Africa-Europe Alliance: Denmark provides €10 million for sustainable development under the EU External Investment Plan

Africa 2019

(Annie Spratt, Unsplash)

This article is brought to you in association with the European Commission.


Today, the European Commission and Denmark signed a transfer agreement for a voluntary contribution of around €10 million (DKK 75 million) to the EU External Investment Plan. The European Investment Plan is a key tool of the Africa-Europe Alliance. Most of the contribution will go to the European Fund for Sustainable Development (EFSD), the financing arm of the EU External Investment Plan. This is the largest single contribution to the Fund by an EU Member State.  A signing ceremony for the contribution took place at the margins of the Council of EU development ministers in Brussels.

Welcoming Denmark’s initiative, European Commissioner for International Cooperation and Development, Neven Mimica, said, “With this contribution, Denmark has given a ringing endorsement of the Commission’s ability to mobilise investment and maximise impact through the External Investment Plan. I am confident that our collective effort will bring the EU’s partnership with Africa to the next level we need for a successful Africa-Europe Alliance.”

Commenting ahead of the signing in Brussels, Danish Minister for Development Cooperation Rasmus Prehn said, “Denmark sees the Fund as a strong instrument in addressing climate change and the root causes of migration. Our contribution is earmarked for Africa to help deal with its challenges in these two areas. In addition, we believe Denmark can offer strong competences for implementing projects in areas such as renewable energy, agriculture, and green urban development.”

Most of the EUR 10 million will be allocated to the EFSD Guarantee instrument. This will help to leverage further investment for sustainable development, in particular in the agricultural sector, boosting jobs and growth in Africa. The remainder of the funds will support the work of the secretariat managing the External Investment Plan, including its technical assistance activities.

The contribution will also foster closer cooperation between the EIP Secretariat and EU Member States. Denmark is the fourth Member State to contribute to the European Fund for Sustainable Development under the EIP after Germany, the Czech Republic and Estonia.

 

Background

 

The EU External Investment Plan is using €4.5 billion in public funds to secure €44 billion by 2020 in public and private investment for development in countries neighbouring the EU and in Africa. To date the EU has allocated €4.2 billion. This is set to leverage €41.5 billion in overall investment.

The External Investment Plan is a key part of the Africa-Europe Alliance, launched by European Commission President Jean-Claude Juncker in September 2018. The Alliance aims at boosting investment that creates jobs and promotes sustainable development.

The plan has three pillars. The first is finance. Through financial guarantees, the EU shares the risk, so that private investors and development banks will lend to entrepreneurs or finance development projects. Through so-called blending projects, the EU covers part of the costs of a development project through a grant, with public and private investors financing the rest. In addition to these blending facilities, the new EFSD guarantee instrument has a number of thematic or geographic investment windows, under which partial guarantees to investment portfolios are provided.

The plan’s second pillar is technical assistance. These assistance funds experts who help develop new projects, enable local and EU firms to draft business plans, and support governments in enacting reforms.

The third pillar is investment climate support. The EU works closely with governments in partner countries to help them improve the conditions that investors consider when making their decisions. These include the business environment and a country’s political and economic stability. The EU also brings together governments and business to discuss investment challenges.

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