Advising on a financing model for the blue economy in west Africa

THE BACKGROUND

Blending is an instrument for achieving EU external policy objectives, complementary to other aid modalities, and pursuing the relevant regional, national and overarching policy priorities. Blending is the combination of EU contributions (often grants) with loans or equity from public and private financiers. Sometimes blending takes the form of financial instruments: support that is repayable but provided on concessional terms. By strategically combining EU contributions with public and private financing, blending helps unlock investments in EU partner countries.

When the EU aims to bring in additional public and private finance to complement EU funding for investments, it does so mainly through budgetary guarantees and blending. The idea behind blending is that the EU grant or concessional financial instrument can be used in a strategic way to attract additional financing for important investments in EU partner countries. The EU’s key partners in blending are International Financial Institutions (IFIs) and Member States Development Finance Institutions (DFIs)

THE PROJECT

FINANCE FOR IMPACT assessed the performance of blending instruments over the period 2015-2021 in EU NEAR regions, including:

• Investment grants aiming at reducing the initial investment and overall project cost.
• Technical assistance ensuring the quality, efficiency and sustainability of the project.
• Risk capital (i.e. equity & quasi-equity) aiming at strengthening the capital base of investments funds that attract additional financing and invest, in turn, in enterprises in partner countries
• Guarantees, which unlock financing for development by reducing risk. These guarantees can be funded as well as unfunded, but – in blending – the EU does not assume contingent liabilities.

The evaluation focused on two facilities:

• The Neighbourhood Investment Platform (NIP), a mechanism aimed at mobilizing additional funding to finance capital-intensive infrastructure projects in EU partner countries covered by the European Neighbourhood Policy in sectors such as transport, energy, environment and social development.
• The Western Balkans Investment Framework (WBIF), a blending platform for the region that gathers Western Balkans partners, Bilateral Donors and International Financial Institutions (IFIs) in support of country growth and convergence.

THE RESULTS

The evaluation team provided an assessment in both qualitative and quantitative terms on the relevance, conditions of implementation and performance of blending as an aid modality. The team assessed the efficiency, effectiveness, sustainability, impact and added value of the two facilities, NIP and WBIF. Emphasis was made on experience from the implementation of blending operations and the EU added value.

The results of the evaluation fed the ground for (i) the operationalization of the EFSD+ in the coming years; (ii) defining greater synergy effects with the EU's political and reform objectives; (iii) strengthening overall programming, monitoring, reporting and implementation of EU financial assistance.