What are the blending facilities of the European Union?
The EU blending facilities are instruments used to catalyze financing for investment projects in beneficiary countries of the EU's external cooperation. These EU blending facilities strategically use a limited amount of grants to mobilize financing from eligible financial institutions and the private sector in order to enhance the development impact of investment projects.
Through blending, EU grants are combined with non-grant resources such as loans, equities and guarantees from development finance institutions as well as commercial loans and investments with the aim of achieving a leveraged development impact.
Each one of the 7 blending facilities specializes in a specific geographical area:
- 1. Latin America Investment Facility (LAIF)
- 2. Caribbean Investment Facility (CIF)
- 3. Neighbourhood Investment Platform (NIP)
- 4. Africa Investment Facility (AfIF)
- 5. Asia Investment Facility (AIF)
- 6. Investment Facility for Central Asia (IFCA), and
- 7. Investment Facility for the Pacific (IFP)
Beyond the specific development objectives defined for each operation, the use of blending reflects the following specific goals:
- financial leverage: mobilize public and private financial resources for enhanced development impact and do more with less;
- stronger developmental impact: improve project quality, sustainability, innovation and accelerate the start of the project;
- policy leverage: support reforms in line with EU and partner country policies;
- aid effectiveness: improve coordination between European and non-European development cooperation agents and partners (i.e. donors and financial institutions);
- visibility: provide more visibility for EU development funding.
What is LAIF?
The Latin America Investment Facility is one of the European Union’s regional blending facilities, aiming to unlock, accelerate and leverage investments in Latin America, focusing on key sectors that are essential for the achievement of the Sustainable Development Goals, such as renewable energy, environment, water, transport, social services, and support to micro, small and medium enterprises. Projects with a clear climate change objective are favored. This facility combines EU grants with financial resources from European and regional financial institutions, governments and the private sector.
How does LAIF work?
LAIF combines resources from the EU with loans from European development finance institutions (such as AECID, AFD, EIB, KfW and others) as well as from regional development banks (such as CABEI, CAF, IDB). These resources are often pooled together with contributions from governments and the private sector in Latin America.
Only eligible European development finance institutions can present proposals for consideration to the European Commission. These proposals are the result of an agreement between the development finance institution and the beneficiary government and/or private sector institution in one or several countries of Latin America. The EU Delegation in the country where the project is planned is involved in all steps of the process.
The process to obtain funding from LAIF includes 6 main stages:
- 1. Project idea: After discussion with the beneficiary countries and the European Union Delegation(s), European financial institutions develop project ideas and present them to the European Commission Directorate-General for International Partnership (INTPA), for assessment by the LAIF management team (INTPA-LAIF-MANAGEMENT@ec.europa.eu).
- 2. Action Fiche: If the project is deemed pertinent and relevant, the development financial institutions prepare a Project application form and submit it to the Blending Facilities Secretariat (INTPA-LAIF@ec.europa.eu).
- 3. Project application form (PAF) assessment: The European Commission (led by INTPA) evaluates the proposal according to the criteria stated in the blending guidelines.
- 4. Technical Assessment Meeting (TAM): Technical committee in which representatives of the European Commission and development financial institutions participate. It is responsible for conducting a technical review of the funding proposals submitted. In this TAM, proposals can be rejected, sent back for revisions, or approved.
- 5. LAIF Board: Operative committee formed by representatives of the Commission, the European External Action Service and the EU Member States. It examines the proposals that have been submitted by the technical committee and takes a final decision.
- 6. Contract negotiation and signature: The project contract is signed between INTPA Headquarters (LAIF Management) and the financial institution.
After the contract is signed, the project’s implementation period begins. Management of LAIF resources is delegated by the EU Commission to the lead European finance institution participating in the project. Additional contract monitoring and follow-up are ensured by the European Union Delegation(s) in the Latin American country(ies) where the project is being implemented, and supported by LAIF headquarters in Brussels.
Click here to download the Guidelines on EU blending operations
Are there calls for proposals to request financing from LAIF?
No, there are no calls for proposals on behalf of LAIF. Only eligible European development finance institutions can directly present proposals for consideration to the EU Delegation and the European Commission.
Is there a standard application form?
Yes, financial institutions applying for LAIF financing must complete an Application Form, following the Guidance notes: How to fill in the Application Form for Blending Facilities.
What are the project selection criteria?
Projects are assessed according to the following criteria:
alignment with EU policy objectives and current EU priorities for the Latin American country/region;
consistency with Latin American countries' national, regional and continental development strategies;
contribution to social, environmental and climate change (mitigation/adaptation) aspects as well as specific cross-cutting issues such as gender equality and women’s empowerment aspects, youth inclusion, decent work and human rights;
clarity of the organizational set-up, implementing scheme and financial structure;
- appropriateness of the project's financial structure and other issues, for example debt sustainability;
the EU value added and the justification of the EU contribution, notably amount and financing modality;
complementarity with other actions (planned or under implementation) and coordination mechanisms with similar initiatives;
long term sustainability when grant support expires;
quality of the communication and visibility plan and expected impact.
For more information, consult the sub-chapter of the Blending Guidelines on ‘Technical assessment’ and Annex 4: Grant Request Assessment Grid.
What form can a LAIF contribution take?
- 1. Technical assistance: providing tailored assistance to boost project design, management, and/or quality (e.g. feasibility studies, environmental impact assessment studies, supervision of construction or installation work, capacity building, business plan). This helps to ensure the quality, efficiency and long-term sustainability of projects.
- 2. Investment grants: financing specific components of a project or a proportion of total project cost, reducing total investment cost and amount of debt.
- 3. Financial instruments such as debt, equity and guarantees, which can mobilize additional funding from other parties.
These three financing modalities modalities can be combined and are applied in reimbursable (financial instruments) or non-reimbursable (technical assistance and investment grants) cooperation.
What countries are eligible for LAIF funding?
LAIF is currently funding projects in 17 Latin American countries:
Where can one obtain additional information?
Write to: firstname.lastname@example.org
We will put you in contact with the person in charge of LAIF in the EU Delegation of your country.
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