On 14 September 2016, the European Commission presented its draft external investment plan (EEIP) to stimulate investment in EU partner countries (Africa and the European Neighbourhood), promote a new model of participation by the private sector and contribute to the achievement of sustainable development goals.

According to the Commission, economic growth in developing countries is currently at its lowest level since 2003. Instability and conflicts in Africa and the European Neighbourhood have been aggravated by the global economic crisis, resulting in limited access to funding for projects that badly need investment.

The new European Fund for Sustainable Development (EFSD) lies at the core of the External Investment Plan, and is expected to provide additional public and private investment. Overall, it should mobilise up to EUR 44 billion, with EUR 3.35 billion contributed from the EU budget and the European Development Fund.

1.EEIP structure

The External Investment Plan is built on three pillars:

• the creation of a new European Fund for Sustainable Development (EFSD) to mobilise investment, which will enable intermediary financial institutions to provide support through loans, guarantees, equity participation, or similar products to end-recipients based on an EFSD guarantee

• technical assistance for a broader political environment to help local authorities and companies develop more sustainable projects and attract investors to increase the involvement of the private sector

• the improvement of investment conditions and the political and business environment in the countries concerned through thematic, national and regional EU programmes

2. EEIP support 

Entities from both the public and private sector may apply for support from the EEIP and submit investment proposals under investment windows and sign guarantee agreements with the Commission, subject to the proposal being submitted for independent financial assessment. 

According to the Commission, investment proposals will, however, have to meet the following criteria: 

• contribute to economic and social development, with a focus on sustainability and job creation, particularly for youth and women, and address the root causes of illegal migration,
• target socio-economic sectors (energy, water and transport infrastructure, information technology, the environment, social infrastructure, human capital),
• complement market-based and other instruments, particularly those financed from the budget of the EU and Member States, including existing European Investment Bank (EIB) instruments,
• support EU and relevant policy objectives and policy dialogue with partner countries, and align with the policies of partner countries. 

Target countries initially eligible for support are African countries and countries in the EU Neighbourhood. The aim is to address the constraints to investment and contribute to sustainable development and job creation.

3. Conclusion 

The EEIP will allow the EU to forge effective partnerships and simultaneously fulfil international commitments on financing development. Grants will remain the foundation of the plan, with the use of guarantees and innovative financial instruments to promote investment, trade, mobilise domestic resources and good governance.

The EEIP will improve the way public funds are used and the way public authorities and private investors cooperate on investment projects.

The EEIP will contribute to the improvement of sustainable investment in Africa and developing countries, using funds from the EU, its Member States and other donors, financial institutions and the private sector.

The EEIP will offer the private sector a guarantee for investment under politically volatile conditions and address key factors allowing the participation of private investment in projects in which investors would not otherwise participate.

For more information, please contact our office’s partner, Mgr. Jiří Kučera, e-mail: jkucera@kuceralegal.cz ; tel.: +420604242241.