Annexes to COM(2020)43 - Recommendations of the high-level group of wise persons on the European financial architecture for development - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2020)43 - Recommendations of the high-level group of wise persons on the European financial architecture for development. |
|---|---|
| document | COM(2020)43  |
| date | January 31, 2020 |
At partner country level, European DFIs are regularly invited to take part in EIP outreach missions and in business fora. In 2019, the EIP Taskforce conducted a total of nine outreach missions, which were organised to selected African and Neighbourhood countries (Cameroon, Angola, Tunisia, Zambia, Kenya, Armenia, Somalia (in Ethiopia), Senegal, Sierra Leone). Moreover, for the 2020 period, at least seven outreach missions are envisioned for African and Neighbourhood countries (Uganda, Rwanda/Burundi, Burkina Faso, Malawi, Democratic Republic of Congo/Congo Brazzaville, Guinea Bissau, Mozambique/Madagascar). These outreach mission are undertaken by EIP development cooperation specialists from the Commission with expertise in finance and communication, with strong support from EU Delegations in the respective partner countries. European DFIs already actively take part in these EIP outreach missions, which usually consist of information sessions with investors, the local private sector, partner country government officials, and representatives from EU Member States and other relevant donors. Moreover, the European Commission is supporting the organisation of important country-specific business fora, gathering key private sector, IFIs, investors and government actors. These business fora are important platforms to address challenges and opportunities for doing business and promoting local and European investments in the country, with a high-level participation.
Furthermore, in regular consultation with EU development and finance institutions present on the ground, EU Delegations organise monthly meetings of economic counsellors in EU Delegations and Embassies in partner countries. EU Delegations also play a key role in holding regular workshops on investment.
The Commission will continue to work towards improving and reinforcing these existing technical meetings and other platforms as stated in the Commission Communication of 2018, ”Towards a more efficient financial architecture for investment outside the European Union”17.
Council conclusion 23. INVITES the European Commission and the Member States to create incentives to strengthen cooperation among development finance and implementing actors of different sizes, profiles, and strengths to maximise development impact, in particular supporting inclusive partnerships via smaller development institutions, and making best use of instruments such as cooperation arrangements, co-financing, and mutual reliance procedures. INVITES the European Commission to develop mechanisms to simplify access to financing to EU development actors and institutions, in particular for smaller ones.
The future EFSD+, through Article 27 (5) of the NDICI proposal, foresees the promotion of cooperation between eligible partners. As outlined in the September 2018 communication, the Commission “invites, as an immediate priority, the current main financial and development institutions active in development financing – at the national and European level – to consider a more collaborative approach”.
This could notably include the co-financing of relevant projects by smaller and larger European DFIs. The Commission will ensure that a level-playing field is established for all implementing partners.
The Commission also strongly encourages the submission of proposals by consortia of DFIs including at least one small DFI in its composition. As a potentiality, the Commission is exploring the options that exist, through the EFSD+ governance boards for example, to dedicate a limited percentage of the total amount of available funds for proposals submitted by consortia of DFIs. Mechanisms to promote the exchange of information and experience among DFIs could also be envisaged following discussions with the DFIs, for example in the context of the EUBEC.
The Commission will continue to build upon its current efforts to strengthen cooperation among development finance actors through the promotion of joint trainings and the development of assistance facilities. Moreover, several IFIs and Member State institutions have prepared, or are currently undergoing, the pillar assessment process. The completion of the pillar assessment of potential implementing partners is a prerequisite in order to enable the channelling of future budgetary guarantees and blending operations through a greater range of smaller European DFIs.
The pillar assessment process18 is composed of nine19 different pillars and is one of the required conditions to allow for the indirect management of EU funding including within the scope of the EFSD. The systems, rules and procedures of these entities must ensure a level of protection of the
17 COM(2018) 644 Final
18 C(2019) 2882 Final, “on establishing new terms of reference for the pillar assessment methodology to be used under Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council”
19 Terms of Reference for Pillar Assessments available at: https://ec.europa.eu/europeaid/funding/about-funding-and-procedures/audit-and-control/pillar-assessments_en
EU’s financial interests equivalent to that under direct management in several key areas, such as: the provision of financing to third parties, accounting system and independent external audit. The Commission is currently looking at ways to facilitate and support the pillar assessment in order to further strengthen inclusiveness.
Key Area 2: Communication and outreach efforts undertaken and to be implemented by Commission services and the EEAS
Council conclusion 16. INVITES the European Commission and the Member States, with the support of the European External Action Service (EEAS), to make proposals for an overall branding and narrative for the EU global development strategy and financing and increase the visibility and communicability of its impacts for both the EU and partner countries. ENCOURAGES all relevant European stakeholders and the Member States to discuss such proposals with the goal to improve their communication strategies and activities.
The European Consensus on Development, the Africa-Europe Alliance for Sustainable Investment and Jobs, and the European Neighbourhood Policy are integral parts of the EU’s communication narrative and strategy. Building on these, Commission services, with the support of the EEAS, are working towards maximising the EU’s outreach efforts through the development of narratives and branding actions in line with the EU global development strategy, with the objective of increasing the EU’s visibility.
Several initiatives are already being implemented to communicate effectively on the EU’s cooperation with partner countries. These include campaigns in the EU and in partner countries (in 2019, 15 business-related events were held, of which eight in EU Member States), and are focused on promoting EU values and the impact of the EU’s collective action and worldwide investments.
In addition, Article 36 of the proposed NDICI Regulation envisages further measures to strengthen communication on EU’s investment and international partnerships by requiring key stakeholders to ensure that the recipients of EU funding acknowledge its origin and ensure its visibility by providing targeted information to the media and the public. While Article 20 (2) (c) provides for further support measures in relation to communication strategies, corporate communication and visibility of the political priorities of the Union, it is imperative that the key actors implementing the EU global development strategy work towards reinforcing the EU narrative and branding efforts. This could notably include:
• coordinating more closely between EU institutions, Member States, DFIs and implementing actors to improve joint communication strategies and activities
• designing a brand which national and EU-wide development agencies and banks would use to label the EU’s development activities, including investment; already in place is the “EU4” brand, which is widely used in in the Eastern Partnership countries and replicated in number of applications and contexts (i.e. EU4Finance, EU4Energy, etc.)
• developing specific corporate visuals to inform the public about EU-funded operations
• testing new ways of reaching a wider range of audiences through projects such as the
developing targeted tools for specific target groups, such as intra-EU actors, extra-EU stakeholders, and EU fund beneficiaries.
Key Area 3: Capacity, operationalisation and internal coordination efforts undertaken and to be implemented by the European Commission, with the assistance of the EEAS
Council conclusion 17. EMPHASISES the role of the European Commission and the EEAS in operationalising EU development policy, including through better coordination of all European development actors, while following the increased political guidance provided by the Council, in particular on development objectives. INVITES them to increase their internal coordination as well as their cooperation with Member States inter alia in the undertaking of policy dialogue and country and regional strategies.
The Commission, with the support of the EEAS, is increasing their efforts to upgrade and operationalise EU development policy through better coordination of all European actors. It is making strides towards greater internal coordination as well as strengthening cooperation with Member States, inter alia in the preparation of policy dialogues and country and regional strategies. In several countries, close cooperation between the EU Delegations and the Embassies of Member States has been established. This cooperation will be further enhanced by instruments such as the EIP, which is a key tool in this regard.
The proposed NDICI Regulation provides for the unification of existing instruments through common governance and the ‘policy first’ approach. This will be key in ensuring effective and cohesive internal coordination. In addition, the proposal explicitly calls for the strengthening of coordination between the Union and Member States (Article 8 (5)). Of further note is that Articles 8, 10, 11 and 12 propose an inclusive process, including joint programming with Member States and consultation with implementing partners, partner countries, civil society organisations and local authorities.
EU development policy is currently implemented via a wide range of frameworks and mechanisms, which could be scaled up to further enhance their effectiveness. Regional platforms such as the strategic and operational boards of the EU External Investment Plan and consultation formations such as EUBEC or Practitioners’ Network bring together representatives of the Union, Member States, implementing partners and development experts, allowing the EU to draw upon the wealth of expertise available, under the political orientation of the Council.
Moving forward, the Commission will continue to further engage with stakeholders under the governance structure of the EFSD+, beginning with the programming of the 2021-2027 financial cycle, which is to be guided primarily by the EU’s policy goals, independent from currently existing and future tools and partners. Joint programming will become the “preferred option” under the NDICI, which will contribute to fostering collaboration and coordination in investment financing.
Council conclusion 22. INVITES the European Commission and Member States to strengthen the cooperation between existing European knowledge hubs and research institutes for development, linking more effectively EU and international research on development with policy-making, providing support for the advancement of development studies and promoting learning on reporting and development impact measurement within the EU. They should also reflect on working towards the setting up of a common platform with information inter alia on ongoing and planned projects, financing conditions as appropriate and their implementing partners in order to provide a comprehensive view of EU action, taking into account the existing tools.
The Foreign Affairs Council’s Development Ministerial meetings provide the political guidance on development policy issues, including on financing for investments in support of development. Ministers have engaged regularly on these topics, most recently on 26 November 2019 when the Ministers invited the European IFIs’ leadership to the Ministerial meeting. The Economic and Financial Affairs Council has also played a pivotal role in ensuring that the necessary dialogues between key European finance and development actors take place.
Additionally, the meetings of the EU Directors-General for Development serve as platforms to discuss EU development actions. The last meeting took place on 26 November 2019 in Brussels and focused on how DFIs can maximise their contribution to the Sustainable Development Goals and on the potential opportunities offered by the EIP.
Platforms containing information on ongoing and planned projects are being developed. Three years ago, the Commission created the Southern Mediterranean Investment Coordination Initiative (AMICI) to help measuring development impact. The AMICI is a collaborative single entry database developed by Commission experts in development and finance on projects implemented in the Neighbourhood region, and contains development projects from the EU, Member States and IFIs. Through the database, the Commission is able to collect, analyse and filter data from all the different projects that were implemented during the last three years.
Moreover, the EU Aid Explorer serves as a unique tool and one-stop shop for funding information: it facilitates donor coordination, ensures transparency and improves accountability to citizens. The EU Aid Explorer allows users to find comprehensive aggregate data as well as detailed information on international development projects funded by the EU and its Member States through the use of European Commission data and open data published by EU Member States to the OECD Creditor Reporting System (CRS) and the International Aid Transparency Initiative (IATI) standard.
The Commission is considering using a database for other external actions and regions. The Commission is also assessing the possibility of a ‘centre of excellence’ on development knowledge through EU Think Tanks, alongside the possible further involvement of European Think Tank Groups on EU international cooperation for global sustainable development.
Council conclusion 24. ENCOURAGES the setting of common standards and business models for private sector involvement in the implementation of development policy, on the basis of the OECD and DFI Blended Finance Principles.
In its communication on “A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries”20, the Commission put forwards six criteria for supporting private sector actors as part of its principles for strengthening the role of the private sector in EU development cooperation. These criteria also apply to EU blending and guarantee operations, and are coherent with the five OECD Blended Finance Principles.21
In its conclusions on the communication, the Council supported the principles and criteria proposed for collaboration with, and support to, the private sector, and invited the Commission and Member States to define how to apply them concretely. Accordingly, the Commission further discussed the principles and criteria with Members States in the context of the EU Expert Group on Private Sector Development and of a meeting of EU Development Directors-General.
Responsible business conduct is an essential component of private sector operations both in European and partner countries. Over the last years, the Commission has worked to promote responsible business conduct and to implement the UN Guiding Principles on Business and Human Rights, through a mix of voluntary and mandatory actions. In March 2019, the Commission published a staff working document giving an overview of progress on corporate social responsibility, responsible business conduct and business and human rights.22
The Commission has also followed the work of DFI Working Group on Blended Concessional Finance Principles for Private Sector Projects.23 They are currently in use in the implementation of blending, including as regards the principle of minimum concessionality, which implies that donor contributions should amount to the minimum necessary in order to render the project in question economically and financially viable.
The Commission has integrated the above principles and criteria into its blending guidelines, which it will further update in the course of 2020.
20 COM(2014) 263 Final
21 http://www.oecd.org/development/financing-sustainable-development/blended-finance-principles/
22 SWD(2019) 143 Final
23 DFI Working Group on Blended Concessional Finance for Private Sector Projects - Joint Report, October 2018 Update, https://www.edfi.eu/wp/wp-content/uploads/2018/10/DFI-Blended-Finance-Report-OCT-2018.pdf
Conclusion
The Commission welcomes the timely guidance of the Council and will continue working with it in order to achieve the EU’s priorities and objectives in relation to the future financial architecture for development. It is also ready to take further steps to improve the coordination and cooperation among actors involved in implementing the EU’s development policy. In that regard, future actions developed by the Commission will take into account the mandates of the relevant Commissioners in order to propose a new comprehensive coordination mechanism with the aim of ensuring that the EU, its Member States and the IFIs they hold shares in, collectively use their sizeable financial assistance capacity in a coherent way which promotes the EU’s values and strategic objectives.
As detailed throughout this report, the Commission services, with the support of the EEAS,24 are working towards implementing the WPG recommendations and Council conclusions. A number of measures to simplify, streamline and considerably enhance the financing architecture for development are pending the approval of the proposed NDICI Regulation, while many others are already under implementation. The Commission also looks forward to the inputs that the Council has requested from the EIB and the EBRD, in particular their respective proposals to increase cooperation between the two institutions and with European and other DFIs. Further measures are to be taken to explore other areas as suggested by the WPG and the Council.
Lastly, the Commission supports the Council’s conclusion encouraging Member States to reinforce their ownership of the EU development policy through a stronger engagement, regular policy steer, further strategic guidance, as well as more effective interaction and coordination with the European Commission and the HRVP. The Commission defends this approach, which is in line with the Global Strategy on EU Foreign and Security Policy’s call for a more responsive and joined-up Union, and the European Consensus on Development – the EU’s shared vision for development cooperation and with the framework agreed through the 2030 Agenda and the Addis Ababa Action Agenda for both the EU and its Member States.
24 As per Article 2(2) of Council decision 2010/427