Assessing the performance of the FEMIP trust fund

THE BACKGROUND

The Facility for Euro-Mediterranean Investment and Partnership (FEMIP) brings together a range of instruments used by the European Investment Bank (EIB) in support of economic development in the Southern Neighbourhood countries. The FEMIP Trust Fund (FTF) is a vehicle that complements the EIB’s activities in the Mediterranean region.

Whilst substantial investment is required in the EU’s Southern Neighbourhood countries, there is not always sufficient local capacity to prepare and implement operations, and investors are often unwilling or unable to finance preparation or provide seed capital to develop major investment projects. The FTF aims to address these gaps by directing resources to operations in priority sectors, which can be enhanced through the provision of technical assistance or made financially viable via risk capital. The FTF may also use dedicated envelopes to target support to priority areas.

In this context, two special envelopes have been developed within the Fund. The CAMENA (Climate Action in the Middle East and North Africa) envelope was created in 2014 to support projects combatting the causes and effects of climate change, and the Gaza Envelope was created in 2018 to enhance the impact of the FTF’s activities in the Gaza strip.

THE PROJECT

The FTF has supported projects in four priority sectors:

• Access to finance for SMEs and mid-caps.
• Infrastructure financing, including projects in transport, energy, and water sectors.
• Environment, including support to projects combatting the causes and effects of climate change through the dedicated CAMENA envelope (Climate Action in the Middle East and North Africa).
• Research, development, and innovation.

Instruments used under the FTF included:

• Risk capital operations: Targeted private equity operations, including seed capital (for example investments in fund structures, microfinance institutions).
• Tailored technical assistance throughout the project cycle, for example, upstream sector studies and master plans; feasibility studies; support for public authority project implementation units…
• Capacity building.

THE RESULTS

The team assessed whether the FTF has been successful in providing evidence on the trust fund’s performance and its capacity to support EIB operations in partner countries. The team provided an overview of the activities and achievements of the FTF since its creation. It also reviewed the performance of the FTF against its original objectives and plans and similar instruments. Finally, the team drew lessons learned and formulated recommendations to EIB and EU member states to improve the performance of the Fund in terms of enhancing the EIB’s role in the Eastern Partnership countries and contributing to the EIB’s lending in the region.