create the jobs needed to tackle both (youth) unemployment and crumbling growth rates. By providing access to (trade) finance and mitigating risk, the ambition is to help enterprises to expand and grow internationally, as “foreign exposure by these companies can increase enterprise competitiveness, provide access to foreign markets and resources, create new opportunities for exports, and generate profits” (UNCTAD, 2015). Key messages Promoting trade and investment along sustainable principles is one of the means to achieve the goals of the 2030 Agenda for Sustainable Development. To this end, what are the potential synergies between development finance institutions (DFIs) and export promotion agencies (ECAs) in promoting sustainable and responsible investments? DFIs and ECAs follow different institutional mandates and objectives to promote investments and exports. But they tend to engage with similar clients and in similar markets. Besides, the sustainability principles required by DFIs and those of ECAs do tend to converge. Potential for synergy and cooperation thus seems obvious. Yet, DFI-ECA collaboration until now has been rather limited, due to various challenges that need to be overcome, relating to issues such as differing policies, approaches, operating procedures, credit and pricing parameters, tenor and currency preferences, and transaction eligibility criteria. There is a need for a better understanding of the respective business practices and priorities of DFIs and ECAs. More systematic efforts are therefore needed to enhance the cooperation and synergy between DFIs and ECAs. This must also be steered by policymakers, so as to foster a more conducive institutional and policy environment and provide the right incentives for each institution to cooperate, building on their respective comparative advantages, towards enhanced sustainability.
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... more
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.
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... more
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.
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... more
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
Migration is a local reality. People may migrate voluntarily, but migration can also be an imperative necessity. Approximately 30 million people are currently considered refugees or internally displaced people, two-thirds of whom live in... more
Migration is a local reality. People may migrate voluntarily, but migration can also be an imperative necessity. Approximately 30 million people are currently considered refugees or internally displaced people, two-thirds of whom live in urban areas. Forced migration and refugee inflows into cities are taking place within the broader context of global urbanisation. And large camps such as Zaatari in Jordan and Dadaab in Kenya are increasingly considered as cities in their own right. KEY MESSAGES 1. Temporary displacement should be thought of as long term 2. Most displaced people and refugees live in towns and cities – either because that is where they have moved, or because long-term camps become like towns. 3. Both humanitarian and development actors need to engage more forcefully with the urban aspects of displacement. 4. The private sector will be at the heart of a comprehensive response, and will need new norms, standards and regulation. 5. The EU has set a progressive policy framework and now needs to deliver.
Blended finance is emerging as one of the means to mobilise more effectively commercial capital to achieve the Sustainable Development Goals and the Paris Agreement-stimulating impactful investment, quality job creation and inclusive... more
Blended finance is emerging as one of the means to mobilise more effectively commercial capital to achieve the Sustainable Development Goals and the Paris Agreement-stimulating impactful investment, quality job creation and inclusive economic growth. To accomplish these objectives, blended finance operations must respond to local needs and realities. While all blended finance projects stem from local development considerations and land at the local level, they commonly stem from a client-driven and deal-oriented approach, which might be generated from an external or more standardised approach. As a result, many blended finance operations do not take local context and dynamics enough into consideration. Drawing on the experiences of some development finance institutions (DFIs) and multilateral development banks (MDBs), this paper considers several dimensions of the local context and illustrates them by highlighting some of the principles, approaches and practices that could serve as useful guidance to anchor blended finance to local realities. This requires direct responses to well-identified local demands based on broad consultations, strong local ownership, development of local (private and public) institutions and markets, and explicit positive spillovers at the local level-related to sector and economy-wide transformations, such as an improved investment climate. DFIs and MDBs need to enhance their understanding of local political economy dynamics, including power relations, market and institutional structures, to assess better vested interests, drivers of change and domestic constraints. The coordination between donor agencies and DFIs and MDBs is paramount to anchor their actions to local context and actors. While diversity of approaches should prevail, comprehensive frameworks and integrated approaches can help address the many dimensions of local engagement in blended finance. https://ecdpm.org/dp259
The UN 2030 Agenda for Sustainable Development places new emphasis on the need to mobilise financial resources to achieve the 17 universal sustainable development goals (SDGs). The ambition is to ‘move from billions to trillions’,... more
The UN 2030 Agenda for Sustainable Development places new emphasis on the need to mobilise financial resources to achieve the 17 universal sustainable development goals (SDGs). The ambition is to ‘move from billions to trillions’, mobilising much higher resources in the pursuit of sustainable development (MDBs, 2015). Contrary to the Millennium Development Goals (MDGs), aid is no longer at the centre of a transformative development agenda. Blending Official Development Assistance (ODA) with other sources of finance is one of the forms taken to stimulate and leverage private investments and finance for sustainable development. It is because of its high ambitions that the EIP has been heralded “a new chapter in EU development cooperation”, or more simply, blending 2.0. Living up to the expectation will be the exciting challenge. Key messages: Blending ODA with other sources of finance is one of the forms taken to stimulate and leverage private investments and finance for sustainable development. It is by no means a magic bullet, and should be used with great caution, so as to prevent unwarranted subsidy to private sector and market distortion, and waste of scarce ODA. So far, blending efforts and approaches have been rather fragmented and different among key stakeholders. Despite similar rationales for blended finance, the principles, modalities and practices (not to mention definition) do vary among European financing institutions, and MDBs/DFIs. To enhance the coherence and effectiveness of its external investment support for sustainable development, in line with the SDGs, the EU is establishing the External Investment Plan (EIP): a ‘onestop-shop’, to promote sustainable private investments with a view to also tackling some of the root causes of migration in Africa and the EU Neighbourhood. To live up to its ambitions, a number of challenges need to be overcome, related to the EIP’s focus, design and politics, and synergy with other initiatives. It will notably require: to better monitor sustainability outcomes; to maximise effective additionality and leveraging; and stimulate development reform dynamics.
This paper has provided a brief outline mapping of DFI response to the Covid-19 crisis and current challenges. Building on this, policy recommendations are proposed with the aim of triggering a debate around these critical issues. Given... more
This paper has provided a brief outline mapping of DFI response to the Covid-19 crisis and current challenges. Building on this, policy recommendations are proposed with the aim of triggering a debate around these critical issues. Given the early stages of the crisis, feedback on these initial ideas is welcome. The key recommendations for DFIs and shareholders to best speed up sustainable and resilient recovery in developing economies, provide countercyclical finance to the most vulnerable, and meet their development mandates are as follows: - Adopt measures and processes allowing DFIs to respond to the protracted Covid-19 crisis in a more countercyclical, sustainable and impactful way, tackling the gender and inequality dimensions of the recovery; - Undertake activities in riskier, more fragile, and low income environments targeted at actors and countries more severely hit by the crisis. Use a combination of financing mechanisms appropriate to each institution, such as accepting lower risk-adjusted returns, stretching balance sheets, and benefiting from enhanced guarantee mechanisms or capital increase, and when appropriate with the support of blended concessional finance; - Increase support and exposure to private sector and in particular MSMEs, with a focus on sustainability, gender and building resilience (without compromising on other types of financing); - Focus even more on building stronger and innovative local partnerships, including with national and regional development banks, emerging market sponsors, local financiers, etc.; - Enhance the capacity for innovation to build project pipelines, in synergy with local actors and donors, partnering with other DFIs, that work in LICs and serve poor and vulnerable populations; - Concentrate efforts on the systemic effects of interventions on the recovery, beyond the immediate impact of single transactions. This could include building back better, by improving the investment climate in developing economies, and preserving already achieved gains. - Pursue opportunities for syndication, risk-sharing mechanisms, alliances and cooperation with other DFIs and development financiers. This may include, as appropriate to individual institutions or groups of institutions, special purpose vehicles and financial structures to be added to the DFI toolkit, which would contribute to stretch DFI capital, take risk off-balance-sheet, make more projects bankable, and facilitate investment, in particular to address at scale the critical situation of MSMEs and firms in LICs. As one option, shareholders could consider allocating additional risk-tolerant capital to an MSME COVID-19 facility that would help interested DFIs manage more risk and mobilize more private finance through the use of subordinated instruments like guarantees and equity. This could be done by leveraging and expanding existing facilities that have the right capabilities, and when appropriate with the support of blended concessional finance. - Focus on opportunities that a more efficient and expanded use of blended finance, including with concessional support, can bring, notably to mobilise sustainable private finance at scale for greater sustainable and transformative impact. https://assets.ctfassets.net/4cgqlwde6qy0/2UIDzHLqOh58RKeuHqejft/6a934d233516039a7c239014ce466b6d/THK_Report_on_Covid-19_and_Blended_Finance_21-10-2020.pdf
The adoption of the 2030 Agenda for Sustainable Development at the United Nations (UN) in New York in September 2015 and of the Paris Agreement in December 2015 has put the sustainability and climate change ambitions and concerns at... more
The adoption of the 2030 Agenda for Sustainable Development at the United Nations (UN) in New York in September 2015 and of the Paris Agreement in December 2015 has put the sustainability and climate change ambitions and concerns at centre stage of the international agenda. International trade is recognised as an important means of implementation to achieve the sustainable development goals (SDGs) and specific targets. For a long time, the European Union (EU) has been committed to the promotion of human rights and sustainability, including in its international relations, and has been a strong advocate of the SDGs. Human rights clauses in EU policy have found some of their origins in the EU partnerships with the African, Caribbean and Pacific Group of States (ACP), as articulated in the Lomé Conventions and the succeeding Cotonou Partnership Agreement. Human rights and sustainability clauses have then increasingly been introduced in the EU trade policy regime, in its general system of preferences (GSP) and its free trade agreements (FTAs), and have become one of the key pillars of the new EU trade strategy, Trade for All, introduced in October 2015. This paper analyses the content of the sustainable development and human rights dimensions of the recently concluded EPA by the EU with the East African Community (EAC), the Economic Community of West Africa States (ECOWAS) and a group of countries from the Southern African Development Community (SADC), and compares them with the Caribbean Forum (CARIFORUM) EPA, the most comprehensive EPA concluded so far. Key messages: Sustainability and human rights dimensions are at the centre stage of the international (2030 Agenda) and EU agenda, including in trade relations. These are part of recent EU FTAs and the EU-ACP EPAs, as well as EU Partnerships such as the Cotonou Agreement. There are some concerns that African EPAs may not have strong enough provisions on sustainability and human rights, and that reference to the Cotonou Agreement may not be relevant after its termination in 2020. While provisions on sustainability differ among EPAs, leading to some legal uncertainty, basic principles on human rights and sustainability remain valid beyond 2020. The various dimensions of EPAs should also be taken into account when considering sustainability. Particular attention must be paid to institutional settings, dialogues, review and monitoring, aid and accompanying measures, multi-stakeholders approaches, responsible business initiatives, rendezvous and revision clauses, all most relevant for the sustainability impact of EPAs.
http://www.tradeforum.org/news/Brexit-trading-uncertainties-for-third-countries/ What Brexit means for trade relations between third countries, the UK and the EU
The negotiation of the Economic Partnership Agreements (EPAs) between the European Union (EU) and the African, Carribean and Pacific (ACP) states to replace the trade provisions of the Cotonou Partnership Agreement (CPA) has been... more
The negotiation of the Economic Partnership Agreements (EPAs) between the European Union (EU) and the African, Carribean and Pacific (ACP) states to replace the trade provisions of the Cotonou Partnership Agreement (CPA) has been controversial and given ...
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... more
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.
The traditional perception on development in industrialised countries has been one centred on the notion of assistance. Rich nations (“the North”) can accompany and support the development efforts of poorer nations (“the South”). The... more
The traditional perception on development in industrialised countries has been one centred on the notion of assistance. Rich nations (“the North”) can accompany and support the development efforts of poorer nations (“the South”). The quest has been to find how to best provide such support. Which programmes and policies would be most effective? How to ensure sustainability of the effort and the outcomes? How to best engage developing countries to this endeavour?
Sub-Saharan Africa will need to create 18 million jobs each year until 2035, to accommodate young labour market entrants.1 Whilst population growth is expected to flatten or be negative in other regions, the African population is expected... more
Sub-Saharan Africa will need to create 18 million jobs each year until 2035, to accommodate young labour market entrants.1 Whilst population growth is expected to flatten or be negative in other regions, the African population is expected to increase substantially. In addition, many people are underemployed. The AU-EU Summit of November 2017 was right: this is a top priority, for Africa, and for development cooperation. GDP growth is often regarded as a key driver of employment growth. The good news is that GDP growth in sub-Saharan Africa has been fairly strong, at around 4.5% annually since 2000. In 2018, 6 out of the 10 fastest growing economies are likely to be in Africa.2 However, the poor have benefitted less from growth than in any other world region.3 In the past decade, job creation has lagged behind working-age population growth by a third. Lack of productive employment A rapier not a blunderbuss: Why the EU must do better in supporting African job creation
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... more
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/
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,... more
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 unprecedented scale of the crisis generated by the COVID-19 pandemic calls for greater empowerment of international, European and regional financial institutions for development, development finance institutions (DFIs) and public... more
The unprecedented scale of the crisis generated by the COVID-19 pandemic calls for greater empowerment of international, European and regional financial institutions for development, development finance institutions (DFIs) and public development banks. They all need to step up their efforts, to ‘build back better’, in a greener, more inclusive and gender-sensitive manner. This paper suggests ways to do that, adjusting the current business model of financial institutions for development to align and coordinate European investments for development.

The European Union (EU) and its member states are well placed to help ‘build back better’ by building on their strategic approaches, (financial) institutions, instruments and initiatives. To unlock this potential, however, it is important to further strengthen the European financial architecture for development (EFAD), in particular by enhancing coordination, joint and complementary investments and approaches among European financial institutions and with other development actors and institutions.

The paper recommends the creation of enhanced European co-investment vehicles and investment platforms, embedded in the EU’s overall framework, and it explores the focused use of Team Europe and new Team Europe-Partner countries and regions (starting with Africa) for sustainable investment.

RESPECT project (EU H2020)
ECDPM Discussion Paper No.294, March 2021
https://ecdpm.org/dp294
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... more
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.

https://ecdpm.org/dp243
The EU has to reposition its trade policies. San Bilal and Bernard Hoekman ask whether the EU has been effective in its pursuit of non-trade policy objectives. This column introduces a new eBook that brings together perspectives on EU... more
The EU has to reposition its trade policies. San Bilal and Bernard Hoekman ask whether the EU has been effective in its pursuit of non-trade policy objectives. This column introduces a new eBook that brings together perspectives on EU trade policy

World Commerce Review

https://www.worldcommercereview.com/html/bilal-and-hoekman-perspectives-on-the-soft-power-of-eu-trade-policy.html
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... more
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
Blended finance is emerging as one of the means to mobilise more effectively commercial capital to achieve the Sustainable Development Goals and the Paris Agreement-stimulating impactful investment, quality job creation and inclusive... more
Blended finance is emerging as one of the means to mobilise more effectively commercial capital to achieve the Sustainable Development Goals and the Paris Agreement-stimulating impactful investment, quality job creation and inclusive economic growth. To accomplish these objectives, blended finance operations must respond to local needs and realities. While all blended finance projects stem from local development considerations and land at the local level, they commonly stem from a client-driven and deal-oriented approach, which might be generated from an external or more standardised approach. As a result, many blended finance operations do not take local context and dynamics enough into consideration. Drawing on the experiences of some development finance institutions (DFIs) and multilateral development banks (MDBs), this paper considers several dimensions of the local context and illustrates them by highlighting some of the principles, approaches and practices that could serve as useful guidance to anchor blended finance to local realities. This requires direct responses to well-identified local demands based on broad consultations, strong local ownership, development of local (private and public) institutions and markets, and explicit positive spillovers at the local level-related to sector and economy-wide transformations, such as an improved investment climate. DFIs and MDBs need to enhance their understanding of local political economy dynamics, including power relations, market and institutional structures, to assess better vested interests, drivers of change and domestic constraints. The coordination between donor agencies and DFIs and MDBs is paramount to anchor their actions to local context and actors. While diversity of approaches should prevail, comprehensive frameworks and integrated approaches can help address the many dimensions of local engagement in blended finance.

https://ecdpm.org/dp259
As the 25th Conference of the Parties (COP25) in Madrid calls for the full operationalisation of the Paris Agreement, Europe is committing to green its policies both within and beyond the European Union (EU). Boosting green finance will... more
As the 25th Conference of the Parties (COP25) in Madrid calls for the full operationalisation of the Paris Agreement, Europe is committing to green its policies both within and beyond the European Union (EU). Boosting green finance will be critical. European top financial institutions such as the European Central Bank (ECB), the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), which are in a position to advance the European agenda, are joining the battle to curb climate change. This decision follows calls for a Climate Bank at the European level and the recommendation by the High-Level Group of Wise Persons that the EU should adopt a common approach to its external financial architecture and establish a single entity, the so-called European Climate and Sustainable Development Bank. Although global climate financing has increased by 60% over the period 2013-2018, this is not enough. Besides, more resources should be dedicated to climate adaptation, which has been neglected, in particular by European finance institutions. Multilateral Development Banks (MDBs), including EIB and EBRD, allocated only 30% of their 2018 climate financing to adaptation. EBRD and EIB allocated as low as 11.8% and 7.6% respectively to adaptation in developing countries. The consequences of climate change, including droughts, floods, plummeting biodiversity and the loss of human lives, are undermining low-income and fragile countries' development prospects. EU efforts to boost its climate action and finance should encompass not only the vital mitigation endeavour, but also greater attention to climate adaptation, as a means to foster climate justice and to achieve the SDGs also in low-income countries, and in Africa in particular. The new European Green Deal will have to live up to this challenge.

EU Horizon 2020 project CASCADES,

https://ecdpm.org/publications/boosting-eu-climate-finance-mitigate-more-without-neglecting-adaptation-poorer-countries/
Alors que les tensions commerciales et pressions protectionnistes se propagent sur la scène internationale, l’Afrique en prend le contre-pied en établissant la plus grande zone de libre-échange du monde par le nombre de ses membres, la... more
Alors que les tensions commerciales et pressions protectionnistes se propagent sur la scène internationale, l’Afrique en prend le contre-pied en établissant la plus grande zone de libre-échange du monde par le nombre de ses membres, la Zone de libre-échange continentale africaine (ZLECA). Une fois mise en œuvre, la ZLECA pourrait remodeler les relations économiques en Afrique et entre l'Afrique et ses principaux partenaires commerciaux. Pour les cinq États membres de l'Union du Maghreb arabe (UMA) - Algérie, Libye, Mauritanie, Maroc et Tunisie – la ZLECA offre des possibilités de renforcer leur commerce extérieur avec l'Afrique. A moyen et long terme, la création de la ZLECA pourrait également avoir un impact sur ses relations commerciales et d'investissement avec l'Union européenne (UE), de loin le principal partenaire commercial des pays du Maghreb. Mais même à court terme, et avant sa mise en place effective, la ZLECA offre déjà à l'UE de nouvelles possibilités de s'engager avec le Maghreb (et l’Afrique subsaharienne) sur des questions liées au commerce et à l’investissement.
While Africa faces a huge infrastructure gap, there are measures that Group of 20 (G20) countries and its institutions can take to ensure greater and faster infrastructure investments. G20 institutions, particularly development finance... more
While Africa faces a huge infrastructure gap, there are measures that Group of 20 (G20) countries and its institutions can take to ensure greater and faster infrastructure investments. G20 institutions, particularly development finance institutions (DFIs), should undertake enhanced local approaches to blended finance. Likewise, G20 governments and associated institutions should rapidly address options for reducing project cycle timelines and complexity. They should also intensify efforts to mitigate fiscal risks in public-private partnerships to make projects more bankable, and address off-budget or opaque contingent liabilities. These actions will lead to more productive infrastructure investment, thereby leading to improvements in connectivity and quality of life for communities across Africa.

T20 Policy Brief, TF3: Infrastructure Investment and Financing

https://t20saudiarabia.org.sa/en/briefs/Pages/Policy-Brief.aspx?pb=TF3_PB2
The expansion of European small and medium enterprises beyond EU borders will not only be important for competitiveness, economic growth and innovation, but also for the promotion of EU values and interests, including environmental... more
The expansion of European small and medium enterprises beyond EU borders will not only be important for competitiveness, economic growth and innovation, but also for the promotion of EU values and interests, including environmental sustainability and social inclusion. This is even more important in light of the COVID-19 pandemic, as it hits the economy hard and European economic isolation is unlikely to help turn the economic tide. Initiatives to promote business, trade and investment such as the Enterprise Europe Network (EEN) can contribute to making better use of trade policies and agreements to achieve concrete results for consumers, workers and businesses – all while respecting the planet and people. The network’s role in the EU’s sustainable trade agenda has become increasingly significant in recent years, but its potential remains largely untapped. Three ways to make better use of the EEN are: (1) extend its geographical scope, including in Africa; (2) strengthen its social and environmental criteria and support, to serve both EU values and economic interests, in line with the European Green Deal; and (3) reinforce the network to use trade opportunities more effectively, better identify trade challenges and collect feedback from businesses when it comes to formulate trade policies. There is also a need to better connect initiatives that promote business, trade and investment and development cooperation activities with low-income countries outside of Europe. Development cooperation funding could help local business support organisations to join EEN and empower their work. The driver behind all this should be EU institutional coordination. This joined-up thinking and working for sustainable trade is fully in line with the priorities and directions taken by the incumbent European Commission led by Ursula von der Leyen.

https://ecdpm.org/bn115
The EU’s response package of aid, development finance, trade and business should be a crucial part of a more ambitious G20 action plan that addresses the socioeconomic cost of coronavirus in developing countries. • The EU should step up,... more
The EU’s response package of aid, development finance, trade and business should be a crucial part of a more ambitious G20 action plan that addresses the socioeconomic cost of coronavirus in developing countries. • The EU should step up, fast-track, front-load and leverage its aid and development finance, and foster coordination. With the global economy going into a steep recession, developing countries are facing considerable financing shortfalls. The UN Conference on Trade and Development warns of a $2.5 trillion finance shortfall; Asian forecasts are down by 5–10 percentage points; Africa is already facing major impacts. The UN SecretaryGeneral has called for a $2.5 trillion fund for developing countries. African finance ministers have called for $100 billion. The average fiscal stimulus in Europe so far (12% of gross domestic product) is 15 times higher than in the poorer African countries (0.8%) – as the latter cannot afford it. This note discusses EU actions to support developing countries to address the coronavirus crisis.
Because of the coronavirus pandemic, Africa’s private sector is facing a very large recession, the likes of which has not been seen for 25 years. This is putting more than 20 million jobs and many livelihoods at risk and pushing millions... more
Because of the coronavirus pandemic, Africa’s private sector is facing a very large recession, the likes of which has not been seen for 25 years. This is putting more than 20 million jobs and many livelihoods at risk and pushing millions into poverty. The authors of this paper argue that development finance institutions are uniquely placed to provide financial support and lead the eventual recovery. European Development Finance Institutions (DFIs) and their shareholders must step up with additional resources and use their links with the domestic banking sector and their competencies to channel liquidity to Africa’s private sector. Also, European DFIs support millions of jobs in Africa, often highly productive ones that have strong interlinkages with the rest of the economy. These direct and indirect jobs must be protected in the recession as they will be crucial to Africa’s bounce-back. For that, European DFIs need to immediately boost the liquidity support for investee firms, increase their risk tolerance, relax debt servicing requirements where necessary, provide scarce foreign exchange when needed, come up with innovative support mechanisms including credit guarantees to deliver countercyclical support, and set up a bounce-back better and recapitalisation vehicle to inject equity into otherwise viable firms hit by the crisis. This will require new capital, increased risk tolerance, temporary suspension of minimum return requirements and new credit lines and guarantees from donors of between € 2-5 billion. This will allow European DFIs not only to protect the jobs they support but also to prevent the loss of jobs in otherwise viable firms.

https://ecdpm.org/wp-content/uploads/Saving-Jobs-During-Pandemic_te-Velde-et-al_15-April-2020.pdf
The European Investment Bank (EIB) has set off to become the EU climate bank, after having pioneered the green bonds market over a decade ago. Now, in this new leading role, the bank is asking institutions, civil society and the general... more
The European Investment Bank (EIB) has set off to become the EU climate bank, after having pioneered the green bonds market over a decade ago. Now, in this new leading role, the bank is asking institutions, civil society and the general public to share their views, to be integrated into the EIB Group Climate Bank Roadmap. We joined the discussion and put forward eight concrete recommendations on how the EIB can better support climate change efforts in Africa.

https://ecdpm.org/talking-points/eight-ways-european-investment-bank-help-tackle-climate-change-africa/
The primary research question addressed herein is how development finance organizations are adapting to country conditions. The paper provides recommendations for enhanced local approaches, which would in turn, lead to expanded financing... more
The primary research question addressed herein is how development finance organizations are adapting to country conditions. The paper provides recommendations for enhanced local approaches, which would in turn, lead to expanded financing opportunities. Many blended finance projects have strong local ownership, responding directly to local demands, resulting from broad consultations, and entailing explicit positive spill-overs at the local level. These provide opportunities to learn from good practice. The analysis also reveals that while all blended finance projects stem from local development considerations, they may be generated from external institutions or follow a standardized approach, and with insufficient considerations for local context and dynamics. They may also be client-driven, but with little consultation with local stakeholders. Recommendations The research identified numerous areas where DFOs can do more to provide financing in developing countries, particularly taking into account local contexts and conditions. These recommendations are not exhaustive but point to areas where enhanced efforts can lead to greater development impact. Organizational Insights: If not already in place, DFOs should make policy on local context explicit and intentional, following from good global practice. If not already the norm, DFOs should develop country or sub-regional strategies that are aligned to national development strategies and avoid adhoc investment choices. Insights on Partnering with Local Actors: DFOs should deepen partnering arrangements with local DFIs, national development banks, Sovereign Investment Funds (SIFs) and local pension funds to better scale-up activities and tailor to the local context. Additional country-specific research is needed on the extent that local investors, institutional investors, financial institutions are being crowded in to blended finance operations. Where local DFIs or development banks do not exist, DFOs should explore options for providing technical know-how and financial support to create new local institutions. Blended Financing Insights: There is a clear need to increase the gross and proportional amount of finance in local currency. Efforts to improve the capacity of issuing local currency securities have shown results, yet the demand for cost-effective foreign exchange (FX) solutions to mitigate foreign currency risk for international investors far exceeds the supply. More research is needed on what instruments are best suited to local approaches or which instruments are most effective at crowding in capital in local currency.

This note has been prepared as a background knowledge document to inform the peer-to-peer learning events of the Group of 20 (G20) Compact with Africa (CwA), in collaboration with the Organization for Economic Cooperation and Development (OECD).

Knowledge Brief for G20 CwA Peer Learning Event September 12, 2019, in Abidjan, Côte d'Ivoire.

https://acetforafrica.org/publications/multi-country-studies/strengthening-the-local-dimension-of-blended-finance/
The European Union (EU) has responded promptly to the unprecedented crisis caused by the COVID-19 pandemic-within, but also beyond its borders. The EU global response to COVID-19 includes quickly reallocating EU support to developing... more
The European Union (EU) has responded promptly to the unprecedented crisis caused by the COVID-19 pandemic-within, but also beyond its borders. The EU global response to COVID-19 includes quickly reallocating EU support to developing countries to address immediate COVID-19 challenges, amounting to some €20.8 billion. The 'Team Europe' approach adopted provides ample opportunities for cooperation and synergies among EU institutions, member states and their development finance institutions, as well as with international actors. These are vital first steps. Given the global economic contraction resulting from COVID-19, very sharp in Europe as well, the capacity to mobilise public resources is too limited to support the huge emergency and recovery needs of the most vulnerable countries and people. A strategic countercyclical response is required. The EU and its member states should thus seek to move towards a collective and well-coordinated global response 2.0, building on the initial one, and following in the footsteps of the proposed €2.4 trillion recovery plan for Europe. This collective EU global response should aim to mobilise additional resources more effectively, better leveraging private finance, and to stimulate greater cooperation and synergies among EU and with international actors, notably development finance institutions, supporting developing countries' own initiatives. It should include initiatives to stimulate risk capital, promote investment coordination platforms, enhance economic governance, and support debt restructuring and reduction. The 'Team Europe' approach should be a rallying point for the active engagement of EU member states and financial institutions, to respond to the COVID-19 crisis and achieve the Sustainable Development Goals. While keeping its priorities, notably towards a value-based approach, resilient health systems, a greening of the recovery and digitalisation, the EU should put greater emphasis on food security and sustainable food systems. Moreover, women should have a central place in the EU's global response 2.0.

https://ecdpm.org/publications/towards-eu-global-covid-19-response-2-0-boosting-smarter-finance/
Trade and investment promotion tools such as the Enterprise Europe Network (EEN) can contribute to making better use of trade policies and agreements to deliver real results for consumers, workers and businesses, with respect for the... more
Trade and investment promotion tools such as the Enterprise Europe Network (EEN) can contribute to making better use of trade policies and agreements to deliver real results for consumers, workers and businesses, with respect for the planet and human rights.

https://ecdpm.org/great-insights/square-pegs-round-holes-trade-policy/potential-trade-investment-europe-network/

European Centre for Development Policy Management (ECDPM)
While the EU weeps over the slow progress in the preparation of the EU-Africa Summit in October – partly slowed down by the COVID-19 pandemic – China and African leaders held an ‘Extraordinary China-Africa Summit on Solidarity Against... more
While the EU weeps over the slow progress in the preparation of the EU-Africa Summit in October – partly slowed down by the COVID-19 pandemic – China and African leaders held an ‘Extraordinary China-Africa Summit on Solidarity Against COVID-19’ last week. Thirteen African leaders took part in this virtual event, including South Africa’s President and African Union Chairperson, Cyril Ramaphosa, and Moussa Faki Mahamat, Chair of the African Union Commission. The Summit focused on addressing the health and economic impact of COVID-19 through the China-Africa partnership. Nothing groundbreaking was announced on these two topics. Yet it is noteworthy that the leaders at the Summit laid out political alignments between China and Africa, with reciprocal support and commitment, and sent implicit geopolitical messages to outside listeners, namely the US.

https://ecdpm.org/talking-points/china-africa-summit-covid-19-geopolitical-economic-considerations/
The EU is putting forward the idea of a COVID-19 marker on aid data to track the unprecedented mobilisation of resources to tackle the crisis globally. Rather than such a marker, the EU should consider supporting more sustainable and... more
The EU is putting forward the idea of a COVID-19 marker on aid data to track the unprecedented mobilisation of resources to tackle the crisis globally. Rather than such a marker, the EU should consider supporting more sustainable and technologically-savvy approaches to ensure much needed transparency and accountability. The EU could back a number of other initiatives that are likely to better meet information needs, strengthening data ecosystems in developing countries and improving global reporting during and beyond the ongoing crisis.

https://ecdpm.org/talking-points/following-money-why-covid-19-marker-might-not-help/
The European Union (EU) has committed to supporting the global transition to more sustainable food systems. As the world's largest food importer, the EU can use its trade policies and agreements to stimulate and incentivise more... more
The European Union (EU) has committed to supporting the global transition to more sustainable food systems. As the world's largest food importer, the EU can use its trade policies and agreements to stimulate and incentivise more sustainable practices by its trade partners. In this brief, we provide specific recommendations on how the EU can do so. Building on lessons from existing initiatives, the EU should adopt sector-specific regulations and sustainability standards to promote imports of sustainable food, and restrict the import of illegally or unsustainably manufactured products. Further, real change can only be achieved if the EU makes sustainable food systems an explicit objective of its free trade agreements, negotiates relevant sustainability provisions in these agreements and monitors efficiently the impact of these provisions on food systems. At the multilateral level, the World Trade Organization and the upcoming 2021 Food Systems Summit can be good platforms for the EU to build alliances with like-minded countries to push for global trade rules that promote sustainable food systems. To be effective, these efforts need to be based on a good understanding of the various ways trade affects food systems. They also need to be based on inclusive consultation involving potentially marginalised food systems actors and civil society representatives, and to be complemented by other relevant policies, including on investment and development cooperation.

https://ecdpm.org/publications/eu-trade-policy-for-sustainable-food-systems/
This paper has provided a brief outline mapping of DFI response to the Covid-19 crisis and current challenges. Building on this, policy recommendations are proposed with the aim of triggering a debate around these critical issues. Given... more
This paper has provided a brief outline mapping of DFI response to the Covid-19 crisis and current challenges. Building on this, policy recommendations are proposed with the aim of triggering a debate around these critical issues. Given the early stages of the crisis, feedback on these initial ideas is welcome. The key recommendations for DFIs and shareholders to best speed up sustainable and resilient recovery in developing economies, provide countercyclical finance to the most vulnerable, and meet their development mandates are as follows:
- Adopt measures and processes allowing DFIs to respond to the protracted Covid-19 crisis in a more countercyclical, sustainable and impactful way, tackling the gender and inequality dimensions of the recovery;
- Undertake activities in riskier, more fragile, and low income environments targeted at actors and countries more severely hit by the crisis. Use a combination of financing mechanisms appropriate to each institution, such as accepting lower risk-adjusted returns, stretching balance sheets, and benefiting from enhanced guarantee mechanisms or capital increase, and when appropriate with the support of blended concessional finance;
- Increase support and exposure to private sector and in particular MSMEs, with a focus on sustainability, gender and building resilience (without compromising on other types of financing);
- Focus even more on building stronger and innovative local partnerships, including with national and regional development banks, emerging market sponsors, local financiers, etc.;
- Enhance the capacity for innovation to build project pipelines, in synergy with local actors and donors, partnering with other DFIs, that work in LICs and serve poor and vulnerable populations;
- Concentrate efforts on the systemic effects of interventions on the recovery, beyond the immediate impact of single transactions. This could include building back better, by improving the investment climate in developing economies, and preserving already achieved gains.
- Pursue opportunities for syndication, risk-sharing mechanisms, alliances and cooperation with other DFIs and development financiers. This may include, as appropriate to individual institutions or groups of institutions, special purpose vehicles and financial structures to be added to the DFI toolkit, which would contribute to stretch DFI capital, take risk off-balance-sheet, make more projects bankable, and facilitate investment, in particular to address at scale the critical situation of MSMEs and firms in LICs. As one option, shareholders could consider allocating additional risk-tolerant capital to an MSME COVID-19 facility that would help interested DFIs manage more risk and mobilize more private finance through the use of subordinated instruments like guarantees and equity. This could be done by leveraging and expanding existing facilities that have the right capabilities, and when appropriate with the support of blended concessional finance.
- Focus on opportunities that a more efficient and expanded use of blended finance, including with concessional support, can bring, notably to mobilise sustainable private finance at scale for greater sustainable and transformative impact.

https://assets.ctfassets.net/4cgqlwde6qy0/2UIDzHLqOh58RKeuHqejft/6a934d233516039a7c239014ce466b6d/THK_Report_on_Covid-19_and_Blended_Finance_21-10-2020.pdf
This paper looks at what development finance institutions (DFIs), including multilateral development banks, can do to support a gender-sensitive economic recovery from COVID-19. 2020 marks 45 years since the first conference on gender... more
This paper looks at what development finance institutions (DFIs), including multilateral development banks, can do to support a gender-sensitive economic recovery from COVID-19. 2020 marks 45 years since the first conference on gender equality of 1975, which aimed at achieving gender equality, integration and full participation of women in development as well as in creating peace. Some progress has been achieved, but at the current snail pace, it will take at least 100 years to attain global gender parity. The COVID-19 crisis has revealed and substantially widened the deeply ingrained gender inequalities, especially in developing countries. Women are more exposed to losing their jobs and being driven out of business. They face higher barriers to accessing finance while taking on a greater burden of unpaid care work, suffering domestic violence and failing to get basic health services for themselves and their households. A sustainable COVID-19 recovery will not happen without a strong gender emphasis, in all its dimensions. DFIs have an important role to play in adopting a gender lens to their operations and incentivising their clients to do the same, seeking synergies with other international and local actors, both public and private. All DFIs should promptly endorse the 2X Challenge and Gender Finance Collaborative principles (or similar principles), and increase the transparency and monitoring impact of their gender lens endeavours. They should promote women's access to fi nance and to sustainable energy and digitalisation and, with a gender lens, provide support to sectors such as health and agriculture and to micro, small and medium-sized enterprises.

https://ecdpm.org/publications/gender-sensitive-sustainable-covid-19-recovery-role-development-finance-institutions/
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,... more
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... more
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
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... more
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.
When the Cotonou Partnership Agreement was established in 2000, succeed- ing two Yaoundé Conventions and four Lomé Conventions, it called for fundamental changes in the longstanding non-reciprocal trade preferences that had governed the... more
When the Cotonou Partnership Agreement was established in 2000, succeed- ing two Yaoundé Conventions and four Lomé Conventions, it called for fundamental changes in the longstanding non-reciprocal trade preferences that had governed the African, Caribbean and Pacific (ACP) and European Union (EU) economic and political relationship for almost forty years. Two main reasons motivated this change. First, the impact of these unilateral preferences was rather disappointing: the share of ACP trade in EU market was continuously falling, and most countries did not manage to use these preferences to diversify their economic structures. Secondly, the preferences were not compatible with the rules of the World Trade Organization (WTO), as they discriminated against non-ACP developing countries. For the first time, ACP countries were required to negotiate reciprocal, though asymmetric trade agreements, i.e. the Economic Partnership Agreements (EPAs) with a major (developed) trading partner, the EU, despite the fact that their own regional integration agenda was still largely in the making. This chapter provides an analysis of three recently concluded European Partnership Agreements (EPAs) between Europe and African regional groupings and countries. It explains the rationale behind and the process of EPA negotiations and provides a state of play of the trade regimes governing the relationship between the EU and African regions and countries, highlighting the key elements of the recently concluded EPAs and their likely implications for market integration and, more broadly, for regional integration.
The European Investment Bank (EIB) operations in Africa, the Caribbean and Pacific (ACP) take place under the ACP-EU partnership agreement, the Cotonou Partnership Agreement (CPA). The EIB’s activities in the ACP are aimed at contributing... more
The European Investment Bank (EIB) operations in Africa, the Caribbean and Pacific (ACP) take place under the ACP-EU partnership agreement, the Cotonou Partnership Agreement (CPA). The EIB’s activities in the ACP are aimed at contributing to the objectives of the Cotonou Partnership Agreement, supporting projects that yield sustainable social, economic and environmental benefits. Under the CPA, the EIB administers the operations made under the ACP Investment Facility (IF), focused on private sector, as well as the loans made under its own resources, mainly infrastructure projects, guaranteed by EU Member States.

The purpose of the study is to identify what aspects of the CPA have been critical for EIB operations in ACP countries. Over the last months, these questions have served to guide numerous bilateral interviews with officials from the EIB (headquarters and in the field), the EU and Member States, the ACP Group, African government and regional officials, state/parastatal companies, private sector actors, and civil society organisations.

Key messages:

With operations both inside (90%) and outside (10%) the EU, the European Investment Bank (EIB) activities are well placed to contribute to the SDGs. Their universal dimension is closely aligned to EIB core activities, e.g. infrastructure investments, climate financing and private sector support. The EIB’s legal mandate to operate in the ACP is the Cotonou Partnership Agreement (CPA), which expires in 2020.
Considering EIB operations beyond 2020, this study looks at aspects of the CPA that have been critical for EIB operations in ACP countries. While under the External Lending Mandate, the EIB needs bilateral framework agreements to operate in non-ACP countries outside the EU, the CPA allows the EIB to operate under a single legal framework.
The CPA’s main innovation is the ACP Investment Facility (IF), which supports the private sector, and its Impact Financing Envelope (IFE), targeting higher development impact while bearing greater risks. Yet, EIB operations face many challenges, e.g. limited field presence, country coverage, alignment with EU and ACP priorities, and mostly, how to best reconcile risk, financial return and development impact.
Strategic and political decisions need to be taken for EIB operations to continue post-2020, including a new mandate for the EIB in the ACP. Options are a continuation, possible extension (financially/ geographically) and possible merge of the IF and IFE, further establishment of funds-of funds, increased EIB capacity and greater synergy with other relevant actors as well as with EU, ACP and international actions along the 2030 Agenda.
Europe is at last fully converted to the merits of boosting investment in order to achieve sustainable growth. The EU is doing so with an internal investment plan (commonly referred to as the Juncker Plan or as the European Fund for... more
Europe is at last fully converted to the merits of boosting investment in order to achieve sustainable growth. The EU is doing so with an internal investment plan (commonly referred to as the Juncker Plan or as the European Fund for Strategic Investments (EFSI). In his State of the Union address, European Commission President Jean-Claude Juncker announced the doubling of its duration and its amount, to at least €500 billion. Complementary to this initiative, the European Commission (EC) has proposed a parallel European External Investment Plan (EEIP). Focused on the EU’s neighbourhood countries and Africa, the EC proposes that the European Union (EU) dedicate €3.35 billion from its budget and the European Development Fund (EDF) to the EEIP by 2020 in the hope of leveraging €44 billion from development finance institutions, institutional and private financiers. That may go up to €88 billion if EU member states agree to chip in.
The adoption of the 2030 Agenda for Sustainable Development at the United Nations (UN) in New York in September 2015 and of the Paris Agreement in December 2015 has put the sustainability and climate change ambitions and concerns at... more
The adoption of the 2030 Agenda for Sustainable Development at the United Nations (UN) in New York in September 2015 and of the Paris Agreement in December 2015 has put the sustainability and climate change ambitions and concerns at centre stage of the international agenda. International trade is recognised as an important means of implementation to achieve the sustainable development goals (SDGs) and specific targets. For a long time, the European Union (EU) has been committed to the promotion of human rights and sustainability, including in its international relations, and has been a strong advocate of the SDGs.

Human rights clauses in EU policy have found some of their origins in the EU partnerships with the African, Caribbean and Pacific Group of States (ACP), as articulated in the Lomé Conventions and the succeeding Cotonou Partnership Agreement. Human rights and sustainability clauses have then increasingly been introduced in the EU trade policy regime, in its general system of preferences (GSP) and its free trade agreements (FTAs), and have become one of the key pillars of the new EU trade strategy, Trade for All, introduced in October 2015.

This paper analyses the content of the sustainable development and human rights dimensions of the recently concluded EPA by the EU with the East African Community (EAC), the Economic Community of West Africa States (ECOWAS) and a group of countries from the Southern African Development Community (SADC), and compares them with the Caribbean Forum (CARIFORUM) EPA, the most comprehensive EPA concluded so far.

Key messages:

Sustainability and human rights dimensions are at the centre stage of the international (2030 Agenda) and EU agenda, including in trade relations. These are part of recent EU FTAs and the EU-ACP EPAs, as well as EU Partnerships such as the Cotonou Agreement.
There are some concerns that African EPAs may not have strong enough provisions on sustainability and human rights, and that reference to the Cotonou Agreement may not be relevant after its termination in 2020.
While provisions on sustainability differ among EPAs, leading to some legal uncertainty, basic principles on human rights and sustainability remain valid beyond 2020. The various dimensions of EPAs should also be taken into account when considering sustainability.
Particular attention must be paid to institutional settings, dialogues, review and monitoring, aid and accompanying measures, multi-stakeholders approaches, responsible business initiatives, rendezvous and revision clauses, all most relevant for the sustainability impact of EPAs.
The UN 2030 Agenda for Sustainable Development places new emphasis on the need to mobilise financial resources to achieve the 17 universal sustainable development goals (SDGs). The ambition is to ‘move from billions to trillions’,... more
The UN 2030 Agenda for Sustainable Development places new emphasis on the need to mobilise financial resources to achieve the 17 universal sustainable development goals (SDGs). The ambition is to ‘move from billions to trillions’, mobilising much higher resources in the pursuit of sustainable development (MDBs, 2015). Contrary to the Millennium Development Goals (MDGs), aid is no longer at the centre of a transformative development agenda. Blending Official Development Assistance (ODA) with other sources of finance is one of the forms taken to stimulate and leverage private investments and finance for sustainable development.

It is because of its high ambitions that the EIP has been heralded “a new chapter in EU development cooperation”, or more simply, blending 2.0. Living up to the expectation will be the exciting challenge.

Key messages:

Blending ODA with other sources of finance is one of the forms taken to stimulate and leverage private investments and finance for sustainable development. It is by no means a magic bullet, and should be used with great caution, so as to prevent unwarranted subsidy to private sector and market distortion, and waste of scarce ODA.

So far, blending efforts and approaches have been rather fragmented and different among key stakeholders. Despite similar rationales for blended finance, the principles, modalities and practices (not to mention definition) do vary among European financing institutions, and MDBs/DFIs.

To enhance the coherence and effectiveness of its external investment support for sustainable development, in line with the SDGs, the EU is establishing the External Investment Plan (EIP): a ‘onestop-shop’, to promote sustainable private investments with a view to also tackling some of the root causes of migration in Africa and the EU Neighbourhood.

To live up to its ambitions, a number of challenges need to be overcome, related to the EIP’s focus, design and politics, and synergy with other initiatives. It will notably require: to better monitor sustainability outcomes; to maximise effective additionality and leveraging; and stimulate development reform dynamics.
In recent years and in the aftermath of the world financial crisis, economic slowdown in Europe has encouraged European governments and the European Union (EU) to set up support programmes and instruments that can stimulate national... more
In recent years and in the aftermath of the world financial crisis, economic slowdown in Europe has encouraged European governments and the European Union (EU) to set up support programmes and instruments that can stimulate national economies and help create the jobs needed to tackle both (youth) unemployment and crumbling growth rates. By providing access to (trade) finance and mitigating risk, the ambition is to help enterprises to expand and grow internationally, as “foreign exposure by these companies can increase enterprise competitiveness, provide access to foreign markets and resources, create new opportunities for exports, and generate profits” (UNCTAD, 2015).

Key messages

Promoting trade and investment along sustainable principles is one of the means to achieve the goals of the 2030 Agenda for Sustainable Development. To this end, what are the potential synergies between development finance institutions (DFIs) and export promotion agencies (ECAs) in promoting sustainable and responsible investments?

DFIs and ECAs follow different institutional mandates and objectives to promote investments and exports. But they tend to engage with similar clients and in similar markets. Besides, the sustainability principles required by DFIs and those of ECAs do tend to converge. Potential for synergy and cooperation thus seems obvious.

Yet, DFI-ECA collaboration until now has been rather limited, due to various challenges that need to be overcome, relating to issues such as differing policies, approaches, operating procedures, credit and pricing parameters, tenor and currency preferences, and transaction eligibility criteria. There is a need for a better understanding of the
respective business practices and priorities of DFIs and ECAs.

More systematic efforts are therefore needed to enhance the cooperation and synergy between DFIs and ECAs. This must also be steered by policymakers, so as to foster a more conducive institutional and policy environment and provide the right incentives for each institution to cooperate, building on their respective comparative advantages, towards enhanced sustainability.
In promoting sustainability and human rights dimensions through EU trade deals like EPAs, dedicated attention must be paid to institutional settings, dialogues, review & monitoring, aid and accompanying measures.
When properly managed, natural resources can effectively contribute to sustainable and equitable development. Yet, too often, resource-rich countries have failed to capitalize from the benefits and transformative potential of their... more
When properly managed, natural resources can effectively contribute to sustainable and equitable development. Yet, too often, resource-rich countries have failed to capitalize from the benefits and transformative potential of their natural endowment. Poor or inappropriate governance and institutional structures have commonly been blamed for this resource curse. While political economy considerations have usefully been advanced to explain some of these weaknesses, proposed remedies have often been prescriptive in nature, focusing on best practices. However, it might be more effective to take greater account of the dynamics of reforms in resource-rich countries. This would notably entail also adopting a
political economy approach to identifying incentive-compatible reforms, as well as promoting initiatives that can enhance domestic incentives towards a pro-development path in resource-rich countries.

https://ecdpm.org/bn48
Peaceful, stable, equitable, sustainable and prosperous development is a common ambition for all. But it seems even more pressing, and yet often more illusory in conflict-affected and fragile states. The complex environment in fragile... more
Peaceful, stable, equitable, sustainable and prosperous development is a common ambition for all. But it seems even more pressing, and yet often more illusory in conflict-affected and fragile states. The complex environment in fragile countries means that there is no simple, let alone unique, solution towards sustainable peace and prosperity. Instead, it is more about intertwined processes and inter-connected factors.

With a rapidly growing population – more than half of this growth by 2050 expected to be in Africa – job creation is a top priority. Yet, there is no quick fix or simple recipe for providing increasing employment opportunities, in particular to an expanding youth work force, and even more so in fragile and conflict-prone contexts.
Infrastructure networks play a critical role in economic development, and have become a key component in African agenda toward sustainable and transformative growth. The challenge of financing infrastructure has therefore gain prominent... more
Infrastructure networks play a critical role in economic development, and have become a key component in African agenda toward sustainable and transformative growth. The challenge of financing infrastructure has therefore gain prominent attention, at national level, but also in the pursuit of regional integration dynamics in Africa. The project cycle for any large infrastructure project is typically complex, spanning activities that place over long timeframes of several years, and involving a large number of different actors and counterparties – each with their own role, stake, risk profile, interests and governance arrangements. For projects with a regional or cross-border dimension, such complexities are often multiplied several times over. Decisions need to be made over how to structure projects, which are in turn driven by how they are financed and governed, and how benefits are distributed. Who is bearing what risk, and how infrastructure projects are implemented and maintained. This paper addresses some of the challenges in financing cross-border and regional infrastructure in Africa. It focuses on the two principal modalities adopted for the financing of regional and cross border infrastructure projects thus far on the continent. The traditional (and still dominant) approach has been that regional and cross border projects have been developed and finance through a country-by-country focus and responsibility over the portion of the project falling within the national boundaries, with some (ad hoc) coordination mechanisms. A second, less common approach has been through the creation of stand-alone institutions, also known in some instances as Special Purpose Vehicles (SPVs) or Special Purpose Public Agency (SPPAs), with some delegated responsibilities over the implementation of the project. The coordination of different activities across different actors is a key dimension affecting the capacity to mobilise and effectively use finance for cross-border and regional infrastructure projects. This is not only a technical problem, but also an institutional and political one, inherently linked to leadership and ownership issues as well. In spite of the strong political commitments to bring African together under new institutional and policy frameworks such as the NEPAD and PIDA, as emphasised again at the AU Summit of June 2014, addressing the coordination problem, and underlying institutional and political factors, will require a further, and perhaps even greater, 'step change' in the way that regional infrastructure projects are managed, if Africa's goals in transforming its infrastructure networks are to make any progress.
Mining companies, African governments and civil society organisations seem to live in parallel worlds that rarely meet. When they do, as in African Mining Indaba, it is mostly in the margins, and what is said often seems lost in... more
Mining companies, African governments and civil society organisations seem to live in parallel worlds that rarely meet. When they do, as in African Mining Indaba, it is mostly in the margins, and what is said often seems lost in translation.
A mapping of the opportunities and challenges of development and commercially-oriented public support to private sector engagement Developing countries increasingly promote inwards investment and global value-chain integration as... more
A mapping of the opportunities and challenges of development and commercially-oriented public support to private sector engagement

Developing countries increasingly promote inwards investment and global value-chain integration as strategies to create more and better jobs. At the ‘other end’ of the value chain, partner countries increasingly aim to work with businesses to achieve both commercial and development objectives.  Linked to this, the 2030 Agenda for Sustainable Development calls for greater policy coherence towards sustainable development, so that the pursuit of economic interests should not be delinked from sustainability and development objectives.

This paper maps out the key instruments used by donor country governments to engage the private sector, both for development and for commercial purposes. Categorising different types of support, including both financial and non-financial means of working with firms, it looks at the potential opportunities and challenges for using these for development, and the potential synergies between developmental and commercial approaches. By looking at the overlaps in these approaches and some specific donor-country examples, the paper aims to outline where further policy dialogue and research might be useful.

Key messages
A mapping of public policy instruments to promote private sector trade and investment outside the EU for both development and commercial purposes identifies some of the key opportunities, challenges and synergies for using these instruments in a coherent way to promote sustainable development outcomes.
Development and commercially-oriented public instruments to engage the private sector abroad take similar forms that can be roughly categorised as 1) matchmaking services, 2) financial support and 3) technical support, with an increasing use of loans, equity investments and guarantees – rather than grants or soft loans only.
The similarities between the objectives and means of instruments point to the potential opportunity for synergies and greater coherence between public instruments with commercially-oriented and development-related objectives, and activities that are more inclusive and to the benefit of the poor.
Dedicated efforts are needed for 1) a more coherent application of sustainability criteria to the instruments, 2) better evaluation and learning opportunities of existing instruments, and 4) increasing transparency through better access to data and achieved impact and results.
This study takes a closer look at three European private sector support programmes – EuroMed Invest, AL-INVEST in Latin America, and the Enterprise Europe Network – with a strong focus on matchmaking, two of which represent development... more
This study takes a closer look at three European private sector support programmes – EuroMed Invest, AL-INVEST in Latin America, and the Enterprise Europe Network – with a strong focus on matchmaking, two of which represent development cooperation and one of which has explicitly commercial objectives. The study aims to better understand their potential to serve development interests while trying to seek an answer to the following research question: what are the lessons to be learnt from development and commercial EU matchmaking instruments to engage business for development?

This case study is not intended to be an assessment or evaluation of those matchmaking instruments, but rather aims at a better understanding of their objectives, synergies and differences as well as challenges and limitations. This can help to inform policy makers, those implementing and managing the projects and final beneficiaries to make better use of such instruments as well as better leverage private sector activities for development objectives. It additionally provides insights into whether the considered examples can be replicated in sub-Saharan Africa.

Key messages
The lines between EU development cooperation and commercial objectives in business matchmaking support programmes are increasingly blurred and despite an institutional division of labour among DGs, underlying objectives and approaches are similar.
The EU aims to include its own commercial intentions in development cooperation approaches. But some programmes have moved towards a more classical private sector development approach. Others have been ahead of EU policy, using ODA funding to foster economic cooperation and business exchange.
To date, commercial matchmaking particularly focused on regions outside Sub Saharan Africa. DG GROW’s Enterprise Europe Network recently welcomed Cameroon and Nigeria, exemplifying a potential changing mindset towards Sub Saharan Africa.
There is a need to more consistently include principles of development and sustainability across commercial and development cooperation matchmaking instruments that ensure inclusiveness; sustainability; and adequate results and measurement indicators.