What is the EU External Investment Plan?
The EU External Investment Plan is an initiative to boost investment in partner countries in Africa and the European Neighbourhood, promoting inclusive growth, job creation and sustainable development, while addressing some of the root causes of irregular migration.
The Plan is supporting the partner countries by mobilizing finance, providing technical assistance, and developing a favorable investment climate and business environment.
With the EIP, the EU will go beyond ‘traditional’ development aid based on grants and instead use innovative financial products such as risk sharing guarantees instruments and the blending of grants and loans to ensure that investments have a major development impact.
More specifically, the Plan crowds in private investors, where viable business proposals meet social needs, and where limited public funds can attract private money, thus encouraging investors to contribute to sustainable development in countries outside of Europe. To attract investors the plan offers a guarantee to lower risk for investors. The guarantee will attract financing for some of the initial capital a project needs to get off the ground and serve as a pledge to pay back part or all of a loan if a borrower incurs losses and defaults on it.
With a contribution of €4.5 billion from the European Union, the External Investment Plan is expected to leverage up to €44 billion of investments by 2020. To enhance the firepower and the efficiency of the new Fund, the Commission wants EU Member States and other partners to contribute.
EU External Investment Plan Targets
- Contribute to achieving sustainable development in our partner countries in a coherent and consistent manner.
- Mobilize investment and leverage funds, to reach countries where investments are currently difficult, and facilitate investments by private actors that would otherwise invest less or not at all.
- Target socio-economic sectors, in particular sustainable infrastructure (including energy, water, transport, information and communications technology, environment, social infrastructure, human capital), and provide finance for micro-, small- and medium-sized enterprises with a particular focus on decent job creation.
- Assist in developing economically and financially viable projects to attract investment.
- Help to improve the business environment in partner countries by supporting reforms and economic governance.
- Contribute to address the root causes of irregular migration and strengthen our partnerships in Africa and the EU’s Neighbourhood countries.
The Plan will prioritize funds and support programs in the following areas:
Micro, small and medium enterprises
Sustainable energy and connectivity
Sustainable agriculture, rural entrepreneurs and agroindustry
Access to internet and digitalisation
LAIF in the next EIP
The EU’s External Investment Plan is proving to be an extremely effective channel for the delivery of EU development assistance. The Plan is looking to enlarging the scope of its operation, merging LAIF with the EIP as of 2021.
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