- €3.3 billion for leverage of €44 billion in private investment
- Focus on poverty reduction, jobs, SMEs, climate change
- Strict rules on labour and human rights and tax transparency
An informal agreement on an EU scheme aiming to mobilise €44 billion in private sector investment in Africa was reached with EU ministers on Wednesday.
As part of the European External Investment Plan, the new European Fund for Sustainable Development (EFSD) would encourage €44 billion in private investments in fragile states by offering a combination of grants, loans and financial guarantees worth €3.3 billion to boost jobs, growth and stability, thus addressing the root causes of migration.
In recent talks on the operating rules of the EFSD, MEPs persuaded EU ministers on the following key points:
- Focus on poverty, jobs, climate and small enterprises. EFSD must focus on fighting poverty, creating decent jobs, youth, women and small enterprises, and support must comply with internationally agreed development standards. A minimum of 28% of investments will back climate action to help the implementation of the Paris Agreement.
- Responsible businesses. Beneficiaries must respect human rights, ILO standards and international rules on responsible investment. Locals affected by projects need to have access to a complaints procedure.
- Tax transparency. Strict rules will ensure that businesses in jurisdictions not cooperating on tax and money laundering issues will not benefit from resources.
- More democratic control. Parliament will have an observer status on the EFSD Strategic Board and the EU Commission must inform Parliament before any important investment decisions.
Foreign Affairs, Development and Budget MEPs suggested changes to the draft operating rules for the EFSD in April.
“I am glad that we reached an agreement with the Council. We want to send a clear signal to our partners that we are serious about creating sustainable growth and addressing the root causes of migration. I hope that this innovative tool improves the investment climate and stimulates private investments where it’s needed most. We worked hard on this deal and I’m sure we can adopt it swiftly”, said co-rapporteur Eduard Kukan (EPP, SK).
“This agreement will help our fight against poverty, foster sustainable and inclusive development and promote the resilience of partner countries, especially the least developed. We managed to reach most of our objectives, which can make EFSD a success. The new tool will help implement the Paris Agreement and the 2030 Agenda and includes fundamental safeguard clauses on human and labour rights”, said Doru-Claudian Frunzulica (S&D, RO).
“We have definitely improved the Commission’s proposal, not only by enhancing the development aspects of this regulation, but also by including EU values such as human, social, labour and environmental rights in line with the Paris agreement, which will improve the lives of thousands of people in Africa and neighbouring countries“, said co-rapporteur Eider Rubial Gardiazabal (S&D, ES).
If the Foreign Affairs, Development and Budget committees approve the agreement on Monday, 3 July, a plenary vote will take place on 6 July.
EFSD resources come from the mid-term review of the MFF 2014-2020 and the European Development Fund (EDF) reserve. The new fund will be composed of two regional platforms: one for Africa and the other for the EU Neighbourhood (south and east). It will function as a “one stop shop”, offering access to existing EU blending facilities, coupled with a new, additional guarantee for public and private investors. The EFSD Guarantee is expected to have a cash provision of €750 million including €350 million from the EU budget and €400 million from the EDF. The EFSD will also combine resources from two existing blending facilities – €2.6 billion from the Neighbourhood Investment Facility and Africa Investment Facility.