WHAT IS LAIF?
The Latin America Investment Facility (LAIF) is one of the European Union’s regional blending facilities, aiming to mobilize funding for development projects by combining EU grants with financial resources from European and regional financial institutions, governments and the private sector.
The purpose of LAIF is to help Latin American countries finance projects in key sectors that are essential for the achievement of the Sustainable Development Goals, such as energy, environment, water, transport, social services, and support to small and medium-sized enterprises (SMEs).
LAIF has three main interconnected and mutually reinforcing strategic objectives:
- Improving the quality of infrastructure in Latin American countries, including energy efficiency, renewable energy systems, sustainable transport and communication networks.
- Increasing environmental protection and supporting climate change adaptation and mitigation.
- Promoting equitable and sustainable socio-economic development through the improvement of social service infrastructure and support to SMEs.
The program allows the European Union to engage in projects that would have been outside the scope of conventional development cooperation instruments, in a region where an increasing number of countries are looking for different approaches, innovative instruments and new forms of tailored support for investment.
HOW DOES LAIF WORK?
LAIF sets up partnerships putting together grants and other resources from the EU, and using them to leverage loans from multilateral and bilateral European finance institutions (AECID, AFD, EIB, KfW) as well as from regional and multilateral development banks (CABEI, CAF, IDB). These resources are often pooled together with contributions from partner countries and beneficiary institutions in Latin America.
The Commission and the Member States decide whether to approve funding, following the criteria based on development impact (SDGs), additionality (added value and leverage) and innovation.
Implementation of both the LAIF grant component and the credit component is managed by the corresponding European development bank. Project follow up is assured by the European Delegation in each country, and supported by LAIF at the headquarters.
Click here to download the Guidelines on EU blending operations
LAIF FINANCING MODALITIES
- Technical assistance, tailor-made to meet specific project needs during both design and implementation phases. This helps ensure the quality, efficiency and long-term sustainability of the projects.
- Investment grants that can finance specific components of a project or a proportion of the total project cost, thereby reducing the amount of partner country debt.
- Financial instruments such as debt, equity and guarantees, which can mobilize additional funding from other parties.
These three financing modalities can be combined and are applied to reimbursable or non-reimbursable cooperation.
SECTORS FINANCED BY LAIF
LAIF funds projects mainly in the following sectors:
|Water supply & sanitation|
|Reconstruction relief &|
|Support to SMEs|
LAIF is currently funding projects in 17 Latin American countries:
PARTNERS FOR THE DEVELOPMENT OF LATIN AMERICA
In less than 10 years, LAIF has managed to position itself as a key strategic partner in Latin America in the implementation of actions in favor of sustainable development. For the implementation of projects, LAIF works in partnership with:
- European finance institutions: currently the portfolio is managed by the European Investment Bank (EIB), the French Agency for Development (AFD), the Spanish Agency for International Development Cooperation (AECID), and KfW Development Bank. Additionally, other EU bilateral financial institutions are eligible.
- Regional and multilateral development banks: the Central American Bank for Economic Integration (CABEI), the Development Bank of Latin
America (CAF) and the Inter-American Development Bank (IDB) are the main implementing partners and/or co-financiers.
- Other actors: national governments, the private sector, and national development banks can co-finance or implement specific investments.