Africa-Europe Alliance: Four new financial guarantees worth €216 million signed under the EU External Investment Plan

The European Commission signed four guarantee agreements worth €216 million that will help unlock €2 billion to invest in renewables, urban infrastructure and start-ups in Africa and the Neighbourhood.

The guarantees were signed with the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the German KfW Group and the Spanish development cooperation agency, Agencia Española de Cooperación Internacional para el Desarrollo (AECID), at the 4th Strategic Board meeting of the External Investment Plan (EIP).

Commenting on these financial guarantees, Jutta Urpilainen, Commissioner for International Cooperation and Development, said: “The agreements signed today, worth €216 million, will aim to unlock €2 billion in new investment in Africa and the EU Neighbourhood. They will help boost the supply of renewable energy to communities and businesses in Africa and the EU Neighbourhood, help small businesses invest and create jobs, and make African cities more resilient to growing populations and the effects of climate change. They are an example of how the EU’s new Green Deal initiative benefits citizens of our partner countries outside the EU”.

Four guarantees, one goal: more investment where it’s needed the most

These guarantees will significantly boost investment in renewable energy and increase access to finance for small businesses (MSMEs), while also improving investment in urban infrastructure and services in Sub-Saharan Africa and in the EU Neighbourhood.

Resilient City Development (RECIDE) 

This €100 million guarantee agreement is signed with AECID, the Spanish development cooperation agency. It targets Sub-Saharan Africa and the EU Neighbourhood. It will help cities develop public-private partnerships and lower the risks for private investors involved in financing urban infrastructure, focusing on: energy efficiency, flood protection, public transport, water sanitation and solid waste treatment.

Boosting Investment in Renewable Energy

This €50 million guarantee agreement with EBRD will help to scale up investment in renewable energy in Ukraine and in the EU Southern Neighbourhood, in particular in Jordan, Lebanon and Tunisia. It will substantially boost renewable energy potential. The guarantee will help to generate a total investment of up to €500 million and is expected to provide 340 MW of additional installed renewable energy capacity.

Supporting Investment in Sustainable Energy

This €46 million guarantee agreement with the KfW Group will help to expand the generation of renewable energy in Sub-Saharan Africa and cut the region’s carbon emissions and increase energy efficiency. It will partially cover the offtake risks in renewable energy projects, such as wind farms and solar energy. This guarantee will give many more people access to energy and reduce power shortages.

SME Access to Finance

This €20 million guarantee agreement with EIB is targeting Small and Medium Enterprises (SMEs) in the EU Neighbourhood, with a particular focus on young entrepreneurs, women entrepreneurs and start-ups. It will provide affordable funding to small businesses, with less access to finance because local financial institutions consider them as riskier clients. The guarantee is providing local banks and financial institutions a first loss credit protection. This guarantee will sustain around 18,000 jobs and support 1,000 small businesses.

These guarantees are part of the External Investment Plan, which aims to mobilize more than €47 billion by 2020 in public and private investment for development in countries neighbouring the EU and in Africa using €4.6 billion in EU funds.

Original source: European Commission
Published on 22 January 2019