EIC Position on the new external financing instrument NDICI
European international contractors have a long-standing record of delivering infrastructure projects in Africa, but had to progressively reduce their market presence over the past two decades due to the unlevel playing field in the competition with state-owned enterprises from third countries which can approach their African clients with highly attractive financing offers. Against this background, EIC closely follows the negotiations on the EU Regulation establishing the new EU external financing instrument titled ‘Neighbourhood, Development and International Cooperation Instrument’ (NDICI).
By proposing to integrate eleven existing financial instruments into a unified NDICI, which also incorporates a single blending facility, the ‘EFSD+’, and a new External Action Guarantee with a ceiling of €60 billion, the European Commission intends to make its spending on external action more effective. This new approach can be considered as a first step to address the concerns of the High-Level Group of Wise Persons on the European financial architecture for development, which released a report in autumn 2019 pointing at overlaps, gaps and inefficiencies, both sectoral and geographical, especially in terms of presence and experience in Africa, between the various European Development Finance Institutions.
EIC submits its respective proposal to EU policy-makers, bearing in mind also its previous recommendations published in its report on “The Case for an EU-Africa Partnership for Sustainable Infrastructure”:
1. In terms of EU development financing, EIC observes a certain bias towards the energy sector and calls upon the European Union to substantially increase the joint programming for the transport and water/sewage sectors, and to reserve a substantial portion of the ‘EFSD+’ for these projects, to better respond to the sector targets of the National Indicative Programmes of African partner countries.
2. The European Union should focus its Blending activities for transport infrastructure projects on European Development Finance Institutions and restrict respective procurement opportunities to companies from ACP countries and from countries that have effectively implemented the OECD-DAC Recommendation on Untying Official Development Assistance.
3. In addition to collaborating closely with European Development Finance Institutions, the European Union should endeavour to catalyse additional private funding under the ‘EFSD+’ by providing investment grants also for public sector infrastructure projects that are co-financed by European commercial banks and European Export Credit Agencies.
4. The European Union should increase Europe’s institutional competitiveness in financing large-scale infrastructure projects in Africa by establishing an EU financing institution and/or system that can combine European development and export finance, including collaboration with commercial banks and Export Credit Agencies, thus matching the performance of Asian and U.S. financing institutions.
EIC is pleased to share its Position Paper below as well as on our Website.