External Investment Plan aims to boost investment in Africa and the EU

The European Union's External Investment Plan is gearing up to encourage investment in partner countries in Africa and the EU, with the aim of leveraging over 44 billion Euros in investments by 2020. The plan, which was approved by the European Parliament in July and finalized on 27th September, has seen significant progress in recent months, as outlined by Robert Ridolfi, Director General of Sustainable Growth and Development at the European Commission. In a recent interview with CNBC Africa, Ridolfi provided an update on the plan's development and key milestones achieved. Ridolfi detailed that following the approval of the EU regulation, strategic meetings were held to outline the plan's direction, which culminated in the approval of five investment windows. These investment windows will focus on key sectors including renewable energy and climate change, micro, small and medium enterprises, agriculture, sustainable cities, and digital. The plan aims to facilitate investments in these sectors through financial products that provide guarantees to financial institutions, enabling them to leverage additional funds for investment. One of the key aspects of the plan is the guarantee mechanism, where the EU provides a cushion of funds to encourage financial institutions to invest in projects. Ridolfi explained that the EU's low-risk capacity allows for the leveraging of significant amounts of private capital, thereby boosting investments in various sectors. By providing guarantees and equity funding, the plan aims to support businesses and startups in sectors such as agriculture, agribusiness, digital, and energy. While the plan appears straightforward in its approach, Ridolfi acknowledged that challenges exist in seeing the plan through to fruition. He highlighted the three pillars of the plan, which include financial aspects, technical assistance for project preparation, and policy reforms to create a conducive environment for investments. These pillars work in tandem to ensure the success of the plan and address issues such as red tape, bureaucracy, and capacity building within administrations. In terms of engagement with African governments, Ridolfi noted varying reactions from different countries. Some governments have expressed concerns about consultation processes, to which Ridolfi clarified that the plan serves as a tool for enabling investments in partner countries, without dictating specific sectors or projects. The decision-making authority lies with the governments and private investors, with the EU acting as a facilitator and providing necessary support. Ridolfi emphasized the importance of targeting technology and digital projects within the plan, recognizing their role as enablers for other sectors. While these projects may not create as many jobs as traditional industries like agriculture, they play a crucial role in enhancing productivity and efficiency in various sectors. Additionally, the plan focuses on transforming agricultural products and adding value along the supply chain, ultimately contributing to job creation and economic growth. Looking ahead, Ridolfi projected that the first guaranteed investment deal under the plan could be signed as early as April or May, with tangible investments in sectors such as agriculture, renewable energy, sustainable cities, and digital expected to follow. The EU's External Investment Plan aims to bridge the investment gap in partner countries, drive sustainable development, and foster economic growth for the benefit of both Africa and the EU.