By Magreth Nunuhe
Windhoek – Southern African countries are yet to come up with bankable projects to benefit from the European Commission’s generous 3.35 billion Euro investment plan in its partner countries in Africa and the European neighbourhood - two years after the Commission announced its intentions to do so.
The European Commission announced the ambitious External Investment Plan (EIP) in 2016 envisaged to boost investment and particularly contribute to sustainable development, poverty eradication and address specific socio-economic root causes of migration in host, transit and destination countries.
The EIP is the EU’s new plan to boost development, growth and jobs in Africa and encourages private companies to invest in the continent while mobilising private funding to fill the gap that public resources such as grants cannot fill.
So far, the EU has launched the plan at the 7th EU-Nigeria Business Forum in Lagos in October, to strengthen existing partnerships by promoting inclusive growth, job creation and sustainable development. It will also tackle some of the root causes of irregular migration.
The EIP has been necessitated by instability and conflicts in Africa and the EU neighbourhood, aggravated by the global economic crisis, which led to decline in foreign direct investment (FDI) and other private financial flows to developing countries since the 2008 financial crisis.
According to the EU, only 6% of overall FDI went to fragile countries as per the statistics of 2012.
Reduced access to finance for much-needed investment has also been exacerbated by on-going migration crisis as more people are on the move in Africa and in the EU neighbourhood.
With the 3.35 billion Euro from the EU budget and the European Development Fund, the EIP is to, inter alia, support social and economic infrastructure and SMEs by addressing obstacles to private investment, improve the way in which public funds are used and the way public authorities and private investors work together on investment projects.
It encourages investment in promoting inclusive growth, job creation and sustainable development and tackling some of the root causes of irregular migration.
Susan Lewis, Information and Communication Officer of the Delegation of European Union in Namibia, said Namibia, just like many other SADC countries, has not yet benefitted from the EIP facility as previous submissions have not been successful because they were not considered extensive enough. She added that further discussions between the EU and Namibia, together with the European Investment Bank and financial institutions were required to move forward.
The EIP further supports innovative guarantees and similar instruments in support of private investment, enabling the EIP to mobilise up to 44 billion Euro of investments to strengthen its partnership and promote a new model of participation of the private sector and contribute to achieving the Sustainable Development Goals (SDGs).
The EIP also offers a guarantee to the private sector to invest in contexts that are politically more risky than others and it addresses key factors that enable crowding-in private investment where investors would not otherwise go.
The public and private sectors are eligible to receive support through the EIP and can submit investment proposals under the investment windows and sign guarantee agreements with the Commission, subject to the relevant financial assessments being carried out by external, independent experts, for the Commission.
To qualify, applicants must be able to contribute to economic and social development, with a focus on sustainability and job creation, particularly for youth and women and address the root causes of irregular migration. They should also target socio-economic sectors, such as infrastructure including energy, water, transport, ICT, environment, social infrastructure, human capital and finance in favour of micro, small and medium-sized enterprises, while particular focus will be on private sector development.
Furthermore, applicants must maximise private sector leverage by addressing bottlenecks to investment, among others.
In addition, the Commission is to expand the EU budget guarantee under the European Investment Bank’s (EIB) External Lending Mandate by a total of 5.3 billion Euro and can thus lend up to 32.3 billion Euro under the EU guarantee between 2014 and 2020.
Some of the main challenges for developing countries remain to achieve inclusive and sustainable growth and creating jobs and the EIP will draw on these lessons and enable the EU, international financial institutions, donors, public authorities and the private sector to cooperate fully in a coordinated way.
The EIP also builds on the experience gained with the very successful Investment Plan for Europe, where its European Fund for Strategic Investments (EFSI) mobilised close to 116 billion Euro across 26 member states in less than a year and where more than 200,000 small and medium enterprises benefitted from the EFSI.