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Discussion Papers (series)

Blending 2.0: Towards new (European External) Investment Plans

Discussion Paper 207

December 2016

Bilal, S., Große-Puppendahl, S. 2016. Blending 2.0: Towards new (European External) Investment Plans. (Discussion Paper 207). Maastricht: ECDPM.

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The UN 2030 Agenda for Sustainable Development places new emphasis on the need to mobilise financial resources to achieve the 17 universal sustainable development goals (SDGs). The ambition is to ‘move from billions to trillions’, mobilising much higher resources in the pursuit of sustainable development (MDBs, 2015). Contrary to the Millennium Development Goals (MDGs), aid is no longer at the centre of a transformative development agenda. Blending Official Development Assistance (ODA) with other sources of finance is one of the forms taken to stimulate and leverage private investments and finance for sustainable development.

It is because of its high ambitions that the EIP has been heralded “a new chapter in EU development cooperation”, or more simply, blending 2.0. Living up to the expectation will be the exciting challenge.

Key messages

  • Blending ODA with other sources of finance is one of the forms taken to stimulate and leverage private investments and finance for sustainable development. It is by no means a magic bullet, and should be used with great caution, so as to prevent unwarranted subsidy to private sector and market distortion, and waste of scarce ODA.
  • So far, blending efforts and approaches have been rather fragmented and different among key stakeholders. Despite similar rationales for blended finance, the principles,
    modalities and practices (not to mention definition) do vary among European financing institutions, and MDBs/DFIs.
  • To enhance the coherence and effectiveness of its external investment support for sustainable development, in line with the SDGs, the EU is establishing the External Investment Plan (EIP): a ‘onestop-shop’, to promote sustainable private investments with a view to also tackling some of the root causes of migration in Africa and the EU Neighbourhood.
  • To live up to its ambitions, a number of challenges need to be overcome, related to the EIP’s focus, design and politics, and synergy with other initiatives. It will notably require: to better monitor sustainability outcomes; to maximise effective additionality and leveraging; and stimulate development reform dynamics.

Read Discussion Paper 207

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Photo: Madagascar has lost a generation of children with declining school attendance and no state investment in education. Credits: EU/ECHO Malini Morzaria, via Flickr.

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