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The EU’s Financial Architecture for External Investment: Progress, Challenges, and Options

Author

Listed:
  • Mikaela Gavas

    (Center for Global Development)

  • Hannah Timmis

    (Center for Global Development)

Abstract

In 2017, the EU launched an ambitious programme of investment mobilisation in Africa and the Neighbourhood: the External Investment Plan (EIP). The EIP aims to increase the scale, impact, and coherence of EU-supported external investment by introducing various innovations to the European financial architecture, including a new guarantee mechanism and a unique “three-pillar” approach to investment support. The European Commission is proposing a significant expansion of the EIP under the EU’s new long-term budget, the Multiannual Financial Framework 2021–27, replacing the current plethora of investment tools and modalities with a single framework. This paper provides a comprehensive overview of the evolution of the EU’s complex external investment architecture. Based on interviews with stakeholders, it documents lessons learned during the EIP’s first year of implementation and proposes a series of options for the design and operationalisation of the new investment framework. To increase the additionality, development effectiveness, and efficiency of EU-supported external investment, it recommends that the European Commission improve the current architecture by providing greater policy steer to investors; increasing competition among institutions for investment support; clarifying linkages between the three pillars; setting clear guidance, fee structures, and standardised contractual terms; and strengthening management of investment tools.

Suggested Citation

  • Mikaela Gavas & Hannah Timmis, 2019. "The EU’s Financial Architecture for External Investment: Progress, Challenges, and Options," Policy Papers 136, Center for Global Development.
    • Handle: RePEc:cgd:ppaper:136
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