COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Strengthening European Investments for jobs and growth: Towards a second phase of the European Fund for Strategic Investments and a new European External Investment Plan
Date: 2016-09-14
Institutions: European Commission, Secretariat-General
Subjects: EU growth strategy, EU investment, EU programme, economic growth, fund (EU), investment policy, job creation, private investment, single market, sustainable development

EUROPEAN 
COMMISSION 

Brussels, 14.9.2016  
COM(2016) 581 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE 
EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF 
THE REGIONS AND THE EUROPEAN INVESTMENT BANK 

Strengthening European Investments for jobs and growth:  
Towards a second phase of the European Fund for Strategic Investments  
and a new European External Investment Plan 

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Smart and sustainable investment is required to boost jobs and growth, both in Europe 
and globally. 

Since  November  2014,  the  Commission  has  mobilised  significant  EU  financial 
resources  in  an  innovative  way  that  maximises  the  impact  of  public  funds  and 
mobilises  private  investment.  Sustainable  investment,  in  particular  in  infrastructure 
and small and medium-sized companies, has been at the centre of its political action, 
notably  through  a  more  efficient  use  of  the  limited  resources  of  the  EU  budget, 
accompanied by measures improving the general business environment.  

The  Commission  continues  to  promote  new  ways  to  make  the  most  of  each  euro  of 
public resources, to mobilise the private sector and deliver tangible results in the real 
economy. 

In the EU, this approach is already showing encouraging results. The European Fund 
for  Strategic  Investments  (EFSI),  core  of  the  Investment  Plan  for  Europe,  should 
therefore  be  reinforced  and  extended,  both  in  time  and  as  regards  its  financial 
capacity. 

Outside  the  EU,  this  new  approach  will  also  be  useful  to  address  the  multiple 
challenges both in the EU Neighbourhood and in Africa. Against this background, and 
with  a  view  to  promoting  sustainable  development,  jobs  and  growth  in  partner 
countries  and  addressing  root  causes  of  migration,  the  Commission  is  today  putting 
forward an ambitious European External Investment Plan (EIP). 

I. The Investment Plan for Europe – EFSI 2.0 

The Investment Plan for Europe has proven to be a useful tool for delivering concrete 
results and encouraging a sustainable increase in the low investment levels in Europe 
after the financial crisis. The way the guarantee is constructed ensures an optimal use 
and leverage of scarce public resources to deliver tangible results for jobs and growth. 
The European Investment Bank (EIB) Group – the Commission’s strategic partner for 
the Investment Plan for Europe – has via the EFSI mobilised close to EUR 116 billion 
across  26  Member  States  in  less  than  a  year.  During  the  same  period,  more  than 
200,000 SMEs have already benefitted from the EFSI1. From Finland to Greece, from 
Ireland to Croatia, from cutting-edge industrial projects to the renovation of the agro-
food industry by SMEs and mid-caps in Europe, from wind-farms to the deployment 
of  new  health  technologies,  the  EFSI  is  making  a  real  difference  by  supporting 
innovative projects that contribute to job creation and growth in local communities. In 
this way, the EFSI is also instrumental in tackling youth unemployment2.  

On  28  June  2016,  the  European  Council  concluded  that  “[t]he  Investment  Plan  for 
Europe, in particular the EFSI, has already delivered concrete results and is a major 

1  See  Commission  Communication  of  1  June  2016,  ‘Europe  investing  again  –  Taking  stock  of  the 

Investment Plan for Europe and next steps’, COM(2016) 359 final. 

2  The EFSI Regulation foresees three evaluations: the Commission evaluation is published alongside 
the EFSI 2.0 proposal and the EIB evaluation is currently scheduled for October. The independent 
evaluation, to be carried out by external experts, will be available in November. 

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step to help mobilise private investment while making smart use of scarce budgetary 
resources. The Commission intends to soon put forward proposals on the future of the 
EFSI, which should be examined as a matter of urgency by the European Parliament 
and the Council”3. With its proposal adopted today, the Commission has delivered on 
these priorities.  

The  Commission  is  committed  to  the  doubling  of  the  EFSI,  both  in  terms  of 
duration  and  financial  capacity. The  EFSI  was  established  for  an  initial  period  of 
three  years  and  with  the  aim  of  mobilising  at  least  EUR  315  billion  of  strategic 
investments. Given its success, the Commission has decided to present an amending 
regulation, extending the EFSI over time and increasing its fire power. This will also 
avoid any possible disruptions as regards financing and assure promoters that they can 
still  prepare  projects  to  be  submitted  after  the  initial  investment  period.  The  legal 
extension  presented  today  covers  the  period  of  the  current  Multiannual  Financial 
Framework  and  should  trigger  a  total  of  at  least  half  a  trillion  euro  investments  by 
2020.  To  enhance  the  firepower  of  the  EFSI  even  further  and  reach  the  aim  of 
doubling  the  investment  target,  the  Commission  calls  on  Member  States  to  also 
contribute as a matter of priority. For the period after 2020, the Commission intends to 
put forward the necessary proposals to ensure that strategic investment will continue 
at a sustainable level. 

Today’s proposal includes the following main elements:  

EFSI  2.0  –  Extension  in  time,  increased  firepower  and  reinforced  additionality 
(first pillar): 

In  addition  to  the  extension  over  time  and  increased  firepower,  today’s  legislative 
proposal  reinforces  the  additionality,  focussing  on  market  failures  and  sub-optimal 
investment situations to ensure a higher level of crowding-in of the private sector. To 
maximise  the  impact  of  the  initiative,  the  EFSI  should  continue  to  concentrate 
primarily  on  the  quality  of  the  investment  projects  (those  leading  to  higher 
productivity  and  competitiveness),  in  addition  to  increasing  investment  volumes.  In 
view  of  their  importance  for  the  Single  Market,  cross-border  infrastructure  projects, 
including related services, have been specifically identified as providing additionality. 
Moreover,  the  EFSI  will  in  the  future  focus  even  more  on  sustainable  investments 
across  sectors  to  further  meet  Paris Agreement  on  Climate  Change  (COP21)  targets 
and help delivering on the transition to a resource efficient, circular and zero carbon 
economy4 in line with Agenda 2030 and the Sustainable Development Goals. It is also 
proposed  to  gear  a  larger  part  of  financing  towards  SMEs  given  that  the  market 
absorption  has  been  particularly  quick  under  the  SME  window  where  the  EFSI  is 
delivering  well  beyond  expectations.  Finally,  a  set  of  new  financial  instruments, 

3  EUCO 26/16. 

4  As regards transport and energy projects, the Commission proposes to focus the EFSI even more on 
the  EU  political  priorities  as  defined  in  Connecting  Europe  Facility  (CEF)  and  trans-European 
transport  network  TEN-T  guidelines.  Moreover,  the  Commission  recognises  the  importance  of 
using  part  of  the  EU  budget,  such  as  the  one  available  under  the  CEF,  in  the  form  of  grants  for 
blending  with  the  EFSI.  The  combined  use  of  grants  and  the  EFSI  will  help  projects  become 
economically  and  financially  viable,  thus  enhancing  the  value  added  of  Union  spending  by 
attracting additional resources from private investors. 

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pooling resources from the programme for Employment and Social Innovation (EaSI) 
and EFSI, have been designed to strengthen support towards social entrepreneurship 
and microfinance5. 

An important objective of the EFSI 2.0 is to enhance the geographical coverage 
of the EFSI and reinforce the take-up in less developed and transition regions. In 
this  respect,  the  combination  of  the  EFSI  with  other  sources  of  Union  funding, 
including European Structural and Investment Funds (ESIF) is a key element6. Today, 
the  Commission  adopted  a  proposal  for  a  simplification  of  the  Common  Provisions 
Regulation  to  facilitate  such  combination.  In  addition,  the  European  Investment 
Advisory  Hub  will  be  enhanced  at  a  regional  and  local  level  so  as  to  actively 
contribute to the sectorial and geographical diversification of the EFSI. 

It  is  also  proposed  to  enhance  transparency  in  the  investment  decisions  and 
governance  procedures. The  Investment  Committee  will  have  to  further  explain  in 
its  decisions,  which  are  made  public,  the  reasons  why  it  deems  that  a  particular 

5   As  a  result  of  this,  the  total  amount  of  financial  instruments  in  support  of  social  enterprises  and 
microfinance  is  expected  to  exceed  EUR  1  billion,  as  opposed  to  EUR  193  million  initially 
earmarked under the EaSI third axis, and is expected to mobilise almost EUR 3 billion of overall 
financing, including from the private sector, at the final recipient level. 

6  The  Commission 

this  matter 
(http://ec.europa.eu/regional_policy/sources/thefunds/fin_inst/pdf/efsi_esif_compl_en.pdf)  and  will 
continue to further simplify the overall framework to develop such combinations. 

published 

guidance 

concrete 

already 

has 

on 

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operation should benefit from the EU guarantee, in particular as regards additionality. 
In addition, the scoreboard of indicators will be published once an operation under the 
EU  guarantee  is  signed.  Moreover,  the  proposal  also  includes  an  obligation  for  the 
EIB  and  the  European  Investment  Fund  (EIF)  to  inform  the  final  beneficiaries, 
including SMEs, of the existence of EFSI support. 

Reinforced technical assistance (second pillar): 

Technical  assistance  will  be  delivered  by  the  European  Investment  Advisory  Hub 
closer  to  the  ground  via  agreements  with  relevant  local  players.  More  targeted  and 
tailor-made  technical  assistance  will  also  be  available  for  projects  involving  several 
Member States, for projects that contribute to reaching the objectives of COP21 and 
for  the  combination  of  the  EFSI  with  other  sources  of  Union  funding,  such  as  the 
European  Structural  and  Investment  Funds,  Horizon  2020,  the  Connecting  Europe 
Facility.  The  EFSI  2.0  proposal  also  provides  in  this  context  that  the  Hub  should 
actively contribute to the objective of sectorial and geographical diversification of the 
EFSI,  by  supporting  the  EIB  in  its  efforts  to  originate  new  projects  on  the  ground, 
where needed.  

In  this  context,  the  Commission  will  explore  the  possibility  to  identify  dedicated 
European investment envoys in its Representation offices in the Member States, who 
would  work  with  the  relevant  Commission  services  in  a  single  investment  policy 
team. 

Removing  obstacles  to  investment  and  further  deepen  the  Single  Market  (third 
pillar):  

The  general  business  environment  is  an  important  element  when  it  comes  to 
promoting sustainable investments. Some of the efforts to improve it must be carried 
out at national level; other challenges can usefully be tackled at the European level. 
As  part  of  its  efforts  to  improve  Europe’s  investment  environment,  the  Commission 
has  already  tabled  concrete  initiatives  to  help  support  investment  and  facilitate  the 
financing of the real economy, such as the lowering of capital charges for insurance 
and reinsurance companies as regards infrastructure investments and the adoption of 
practical guidance on the application of State aid rules in the context of public funding 
of infrastructure. In addition, the Energy Union, the Capital Markets Union, the Single 
Market  and  the  Digital  Single  Market  Strategies,  as  well  as  the  Circular  Economy 
package  and  international  trade  and  investment  agreements  all  contain  specific 
measures  that  will  remove  barriers,  promote  innovation  and  further  improve  the 
environment for investment, when fully implemented. For instance, the Energy Union 
will  contribute  to  increasing  ex-ante  certainty  on  public  accounting  for  specific 
sectors,  such  as  energy  efficiency.  Eurostat  has  further  developed  and  clarified  the 
relevant  public  accounting  rules  (ESA  2010),  particularly  in  the  domain  of  public-
private partnerships (PPPs). A guide to the statistical treatment of PPPs, produced in 
cooperation  with  the  EIB  and  mainly  addressed  to  private  stakeholders,  will  be 
released  on  29 September  2016.  This  publication  will  be  followed  by  an  active 
outreach  campaign.  In  addition,  and  as  highlighted  in  the  1  June  Communication, 
Eurostat is closely monitoring the impact of public accounting rules on the creation of 
PPPs in different sectors and will take further action where appropriate.  

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The Capital Markets Union7 will help remove financial barriers to investment. To this 
end, further amendments to Solvency II are being considered in relation to insurers’ 
investments  in  infrastructure  corporates  and  to  the  venture  capital  regulatory 
framework.  The  Commission  will  also,  as  part  of  the  forthcoming  revision  of  the 
banking legislation that will be adopted before the end of the year, propose lowering 
the  capital  charges  that  apply  to  banks  when  they  invest  in  infrastructure  assets. 
Initiatives to further reinforce the Single Market in goods and services are also vital to 
unlocking the full potential of investment in Europe. The Single Market Strategy will 
help  create  new  business  opportunities  and  remove  existing  regulatory  and 
administrative  barriers,  notably  for  service  providers  seeking  to  expand  across 
Europe. Work  is  ongoing  on  concrete  proposals  linked  to  the  enforcement  of  single 
market  rules  as  well  as  measures  in  the  area  of  business  services,  business 
restructuring  and  insolvency  and  the  creation  of  a  simple,  modern  and  fraud-proof 
VAT system. The Digital Single Market Strategy will enhance regulatory certainty in 
the  digital  sector.  The  Commission  is  exploring  the  design  of  a  single  EU 
authorisation  framework  that  would  directly  apply  to  large  projects  with  a  cross-
border dimension or major Investment Platforms that involve national co-financing. 

Member States should step up their efforts to implement the necessary reforms 
aimed at removing obstacles to investment which were identified in the context of the 
European Semester. This concerns areas like insolvency, public procurement, judicial 
systems  and  the  efficiency  of  public  administration  or  sector-specific  regulations. 
These  reforms  identified  in  the  country-specific  recommendations  are  a  necessary 
condition  to  sustain  and  increase  investment  levels  in  Member  States,  taking  into 
account  national  specificities.  The  recommendations  for  reforms  in  the  area  of 
investment will be discussed in the various Council formations in the autumn. Against 
this  background,  and  by  way  of  preparation  of  the  2017  European  Semester,  the 
Commission  will  also  update  the  assessments  on  the  challenges  to  Member  States’ 
investment environments which will be published again alongside the Annual Growth 
Survey. 

II. The European External Investment Plan 

Investment is also a key factor in transforming development policy and assistance in 
order  to  better  support  the  achievement  of  the  Sustainable  Development  Goals,  and 
address  the  multiple  challenges  faced  in  both  the  EU  Neighbourhood  and  Africa. 
Smart  and  sustainable  investment  can  play  an  essential  role  in  boosting  jobs  and 
growth in developing countries, bringing in more stability and improving conditions 
on the ground in fragile countries affected by conflict. 

On  28  June  2016,  the  European  Council  endorsed  the  Commission’s  proposal  for  a 
new  Partnership  Framework  with  third  countries8.  This  Framework  is  based  on  the 
premise  that  tackling  the  migration  challenge  requires  a  joint  effort  fully  embedded 
into the EU’s overall relationship with partner countries and supported by all relevant 

7   See  the  Communication  adopted  today,  ‘Capital  Market  Unions  –  Accelerating  Reform’, 

COM(2016) 601.  

8  EUCO 26/16. 

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EU  policies  and  tools.  In  order  to  address  migration  flows,  compacts  with  partner 
countries are being developed to achieve the short-term objectives of saving lives at 
sea, increasing the rate of returns and enabling migrants and refugees to stay close to 
home. 

A  new  approach  is  needed  to  address  the  factors  that  constitute  the  root  causes  of 
migration, and to support partners to manage its consequences, both in Africa and in 
the  EU  Neighbourhood,  by  financing  investments  and  addressing  barriers  to  private 
investment. In 2015, more than 60 million people left their places of origin in search 
of  a  better  life,  either  because  they  were  seeking  refuge  from  conflicts  and  wars  or 
because  economic  opportunities  at  home  were  limited.  North  African  and  Middle 
Eastern countries hosted about 40% of all displaced people worldwide, Sub-Saharan 
Africa  accounted  for  another  30%.  The  combination  of  high  numbers  of  displaced 
people  and  weak  economic  prospects  is  a  shared  challenge  for  the  Union  and  its 
partner countries.  

The Union’s external policies, and in particular its development and Neighbourhood 
policies,  seek  to  promote  the  Union’s  values  and  interests,  including  through  the 
promotion  of  prosperity.  Economic  growth  is  a  prerequisite  for  sustainable 
development,  but  economic  growth  in  developing  countries  has  now  reached  its 
lowest level since 2003. Instability and conflicts in Africa and the EU Neighbourhood 
have  been  aggravated  by  the  global  economic  crisis,  resulting  in  increased  overall 
indebtedness.  Companies  face  credit  crunches,  reducing  access  to  finance  for  badly 
needed investment. Unsustainable use of natural resources often deprives developing 
countries of potential sources of economic growth. 

As  regards  foreign  direct  investment  (FDI)  going  to  developing  countries,  only  6% 
goes  to  fragile  countries9,  pushing  down  the  investment  per  capita  to  a  level  almost 
five  times  lower  than  in  other  developing  countries.  Similarly,  the  cost  to  start  a 
business is almost three times higher in fragile countries than in non-fragile countries. 
Growth in Africa has slowed to the weakest levels in years, notwithstanding continued 
demographic  growth.  Combined  with  significant  security 
trend 
exacerbates poverty, holds back sustainable development, and results in economic and 
social conditions that are often among the root causes of migration.  

issues, 

this 

A  stronger  focus  on  investment  is  a  key  element  also  of  the  UN’s  2030 Agenda,  its 
Sustainable  Development  Goals  (SDGs)10,  and  the  Addis  Agenda  on  Financing  for 
Development. While official development assistance remains essential for the poorest 
and  fragile  countries  in  their  efforts  to  fight  poverty  and  achieve  sustainable 
development, other means of financing of our partner countries gain much additional 
weight  including  investment,  trade,  domestic  resource  mobilisation  and  good 
governance.  On  the  economic  front,  a  new  approach  attracting  in  particular  private 
sector investment is needed, in  order to generate investment on a scale necessary to 
address economic, social, and environmental challenges. Commitments taken in Addis 
Ababa by the international community11, including the Union and its Member States, 

9 

In  2012,  this  figure  amounted  to  USD  38.7  billion  according  to  the  OECD  (2015)  ‘States  of 
Fragility’ report. 

10  http://www.un.org/sustainabledevelopment/sustainable-development-goals/  

11  Addis Ababa Action Agenda on Financing for Development. 

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aim  to  foster  inclusive  economic  prosperity  to  improve  people’s  wellbeing,  while 
protecting the environment. As part of this process12, promoting affordable and stable 
access to finance is essential.  

This  new  targeted  approach  will  help  support  sustainable  development  in 
partner countries, which in turn will become the growth markets of the future. It will 
also  provide  opportunities  for  private  enterprises  through  trade  and  investment, 
including  from  Europe,  thus  also  supporting  European  Economic  Diplomacy  and 
contributing to European economic growth. It will support the implementation of the 
new Partnership Framework proposed to the partner countries by the EU.  

In order to achieve these goals, which are fully in line with the EU Global Strategy on 
Foreign and Security Policy13 and the revised European Neighbourhood Policy14, the 
Commission is putting forward for the first time an ambitious Plan, initially for 
Africa and the EU Neighbourhood. This will also be an important contribution that 
the  EU  will  present  to  its  partners  at  the  upcoming  UN  General Assembly  in  New 
York,  where  global  responsibility  sharing  for  addressing  the  long-term  trends  in  the 
field of migration will be at the centre of the discussion. 

The External Investment Plan package 

The  EIP  package  adopted  today  by  the  Commission  comprises  the  following 
elements: 

1.  Proposal for a Regulation on the European Fund for Sustainable Development 
(EFSD) and establishing the EFSD Guarantee and the EFSD Guarantee Fund; 

2.  Report from the Commission on the mid-term review of the application of the 
Decision  N°  466/2014/EU  as  regards  the  EU  guarantee  to  the  EIB  against 
losses  under  financing  operations  supporting  investment  projects  outside  the 
Union;  

3.  Commission  proposal  for  a  Decision  of  the  Parliament  and  Council  granting 
an  EU  guarantee  to  the  EIB  against  losses  under  financing  operations 
supporting investment projects outside the Union; 

4.  Report  from  the  Commission  to  the  Parliament  and  to  the  Council  on  2015 

EIB external activity with EU budgetary guarantee; 

5.  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council 
amending Council Regulation N° 480/2009 establishing a Guarantee Fund for 

12  The  process  involves  domestic  resource  mobilisation,  official  development  assistance,  and  the 

mobilisation of investment within regulatory frameworks that set the right incentives. 

13  Available at http://europa.eu/globalstrategy/sites/globalstrategy/files/eugs_review_web.pdf  

14  Joint  Communication  ‘Review  of  the  European  Neighbourhood  Policy’  of  18  November  2015, 

JOIN(2015) 50 final. 

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external actions; 

6.  Draft Commission Decision on the individual measure ‘Creation of the Africa 

Investment Platform’ and repealing Decision C(2015)5210; 

7.  Draft  Commission  Decision  on  the  ‘Neighbourhood  Investment  Platform’, 
amending  the  Commission  Decision  C(2016)3436  on  the  Neighbourhood 
Investment Facility under the European Neighbourhood Instrument; and 

8.  Draft Commission Decision on the individual measure for a contribution to the 
EFSD  Guarantee  Fund  to  be  financed  from  the  11th  European  Development 
Fund. 

The main elements of the European External Investment Plan 

The  EIP  ensures  a  coherent  European  approach  to  investments  outside  the  EU,  by 
combining  existing  instruments  with  three  important  innovative  elements.  First,  it 
combines into one coherent Plan various actions that promote an improved business 
and broader policy environment in partner countries as regards access to finance and 
the  development  of  economically  viable  projects.  Second,  it  creates  a  single  entry 
point for financing requests for investments, thus ensuring efficiency and leverage of 
public financial institutions and the private sector. Third, it addresses, through a new 
guarantee  mechanism,  specific  needs  for  private  investment  in  environments  with 
higher risks.  

The  EIP  is  a  new  approach  to  the  way  the  Union  supports  sustainable 
development  and  identifies,  prepares,  and  delivers  support  for  investment 
projects in countries outside Europe. The Plan offers an integrated framework for a 
partnership  enabling  full  cooperation  between  the  EU,  Member  States,  International 
Financial  Institutions,  other  donors,  public  authorities  and  the  private  sector.  It  will 
improve the way in which scarce public funds are used and the way public authorities 
and  private  investors  cooperate  on  investment  projects.15  It  will  also  support  the 
reforms needed to fight corruption, improve economic governance and local business 
environments, in full cooperation with the partner countries concerned. 

The  Plan  aims  to  boost  investment  and  job  creation  in  Africa  and  the  EU 
Neighbourhood,  crowding-in  financing,  in  particular  from  the  private  sector.  It 
builds on the experience gained with the EFSI and benefits from the expertise of the 
Commission, the EIB, and other institutions with investment facilities for developing 
countries.  

The Plan will work alongside and complement existing international cooperation 
and  development  instruments.  In  particular,  it  will  complement  the  projects 

15  As a further means of contributing to the coordinated European approach to migration called for in 
the 7 June Communication and as a complement to the External Investment Plan, the Commission 
will  examine  the  possibility  of  the  EU  becoming  a  shareholder  of  the  Council  of  Europe 
Development Bank. 

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undertaken  with  partner  countries  under  the  EU  Emergency  Trust  Fund  for Africa16 
and the EU Regional Trust Fund in Response to the Syrian Crisis17 to achieve short-
term objectives of the Partnership Framework. It will do so by strengthening longer-
term  development  strategies  which  provide  real  economic  opportunities  for  local 
people and reintegrated migrants, thereby addressing root causes of migration. In this 
way, the Plan will  constitute  a  crucial tool for the achievement of the SDGs,  and to 
leverage  additional  resources  for  development  in  line  with  the  Addis  Agenda  for 
Action  on  Financing  for  Development.  In  the  EU  Neighbourhood,  it  will  promote 
economic  development  to  progressively  achieve  stabilisation  and  transition  from 
emergency to structural responses. The possibility to gear investments under the Plan 
towards sustainable and renewable energy will also contribute towards implementing 
the COP 21.  

The Plan comprises three key parts in order to deliver on its overarching objective of 
job creation and sustainable growth:  

(i) mobilising investment;  

(ii) stepping up technical assistance; and  

(iii) supporting economic and structural reforms to improve the business and broader 
policy environment.  

These priorities are inspired by the key principles of, and experience gained with, the 
Investment Plan for Europe. Structural and institutional reforms and improvement of 
the  overall  business  environment  are  essential  to  underpin  long-term,  sustainable 
growth. Without this, the impact of investments might be short-lived.  

Effectively  scaling  up  investment  in  partner  countries  requires  specific  analysis 
and tailor-made responses. This is particularly true in partner countries affected by 
fragility,  conflict,  significant  outward  migration  and  weak  public  sector  institutions. 
Specific “investment windows” under the Plan will be established for this purpose.  

1. Mobilising investment 

The Commission proposes to open up investment opportunities in partner countries by 
leveraging  existing  EU  resources  in  a  manner  similar  to  the  Investment  Plan  for 
Europe  and  the  EFSI. At  the  centre  of  the  EIP  lies  the  creation  of  a  new  European 
Fund  for  Sustainable  Development18.  The  EFSD  will  be  composed  of  regional 
investment  platforms,  which  will  combine  financing  from  existing  blending 
facilities19  and  the  EFSD  Guarantee  from  resources  stemming  from  the  EU  budget 

16  C(2015) 7293 final of 20 October 2015. 

17  C(2014) 9615 final of 10 December 2014. 
18  Commission  proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  the 
European Fund for Sustainable Development (EFSD) and establishing the EFSD Guarantee and the 
EFSD Guarantee Fund, COM(2016) 586. 

19  For  Africa,  see  Commission  Decision  (2015)5210  and  for  the  Neighbourhood,  Commission 

Implementing Decision (2016)3436. 

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and  the  11th  European  Development  Fund20.  The  governance  structure  of  the  EFSD 
will ensure close coordination with actions  undertaken  under the proposed extended 
External Lending Mandate of the EIB, including its new Resilience Initiative and the 
ACP Investment Facility.  

The  EFSD  is  expected  to  trigger  additional  public  and  private  investment 
volumes, mobilising total investments of up to EUR 44 billion, based on EUR 3.35 
billion  contribution  from  the  EU  budget  and  the  European  Development  Fund.  In 
order  to  enhance  further  the  firepower  and  the  efficiency  of  the  new  Fund,  the 
Commission  calls  on  the  Member  States  and  other  partners  to  match  these  EU 
contributions. If they match the EU guarantee, with the flexibilities described below, 
the total amount of additional investment could be EUR 62 billion. If they also match 
the contribution to the blending, this amount could reach EUR 88 billion. 

20  Internal Agreement between the Representatives of the Governments of the Member States of the 
European  Union,  meeting  within  the  Council,  on  the  financing  of  European  Union  aid  under  the 
multiannual  financial  framework  for  the  period  2014  to  2020,  in  accordance  with  the  ACP-EU 
Partnership Agreement and on the allocation of financial assistance for the Overseas Countries and 
Territories to which Part Four of the Treaty on the Functioning of the European Union applies (OJ L 
210, 6.8.2013, p. 1). 

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1.1 How will it work?  

Combining the existing and well-established blending facilities with a new, additional 
guarantee  and  putting  them  under  one  coherent  framework,  will  create  a  “one-stop 
shop”  for  public  and  private  investors.  This  will  allow  partners  to  find  swiftly  the 
most  appropriate  products  and  ensure  that  projects  become  realities  that  create  jobs 
and contribute to sustainable development. 

The  two  first  Regional  Investment  Platforms  will  cover  Africa  and  the  EU 
Neighbourhood  (South  and  East),  with  the  possibility  of  expanding  the  coverage  to 
other regions at a later stage. The new Platforms will combine the existing Blending 
Facilities (the Africa Investment Facility and the Neighbourhood Investment Facility), 
with  refocused  objectives  and  new  tasks. The  EFSD  guarantee  will  help  to  enhance 
credit and increase the leverage factor, which will benefit the final beneficiaries and 
projects. The new approach will allow for investment-oriented risk sharing with other 
investors,  and  in  particular  private  actors.  It  will  enable  crowding-in  private 
investment by addressing the key factors that currently prevent it. 

The specific projects will be agreed jointly by all interested parties in a swift process. 
While  the  countries  in  Africa  and  the  EU  Neighbourhood  often  share  common 
challenges,  there  is  a  need  to  take  specific  regional  or  sectorial  conditions  into 
account.  Strong  involvement  and  ownership  of  the  partner  countries  throughout  the 
design and implementation of the projects will thus be critical. Financial institutions 
already active in the relevant regions will be invited to bring their own proposals to 
benefit  from  the  new  guarantee.  The  EIB,  in  addition  to  being  one  of  the  key 
implementing financial institutions, will provide an advisory role to further strengthen 
the  quality  and  impact  of  the  investment  strategy.  Socio-economic  sectors  and  in 
particular 
information  and 
communications technology, environment and social infrastructure will be targeted, as 
well  as  investments  in  human  capital  and  access  to  finance  for  micro-,  small-  and 
medium-sized enterprises, with a particular focus on job creation, including for young 
people and women. 

including  energy,  water, 

infrastructure, 

transport, 

The EU’s strategic partner for investments, the EIB, will support this EU initiative, by 
financing  investments  eligible  under  the  EFSD  and  catalysing  other  sources  of 
finance, in particular from the private sector.  

1.2. Increased impact  

Like  the  EFSI  and  several  financial  instruments  supported  by  the  EU  blending 
facilities since 2007, the new EFSD guarantee will mobilise additional investments, in 
particular from private investors. Investments will target specific regions, countries or 
sectors through the establishment of “investment windows” by the Commission. The 
guarantee  will  be  granted  to  eligible  counterparts  (financial  institutions  or  private 
sector  investors)  by  means  of  guarantee  agreements  implementing  the  investment 
windows.  These  counterparts  will  in  turn  provide  support  (via  loans,  guarantees, 
equity or similar products) to selected portfolios of investment projects and make sure 
that  the  guarantee  coverage  is  passed-on  to  the  final  beneficiaries.  Based  on 
conservative  estimates,  the  Commission  expects  that  every  euro  guaranteed  will 
mobilise a total of more than ten euros of investment. 

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The Commission proposes an innovative scheme whereby the EUR 1.5 billion of 
guarantee  covered  by  the  EU  budget  would  be  backed  by  a  guarantee  fund 
provisioned  with  EUR  750  million21,  to  maximise  the  impact  of  the  new  EFSD 
guarantee  and  reach  a  critical  mass  able  to  deliver  results  in  line  with  the  needs 
identified.  The  impact  of  the  new  EFSD  guarantee  will  be  greatly  enhanced  if 
Member  States  decided  an  additional  contribution  of  at  least  EUR  750  million 
provided  in  the  form  of  a  second  loss  guarantee  that  would  only  be  called  in  the 
unlikely scenario of losses above EUR 1.5 billion. Contributing Member States would 
not bear any contingent liability above the amount of their guarantee. Member States 
will be able to contribute also in cash. Importantly, in the context of the assessment of 
public  finances  under  the  Stability  and  Growth  Pact,  the  Commission  will  take  a 
favourable position towards Member States’ contributions to the Fund, as has been the 
approach  in  the  context  of  the  EFSI.22  In  the  case  of  cash  contributions  by  Member 
States,  these  should  in  principle  qualify  as  one-off  measures;  a  Member  State 
guarantee would not, in principle, impact the public deficit unless called23.  

In  addition,  Member  States  contributing  to  the  enhancement  of  the  EFSD 
guarantee would be allowed to earmark their contribution for a specific purpose. 
This can be done by region or sector. This will help align the objective of maximising 
the impact of the External Investment Plan with the priorities of Member States. 

1.3 Who decides? 

The  Commission  will  be  advised  by  a  Strategic  Board  and  two  Operational  Boards, 
one for each Regional Investment Platform. The Commission will manage the EFSD 
Secretariat,  which  will  ensure  the  performance  of  all  tasks  and  functions  needed  to 
fulfil the objectives of the EIP. The Strategic Board, co-chaired by representatives of 
the Commission and of the High Representative of the Union for Foreign Affairs and 
Security Policy and composed of the Member States and the EIB, will give strategic 
guidance and help the Commission set overall investment goals as regards the use of 
the  EFSD  Guarantee,  ensuring  coordination  and  coherence  between  the  Regional 
Investment  Platforms  and  with  the  External  Lending  Mandate,  the  Resilience 
Initiative and the ACP Investment Facility managed by the EIB. The EIB will actively 
contribute  through  advisory  functions  to  the  Commission  as  regards  the  operational 
management of the guarantee. 

A sound technical assessment and due diligence as well as a swift implementation of 
individual  projects  will  be  ensured. The  bankability  and  risk  of  the  projects  will  be 
assessed by the eligible counterparts and verified by independent experts to ensure the 

21  Stemming  both  from  the  Union’s  budget  and  the  11th  European  Development  Fund.  In  addition, 

there will be a contingent liability of EUR 0.75 billion. 

22  See  the  Commission  Communication  ‘Making  the  best  use  of  the  flexibility  within  the  existing 

rules of the Stability and Growth Pact’ of 13 January 2015, COM (2015) 12.  

23  Cash  contributions  should  in  principle  qualify  as  one-off measures  which  have  no bearing  on  the 
underlying fiscal  position  in  the  assessment  of  the necessary  fiscal  adjustment  under  the  Stability 
and  Growth  Pact.  A  national  guarantee  would,  in  principle,  not  impact  the  public  deficit,  as  it 
requires  no  upfront  cash  disbursement,  nor  impact  the  public  debt  ratio,  unless  the  guarantee  is 
called. In practice, the assessment of how a given guarantee would affect Member State’s deficit or 
debt is to be done by the competent statistical body. 

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credibility  vis-à-vis  the  private sector, before the investment proposals are approved 
by  the  Commission.  The  detailed  practical  modalities  of  how  to  implement  the 
guarantee will be decided for each investment window.  

2. Stepping up technical assistance with partner countries 

investments  requires 

the  development  of  financially-sound, 
Mobilising  more 
attractive  and  mature  projects.  In  the  context  of  the  EIP,  the  Commission  has  made 
significant resources available for technical assistance to help partner countries attract 
investment  by  developing  a  higher  number  of  bankable  projects  and  making  them 
known  to  the  international  investor  community.  The  Commission  will  draw  on  the 
EU’s own experience obtained under the Investment Plan for Europe, in particular as 
regards  developing  the  European  Investment  Advisory  Hub  and  the  European 
Investment Project Portal. 

Technical assistance will focus on better preparing and promoting projects so that they 
attract more investment, through financial envelopes for technical assistance designed 
within  the  EFSD  Regional  Investment  Platforms.  Existing  technical  assistance  in 
partner countries for private sector development through dedicated thematic, national, 
and  regional  EU  programmes  will  be  refocused  to  ensure  that  it  contributes  to  the 
overall objectives of the EIP, and in particular that it attracts sustainable investment. 

The  visibility  and  accessibility  of  EU  financing  opportunities  and  technical  support 
would be provided via a project web-portal. 

In addition, the Commission will pursue a structured dialogue in order to understand 
the needs and constraints of the local private sector and to boost the potential of the 
European private sector to invest in and engage with businesses in partner countries. 
Moreover,  the  Commission  will  also,  in  coordination  with  the  Member  States, 
facilitate and support inclusive public-private policy dialogues in partner countries to 
identify key challenges and opportunities. The Commission will also provide targeted 
capacity building for private sector representatives, including chambers of commerce, 
social  partners,  and  organisations  representing  micro-,  small-  and  medium-sized 
enterprises and female entrepreneurs.  

3. Improving economic governance, the broader policy and business environment 
and engaging with the private sector  

The Plan also aims to improve the business environment in partner countries. It will 
do  so  by  reinforcing  the  economic  and  social  policy  dialogue  between  the  EU  and 
partner  countries  in  order  to  develop  more  effective  legal  frameworks,  policies  and 
institutions  that  promote  economic  stability,  sustainable  investment  and  inclusive 
growth.  Training  through  practical  policy-oriented  courses,  hands-on  workshops, 
twinning  projects,  and  seminars,  will  strengthen  officials’  capacity  to  analyse 
economic  developments,  formulate,  and  implement  effective  policies.  Political  and 
policy  dialogues  with  partner  countries  will  be  strengthened,  in  order  to  support 
sustainable and inclusive growth, respect of human rights, fight against corruption and 
organised  crime,  illicit  financial  flows,  and  improve  trade  relations  of  the  EU’s 

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partners.  Such  dialogues,  conducted  in  close  coordination  with  partner  institutions 
active  in  the  countries,  will  contribute  to  better  regulation  and  development  of 
markets in partner countries, improving employment opportunities and supporting the 
development of the local private sector. 

An improved business environment and investment climate  in partner  countries will 
benefit both the local private sector and EU companies wishing to invest. More jobs 
will be created and the economic links between partner countries and the EU will be 
strengthened for mutual benefit. The EIP therefore complements the Investment Plan 
for Europe. 

As part of its commitment to sustainable development, the EU will make full use of 
existing initiatives under its energy and climate diplomacy agendas. Direct interaction 
with  companies  and  sectorial  associations  will  also  be  sought  to  encourage  more 
private  sector  engagement  and  market-based  solutions  in  sustainable  agriculture  and 
agribusiness, sustainable energy, infrastructure and social sectors. 

III. Next Steps 

The Commission calls on the co-legislators to deal with the proposals as a matter of 
priority,  adopted  today  in  line  with  the  requests  of  the  June  European  Council. The 
European Parliament and the Council are invited to reinforce and extend the EFSI and 
to kick-start the launch of the External Investment Plan through the establishment of 
the  EFSD  which  should  be  operational  as  soon  as  possible,  and  by  the  latest  by  the 
EU-Africa  Summit,  currently  foreseen  for  autumn  2017.  The  Commission  will 
support  the  European  Parliament  and  the  Council  during  the  negotiations  and  will 
continue its dialogue with all relevant stakeholders. 

The Commission will also draw on the experience with the implementation of these 
instruments  in  view  of  the  upcoming  discussions  on  the  new  Multiannual  Financial 
Framework.  

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