Operational Report Printed by Ariane in Belgium
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AfIF Africa Investment Facility 2016 Operational Report Printed by Ariane in Belgium Printed on Process Chlorine Free paper (PCF) PEFC certified and EMAS Verified environmental management This document has been prepared for the European Commission. However, it reflects the views only of the authors, and the European Commission cannot be held responsible for any use which may be made of the information contained therein. Neither the European Commission nor any person acting on behalf of the European Commission is responsible for the use which might be made of the following information. This report does not engage the responsibility of the Financial Institutions mentioned therein. Luxembourg: Publications Office of the European Union, 2017 © European Union, 2017 Reproduction is authorised provided the source is acknowledged. Photo on cover page: © Getty Images Photos are © Getty Images, except P3 and P36: © EU. Print ISBN 978-92-79-70574-8 ISSN 2529-6256 doi:10.2841/03388 MN-AT-17-001-EN-C PDF ISBN 978-92-79-70573-1 ISSN 2529-6264 doi:10.2841/165139 MN-AT-17-001-EN-N AfIF OPERATIONAL REPORT 2016 1 INTRODUCTION 2016 Operational Report The Africa Investment Facility (AfIF), set-up in 2015, is the newest of the EU’s regional blending facilities. The blending facilities are innovative financial instruments that use EU development grants to leverage additional funding from European and regional development financial institutions and the private sector. They help implement key infrastructure and private sector support projects that are critical to sustainable development in partner countries worldwide. AfIF, which is funded mainly from different programmes under the European Development Fund (EDF), but also under the EU's Development Cooperation Instrument (DCI), provides various kinds of grant funding for development projects: • Investment grants, to finance specific project components (with, for example, social or environmental added-value) or a percentage of the total project cost (thereby reducing the amount of debt for the partner country). • Technical assistance, providing tailored support to meet specific project needs, both during project preparation and implementation. This assis- tance helps ensure the quality, efficiency and long-term sustainability of a project and may address aspects related to the project-enabling environment or other aspects that are key for a project’s successful AfIF implementation. Africa Investment Facility • Risk sharing instruments, such as risk capital and guarantees, to allow the available funds to be used efficiently by reducing risks and unlocking additional financing. This is the first Operational Report for AfIF. The report details the Facility’s operational activities in 2016 and provides a comprehensive overview of the 16 projects funded. In 2016, AfIF provided a total of over €288 million in contributions to important infrastructure projects across Africa. The transport sector received the lion’s share of funding, with nine projects benefitting from a combined AfIF contribution of just over €183 million, followed by the energy sector, with an AfIF contribution of €85 million to five projects. One ICT project benefitted from an AfIF contribution of over €17 million and a project in water and sanitation received a contribution of almost €3 million. Like the other EU blending facilities, AfIF acts as a catalyst to pool resources and improve the coordination and coherence of donor actions, underpinning the policy principles of ownership, partnership and shared responsibility. The Facility contributes to leveraging the funds needed to finance capital-intensive projects in key sectors, which might otherwise be too large to finance using market instruments alone, or by development financial institutions or benefi- ciary governments on their own. In its first year of operations, AfIF has already made an important contribution to strengthening transport, energy and communications infrastructure, holding the promise of a major contribution to sustainable and socially-equitable de- velopment in Africa. AfIF CONTENTS INTRODUCTION 1 FOREWORD 3 AfIF Africa Investment Facility 4 Advancing EU Policy Goals in Africa 6 AT A GLANCE 8 HIGHLGHTS 2016 10 1. Overview 11 2. Projects 12 AfIF Supporting Africa in its Efforts to Combat Climate Change 34 AfIF Closing Remarks 36 AfIF Organisational Structure 37 AfIF / ANNEX 38 AfIF / ACRONYMS 40 AfIF OPERATIONAL REPORT 2016 3 AfIF FOREWORD Neven Mimica Africa is a continent of huge opportunity and potential. However, for this potential to be fully realised, a number of significant challenges need to be overcome. Poverty, unemployment and inequalities remain high, and the region is particularly vulnerable to the impacts of climate change. These challenges lie at the core of the EU’s partnership with Africa, which focuses on alleviating poverty, fostering peace and stability, consolidating democracy and good governance, and boosting economic growth and job creation. In this way, we can help to unleash the opportunities needed to achieve truly inclusive and sustainable development in Africa. As part of our new vision for the EU's role in international cooperation and development, the European Union and its Member States signed a new European Consensus on Development in June 2017. This underlines the EU's determination play its part in implementing the internationally agreed UN 2030 Agenda for Sustainable Development. It also includes a commitment to explore all available means of financing, including by combining traditional development aid with other resources. The Africa Investment Facility (AfIF) was set up in 2016, to support investment in Africa and mobilise additional funding in a broad range of sectors. In line with the priorities agreed with our partner countries, activities focused on areas such as micro, small and medium-sized enterprises (MSMEs), agriculture, infrastructure, environment, and the social sector. Like other EU blending Neven Mimica facilities, AfIF uses EU resources as a catalyst to leverage further financing from European finance European Commissioner, institutions, regional and multilateral development banks, and other investors. International Cooperation and Development Building on the success of this approach, the European Commission proposed a new External Investment Plan (EIP) in September 2016, to encourage investment and strengthen partnerships in Africa and the EU Neighbourhood. This new Plan is an innovative approach to investment, which focuses on important socio-economic sectors, such as sustainable energy, agriculture and social infrastructure, and support to MSMEs. These are all essential ingredients for sustainable growth and inclusive jobs, which are in turn necessary to fully implement the 2030 Sustainable Development Agenda, and to improve the lives of millions of African citizens. The EIP will focus on three pillars of intervention: mobilising investment through a new European Fund for Sustainable Development (EFSD); providing technical assistance; and pioneering policy dialogue and cooperation to improve the overall investment climate in our partner countries. Blending will be a central pillar of the EFSD, which will be made up of around €2.6 billion from the two Regional Investment Platforms for Africa and the EU Neighbourhood and a €1.5 billion guarantee on the EU budget. In this way we aim to mobilise up to €44 billion of additional investment. The adoption of the Plan by a large majority in the European Parliament in July 2017 was a major milestone. This will allow us to start the implementation of the EIP in the autumn and to present tangible progress at the AU-EU Summit at the end of the year in Abidjan. As we look to the future, we must apply the lessons we have learned, in order to reap the maximum impact from our activities and to make our development support as effective as possible. By integrating the Africa Investment Platform, into which AfIF will evolve, into the EIP, we will link innovative financing with policy dialogue and technical support in view of mobilising more investments in Africa. These efforts will be critical in supporting the aims of the Africa-EU partnership, and ensuring that our development efforts in Africa have the maximum impact, and benefits those who need it the most. AfIF Africa Investment Facility AfIF is one of the EU’s blending facilities, innovative financial instruments which combine EU grants with other public and private sector resources, such as loans, equity and other financing, for invest- ments that promote sustainable and socially-inclusive development. AfIF was created in August 2015 and started oper- ating in November of the same year. AfIF OPERATIONAL REPORT 2016 5 In line with EU and partner countries’ agreed policy objectives, AfIF aims to support sustainable and inclusive growth in Africa by fostering investments that have a positive impact on socio-economic development in the region, such as infrastructure in transport, communication and energy interconnections and the promotion of renewable energy. In addition, it can support access to finance for households, micro, small and medium-sized enterprises (MSMEs), the social sector and for municipal development. It can also contribute to actions in the environmental sector, including water supply and sanitation, climate change adaptation and mitigation, agriculture, information and communication technologies as well as social infrastructure. The final beneficiaries of the Facility are the EU’s partners in Africa either