Making policies work

Leveraging private finance

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Development challenges require substantial amounts of finance that scarce public resources alone will not be able to provide. In line with the 2030 Agenda and its Sustainable Development Goals (SDGs), both governments and multilateral institutions are looking increasingly at opportunities to use aid and public finance in a ‘smarter way’. To do so, they strategically use development banks and finance institutions to leverage private investments by mitigating risk and providing appropriate incentives towards potential investors.

By blending public and private resources, the overall available amount of funding can be significantly increased to have greater development impact, while potentially allowing to take more risk and promoting investments in countries and regions, where private investors and companies alone would not go. In this regard the role of development banks, as well as development and international finance institutions (DFIs and IFIs), is crucial. They can not only improve the amount and quality of projects and the capacity of local partners but also build a pipeline of projects (e.g. in agriculture or energy). This, in turn, can help attracting investments by philanthropic, institutional and other private investors.

Using technical assistance and policy dialogue in combination with a variety of financial instruments further helps to shift from pure grant funding towards blended finance, to promote sustainable investments that are both financially viable and have a high development impact:

ECDPM has been and will be supporting such efforts by brokering knowledge, providing policy analysis, and facilitating dialogue among relevant stakeholders and policy-makers. This is our contribution to enhance the overall financial instruments’ and actors’ complementarity, effectiveness, transparency and coherence as well as point to challenges and opportunities in their implementation.

Would you like to know more about our work on policy coherence or share your thoughts? Get in touch with San BilalSebastian Große-Puppendahl or Karim Karaki. For media enquiries, please contact Virginia Mucchi.


Publications


The European External Investment Plan: Challenges and next steps for a game changer (Briefing Note 102)
San Bilal and Sebastian Große-Puppendahl, Briefing Note 102, March 2018.

What is the European External Investment Plan really about? (Briefing Note 101)
Sebastian Große-Puppendahl and San Bilal, Briefing Note 101, March 2018.

EU financing and private investments: Time for a quantum leap
San Bilal, ECDPM blog, 5 February 2018.

The EU’s financial instruments for access to energy in sub-Saharan Africa (Discussion Paper 218)
Sebastian Große-Puppendahl, San Bilal and Karim Karaki, Discussion Paper 218, November 2017.

Can Africa and Europe jointly walk the talk on investment mobilisation?
San Bilal, ECDPM blog, 27 November 2017.

Au delà des discours : l’Afrique et l’Europe vont-elles mobiliser ensemble les investissements pour le développement ? [in French]
San Bilal, ECDPM blog, 27 November 2017.

The European External Investment Plan and sustainable development – don’t reinvent the wheel, just realign it
Karim Karaki, Bruce Byiers and Sebastian Große-Puppendahl, ECDPM blog, 3 March 2017.

Investment promotion for sustainable development: The roles of DFIs and export credit agencies (Discussion Paper 208)
Sebastian Große-Puppendahl, Karim Karaki and San Bilal, Discussion Paper 208, December 2016.

Blending 2.0: Towards new (European External) Investment Plans (Discussion Paper 207)
San Bilal and Sebastian Große-Puppendahl, Discussion Paper 207, December 2016.

The European External Investment Plan: more than old wine in a new bottle
San Bilal, Column in Euractiv, 16 September 2016.

The EIB’s innovative role in ACP countries under the Cotonou Agreement: Options beyond 2020 (Discussion Paper 196)
San Bilal and Sebastian Große-Puppendahl, Discussion Paper 196, July 2016.

Beyond aid in private sector engagement (Discussion Paper 187)
Sebastian Große-Puppendahl, Bruce Byiers and San Bilal, Discussion Paper 187, May 2016.