Review of the main European development cooperation strategies to encourage investments in Africa and in the Neighborhood countries: a focus on blending facilities

The European Commission External Investment Plan, launched in 2016, acknowledges that the traditional public development assistance is essential but not sufficient to address development challenges and that the mobilization of private resources to complement scarce public ones is increasingly necessary. This Plan offers an integrated framework to promote the participation of the private sector in financing for development and to develop a blending agenda able to combine EU grants with loans or equity from public and private financiers.

This study provides an overview of the EU blending facilities covering Africa and the Neighborhood countries. It thus focuses on the crucial role that Development Finance Institutions are assuming in implementing blending initiatives and maps, in particular, the experiences of the French and Italian cooperation systems. While the French Development Agency and its private sector financing arm, Proparco, are leading blending operations for development interventions, the Italian Cassa Depositi e Prestiti, in its role of technical and financial advisor of the Development Cooperation Agency (AICS), has only recently become entitled to act as the Italian financial institution for development cooperation able to manage EU funds (Italian Law No. 125/2014).

European blending facilities have been welcomed for their potential to leverage private resources that are additional to public funds and are aimed at reaching development objectives. But there is still a limited body of evidence in this area and a number of stakeholders, especially among the civil society, call for caution and more in-depth assessments to identify good practices.

Then, this study includes a SWOT analysis to review the available evidence and the elements of strengths and weaknesses, opportunities and threats of blended finance as a tool for development cooperation. The results from the proposed analysis also suggest some recommendations for good practices and actions that might increase the effectiveness of blending facilities for achieving the EU external policy objectives for Africa.