The EU wants to maximise the impact of its development financing
The Council today adopted conclusions on enhancing the European financial architecture for development (EFAD). The conclusions stress the urgent need to increase development impact in partner countries and to address the development challenges reinforced by the COVID-19 pandemic. They leverage the entire European financial development ecosystem, encouraging the European Investment Bank (EIB), as the EU’s Bank, and the European Bank for Reconstruction and Development (EBRD) to work together more effectively and efficiently and to strengthen their cooperation with the European development banks and financial institutions in a Team Europe approach, increasing EU visibility.
The conclusions underline the importance of focusing investment on the areas where they are needed the most, in particular the least developed countries and countries in situation of fragility or affected by conflict, Africa, the Neighbourhood as well as other priority regions severely affected by the pandemic.
The Council emphasises the need to work towards achieving the Agenda 2030 and its sustainable development goals as well as the Paris Agreement objectives, based on the strategic interests and values of the EU, including democracy, human rights, gender equality and climate, and on the needs of partner countries.
The structure of the EFAD involves European, national, public and private actors. The conclusions reflect the need to pull development institutions and resources together to deliver better results on the ground. They also emphasise the importance of strengthened political guidance by the Council.
The implementation of the NDICI-Global Europe external action financing instrument will be key to ensure that improvements in the EFAD are set in motion, in view of a better division of labour, coordination and synergies, an increase in investment volumes, an enhanced development impact of operations and the mobilisation of sustainable private sector financing.
In order to establish appropriate political oversight, the Council invites regular reporting by the EIB and the EBRD on the actions undertaken starting in November 2021. It also invites the Commission to present a roadmap for the implementation of the objectives and recommendations contained in the conclusions in view of annual reporting to ECOFIN and the Foreign Affairs-Development Council as from the end of 2021.
In order to increase the development impact of our financing, we need to foster an effective cooperation between our European development banks and financial institutions, also by promoting joint and complementary investments. I welcome this new momentum, created by the Council conclusions, for enhanced and inclusive cooperation among all European development financial actors, as we address the consequences of the Covid-19 pandemic, work towards the achievement of the sustainable development goals and tackle climate change.
João Leão, Minister of State for Finance of Portugal
To meet the current and future global development challenges and establish the EU leadership to ‘build back better and greener’, leaving no one behind, we need to leverage the full potential of EFAD by building on the strengths and complementarities of all its actors, including smaller and medium ones. A reinforced Team Europe approach will play a key role by developing innovative joint actions and ensuring the visibility of EU external financing.
Francisco André, Secretary of State for Foreign Affairs and Cooperation of Portugal
The EU and its member states are the world’s largest donor of development aid accounting for about half of the total development assistance provided to developing countries. EU assistance contributes to improvements in eradicating poverty, reducing vulnerabilities and addressing inequalities. The European development financial architecture (EFAD) plays an important role in the achievement of the sustainable development goals and tackling climate change.
The structure builds on a multiplicity of EU and national actors, as well as financial instruments. Reflections on how to make it more coherent, strategic, inclusive, impactful and visible started in 2019. In October 2019, a High-level Group of Wise Persons, established by the Council, published a report, providing a system-wide perspective on the challenges and opportunities for improving and rationalising EFAD, looking in particular at the respective roles of the EIB and EBRD, as well as a number of steps to be taken immediately.
In its conclusions of December 2019, the Council set out its views on initial improvements to be made and outlined the way forward for political reflection. It requested further work on the feasibility of options for institutional change put forward by the Wise Persons group as well as of possible enhancements to the current institutional set-up. A feasibility study was carried out on this basis retaining the enhancement of the current institutional set-up as the most suitable way forward to ensure a strong and coherent approach to address the current main development challenges.