external investment plan - european commissionduring the first year of the external investment plan:...

EFSDThe European Fund for Sustainable Development

AIPAfricaInvestment Platform

NIPNeighbourhoodInvestment Platform

Promoting investment in the Neighbourhood and Africa

2017 OPERATIONAL REPORT

EXTERNALINVESTMENT PLAN

This report covers the first year of the operation of the European Fund for Sus-tainable Development (EFSD). As such, it merges into one the reports on blended finance operations under the Africa Investment Platform (AIP, formerly the AfIF) and the European Neighbourhood Platform (NIP, formerly the NIF).

It presents the first results of the EFSD, such as approved blending investments, and the first steps towards implementing the EFSD Guarantee.

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© European Union, 2018

CONTENTSJOINT FOREWORD / INTRODUCTION 4

EIP AND EFSD OBJECTIVES, BLENDING INSTRUMENTS, AND PROGRESS IN 2017

OBJECTIVES 6

INSTRUMENTS 6

PROGRESS IN 2017 8

POLICY CONTEXT

FROM THE AFRICA INVESTMENT FACILITY TO THE AFRICA INVESTMENT PLATFORM 10

FROM THE NEIGHBOURHOOD INVESTMENT FACILITY TO THE NEIGHBOURHOOD INVESTMENT PLATFORM 11

LAUNCH OF THE EFSD GUARANTEE

INVESTMENT AREAS 12

ORGANISATIONAL STRUCTURE 13

EFSD BLENDING IN SUB-SAHARAN AFRICA IN 2017

OVERALL 14

ALLOCATIONS BY SECTOR AND FINANCING TYPE 16

EFSD BLENDING IN THE EU NEIGHBOURHOOD IN 2017

OVERALL 18

ALLOCATIONS BY SECTOR AND FINANCING TYPE 19

ALLOCATIONS BY REGION 20

OVERVIEW OF EFSD PREDECESSOR BLENDING OPERATIONS

AFRICA INVESTMENT FACILITY (AFIF) 22

NEIGHBOURHOOD INVESTMENT FACILITY (NIF) 23

EFSD BLENDING OPERATIONS IN 2017

SUB-SAHARAN AFRICA 24

EU NEIGHBOURHOOD 46

ANNEX 60

ABBREVIATIONS 64

FOREWORD

The Sustainable Development Goals (SDGs) are our common aspiration. To achieve them, we need to mobilise all the different sources of financing available. We realise that public money and grants alone are not enough; we also need to leverage private investment.

In Abidjan in November 2017, the EU held an important summit with the African Union. The Heads of State recognised that creating quality jobs requires stepping up joint efforts to advance economic transformation, an improvement of the investment and business climate as well as unlocking and boosting responsible and sustainable African and European investments.

At the same time, the Eastern Partnership Summit in Brussels welcomed the EU's continued support to the Eastern Partnership through a full and targeted use of the available financial instruments, including efficient mobilisation of significant amounts of investment. It also affirmed that the EU's incentive-based approach will continue to benefit those partners most engaged in reforms.

A paradigm change is required and the External Investment Plan (EIP) is the EU’s contribution to it. The EIP offers a more holistic approach to economic and social development by closely linking economic policy dialogue, technical assistance and investment. To this end, the EIP’s investment arm, the European Fund for Sustainable Development (EFSD), combines the existing blending platforms with a new guarantee. It will cover part of the investment risks, for both private and public investors in projects with high social and development impact, including in the world's least developed countries and in fragile states.

In fact, the Fund is expected to generate eleven times more investment – €44 billion – than the EU's initial €4.1 billion contribution. This money will help improve ports and roads, expand energy supplies and connect energy suppliers and consumers, protect the environment, support entrepreneur farmers and food companies. It will improve quality of life in cities while protecting the nature, and help small businesses, especially young people and women, secure the financing they need to take off the ground and expand. By doing so, the EIP will also help address some of the root causes of migration.

This report outlines EIP major achievements, the Fund's activities in 2017, focusing on blending – the strategic use of a limited amount of EU grants to leverage financing for investment projects.

4EIP / EFSD OPERAT IONAL REPORT 2017

Johannes Hahn &Neven Mimica

During the first year of the External Investment Plan:

‣ The EU contributed €1.3 billion to blended finance operations in Africa and the European Neighbourhood. This will bring in more than €10.6 billion in much-needed investment, funding over 50 projects.

‣ More than 80% of the projects the EU has approved in Sub-Saharan Africa are in least developed countries.

‣ The EU established the Sustainable Business for Africa (SB4A) and the Structural Reform Facility for Eastern Neighbourhood as platforms for structured dialogue on investment climate with the private sector and partner countries.

‣ For the Guarantee, five priority areas for investment were approved. The entities entrusted to manage EU funds were invited to submit proposals for investment that the EFSD Guarantee would cover.

We expect to sign the first guarantee agreements in the second half of 2018, after consulting EU Member States.

This is a significant moment for the EU’s international cooperation. With the EFSD, we can now step up investments in places and sectors that are not attractive for regular investors.

Partner countries and investors stand to benefit from the EIP's three central innovations:

‣ An integrated, three-pillar approach that will help improve the investment climate and business environment in partner countries.

‣ A single entry point and one stop shop for submitting proposals for financing investments.

‣ A flexible new guarantee to mitigate investment risks in difficult environments.

Our success will result in new jobs and opportunities for people in our partner countries, as well as in the EU. With the experience gained, we can expand the use of modern financial instruments in the external chapter of the next EU budget.

5FOREWORD BY HAHN & MIMICA

Johannes HahnCommissioner for Neighbourhood and Enlargement Negotiations

Neven MimicaCommissioner for International Cooperation and Development

EIP / EFSD OPERAT IONAL REPORT 2017 - CHAPTER 1

Objectives

The European Union’s External Investment Plan (EIP) supports investments primarily in the EU Neighbourhood and in Africa. It has three parts:

‣ The European Fund for Sustainable Development (EFSD), which includes a financial guarantee and blending instruments to leverage much more public and private investment in sustainable development.

‣ Technical assistance to enable investors and businesses to develop bankable projects, and support for regulatory improvements.

‣ Improving business environment and investment climate in partner countries, including through regular dialogue with governments, businesses and other stakeholders.

The EIP is guided by the general objectives of the EU’s external action. It contributes to:

The achievement of the SDGs of the United Nations (UN) 2030 Agenda for Sustainable Development (the ‘2030 Agenda’), in particular poverty eradication

The EU’s commitments under the European Neighbourhood Policy

By supporting such investments, the EFSD aims to address some of the socio-economic causes of migration. The EFSD, as part of the EIP, should also contribute to the implementation of the Paris Agreement on Climate Change (the Paris Agreement).

The EFSD should also allow investors and private companies, in particular micro, small

and medium-sized enterprises (MSMEs), to contribute more effectively to sustainable development in partner countries. The EFSD should:

‣ maximise additionality ‣ address market failures and sub-

optimal investment situations ‣ deliver innovative products, and ‣ crowd in private sector financing

The EFSD should also foster:

‣ the creation of decent jobs ‣ economic opportunities and

entrepreneurship ‣ green and inclusive growth that furthers

gender equality and empowers women and young people

‣ the rule of law, good governance, and human rights

‣ equitable access to, and use of, natural resources

Instruments

The EFSD blended finance operations are composed of two regional investment platforms – the Africa Investment Platform (AIP, former AfIF) and the Neighbourhood Investment Platform (NIP, former NIF).

EFSD Budget

EIP AND EFSDOBJECTIVES, BLENDING INSTRUMENTS, AND PROGRESS IN 2017

6

AIP and NIP€2.6 billion

EFSD Guarantee€1.5 billion

Amount expected to be leveraged by 2020€44 billion

7OBJECT IVES , BLENDING INSTRUMENTS AND PROGRESS

What is Blending?

Blending is the use of a limited amount of public grants or non-grant resources to mobilise financing from partner financial institutions, such as international development banks, and the private sector for projects which will do most to help countries develop. Blending projects aim at achieving sustainable growth and reducing poverty. The EU has conducted blended finance operations around the world since 2007.

Blending grant contributions can take different forms to support investment projects:

‣ Investment grants – these finance specific project components or a percentage of the total project cost thus supporting or enabling the investment

‣ Interest rate subsidies – these reduce the cost of the initial investment and overall project by reducing the financing costs

‣ Technical assistance – this ensures that projects meet high standards of quality, efficiency and sustainability, both during project preparation and implementation

‣ Risk capital in the form of equity and quasi-equity – this attracts additional financing by improving the risk/return profile of an investment

‣ Guarantees – these unlock financing by transferring risk to third parties with better capacity to absorb them

Blending helps to:

‣ Do more with less taxpayers’ money, while saving time

‣ Improve project sustainability, development impact, quality, and innovation

‣ Support reforms that partner countries pursue

‣ Improve cooperation between European and non-European donors and financial institutions

‣ Raise the profile of EU development funding

What is the EFSD Guarantee

The innovative EFSD Guarantee will be used to cover the risks for the following instruments:

‣ Loans, including local currency loans ‣ Guarantees ‣ Counter-guarantees ‣ Capital market instruments ‣ Any other form of funding or credit enhancement, insurance, and equity or quasi-equity participations

The EFSD Guarantee would only cover pre-agreed specific risks, up to a defined ceiling. It will be provided to portfolios of investment to balance risks by including both fragile and more stable countries. Its benefits will be passed on to the end beneficiaries.

In 2017, the EU agreed to invest nearly €1.3 billion in 52 blending projects in Africa and the European Neighbourhood under the EIP.

The EU contribution will unlock around €10.6 billion in public and private investment which otherwise may not be possible or would be much smaller.

The main sectors of activity are:

Transport and energy

Environment

Agriculture

Urban development

Improved access to finance for local MSMEs

PROGRESS IN 2017AT A GLANCE

8

Africa Investment Platform Countries

EU Member StatesNeighbourhood Investment Platform Countries

30 projects

€5.6 billion

€900 million

Sub-Saharan Africa

22 projects

€5 billion

€400 million

EU Neighbourhood

EFSD target region

EU contribution

Investment leveraged

Projects 24.1%

€10.6 billion

€44 billion

Investments progress

Currently, the NIP can be implemented only in the following countries: Morocco, Tunisia, Egypt, Jordan, Palestine*, Lebanon, Armenia, Georgia, Azerbaijan, Ukraine, Moldova; for regional projects, also Belarus is eligible.

(*)“This designation shall not be construed as recognition of a State of Palestine and is without prejudice to individual positions of the Member States on this issue.”


9

EU Member StatesAgriculture

Education

Energy

Environment

Private Sector

Social

Transport

Water / Sanitation

9% 6.6%

36.2%

47.9%

Breakdown by sector

0.3%

Infrastructure and urbandevelopment

OBJECT IVES , BLENDING INSTRUMENTS AND PROGRESS

60.3%

€59.8M

€330.2M

€3M

€437.4M

€82.2M

Neighbourhood Investment Platform

Breakdown by sector

3% 3%

12%

17%

29%

8%

7%

21%

€10.2M€13.5M

€49.1M

€66.5M

€113.4M

€30.7M

€27M

€83.6M

Africa Investment Platform

Objectives

As part of a new vision for the EU role in international cooperation and development, the EU and its Member States signed the European Consensus on Development in June 2017. It aligns the Union's development policy with the 2030 Agenda for Sustainable Development and calls for a focus on the economic, social and environmental dimensions of sustainable development. It also underlines the links between development and other policies, including peace and security, humanitarian aid, migration, the environment and climate change.

The Consensus takes a comprehensive approach to implementation, drawing on the framework agreed through the Addis Ababa Action Agenda, combining aid with other resources, sound policies and a strengthened approach to Policy Coherence for Development. It includes a more coordinated approach by the EU and its Member States to development, promoting joint programming and joint actions. It puts emphasis on better-tailored partnerships with a broader range of stakeholders and partner countries.

In countries neighbouring the EU, the European Neighbourhood Instrument (ENI), launched in 2004, supports implementation of EU policy in a wide range of interventions to reduce social, economic and political barriers between the EU and its neighbours.

From the Africa Investment Facility (AfIF) to the Africa Investment Platform (AIP)

Created in August 2015, the AfIF started operating in November of that year in order to support investment in Africa. AfIF is funded mainly from different programmes under the European Development Fund (EDF) but also the EU's Development Cooperation Instrument.

Within the EIP, in 2017 the AfIF evolved into the AIP.

The AIP supports:

Infrastructure, including transport, energy interconnections and renewable energy, and information and communication technologies

Private sector development, including access to finance for households and MSMEs

The environment, including water supply and sanitation, and climate change adaptation and mitigation

Agriculture

Healthcare and education (social infrastructure)

The final beneficiaries of the AIP are the EU’s partners in Africa, their central, regional and local administrations, public and semi-public institutions. Many beneficiaries are households and micro or small businesses.

POLICYCONTEXT

10EIP / EFSD OPERAT IONAL REPORT 2017 - CHAPTER 2

From the Neighbourhood Investment Facility (NIF) to the Neighbourhood Investment Platform (NIF)

The NIF came into operation in 2008 to enable countries in the EU´s Neighbourhood to access loans to finance critical infrastructure, public services and private sector development, in particular SMEs. The NIF is funded under the ENI. With its inclusion into the External Investment Plan in 2017, NIF was re-named into the Neighbourhood Investment Platform (NIP). Member States may contribute to the (smaller) NIP Trust Fund.

The NIF’s Strategic Objectives for 2014-2020 are:

Energy security, connectivity and market integration, including Deep and Comprehensive Free Trade Areas (DCFTAs)

Combatting climate change and environmental threats more broadly, and

Promoting sustainable, inclusive growth by boosting SMEs and by supporting the social sector and municipal infrastructure

Risk-sharing arrangements co-funded by the NIF have been a particularly effective way to involve the private sector, crowding in private investors who would otherwise consider the risks too high.

11POLICY CONTEXT

Investment areas

In September 2017, the European Parliament and the Council adopted Regulation (EU) 2017/1601 establishing the EFSD, the EFSD Guarantee and the EFSD Guarantee Fund.

Defining priority investment areas

In the end of November 2017, the European Commission proposed five investment areas of the EFSD Guarantee (see box below), which were approved by the Strategic Board.

The European Commission invited pillar-assessed eligible counterparts (mainly European development financial institutions) to send Proposed Investment Programmes (PIPs) under the five windows.

Deadlines

For "Sustainable Energy and Connectivity" and "Micro, Small and Medium Sized Enterprises

(MSMEs) Financing", the deadline for submitting PIPs was the end of January 2018.

For "Sustainable Agriculture, Rural Entrepreneurs and Agribusiness", "Sustainable Cities" and "Digital for Development", the PIPs deadline was the end of March 2018.

Presentations at major events

In 2017, the EIP and the EFSD were presented at four major events:

‣ September / New York During the UN General Assembly

‣ November / BrusselsEastern Partnership Summit

‣ November / AbidjanEU-Africa Summit and 6th EU-Africa Business Forum

‣ December / ParisOne Planet Summit

LAUNCH OF THE EFSD GUARANTEE

12

EFSD Guarantee Investment Window Purpose

to attract investments in renewable energy, energy efficiency and sustainable infrastructure.

to improve MSME’s access to finance. Such businesses are the main employers in Africa and the EU Neighbourhood, and offer important and more sustainable alternatives to the informal economy.

to provide better access to finance for smallholders, cooperatives and MSME sized enterprises, agribusiness, allowing to address food security issues.

to mobilise investments in sustainable urban development of municipal infrastructure, including urban mobility, water, sanitation, waste management, renewable energy.

to promote investments in innovative digital solutions for local needs, financial inclusion and decent job creation.


13LAUNCH OF THE EFSD GUARANTEE

Organisational structure

The EFSD Strategic Board supports the Commission by giving strategic guidance and setting the EFSD's overall investment goals, as well as in ensuring an appropriate and diversified geographical and thematic coverage for investment windows.

The Strategic Board

Full members:

‣ The European Commission (chair) ‣ EU Member States ‣ The EIB ‣ The European External Action Service

(EEAS)

Observers:

‣ The European Parliament ‣ Partner countries ‣ Regional stakeholders

On 28 September, the first Strategic Board of the EFSD met in Brussels and discussed rules of procedure, strategic orientations and proposals for concrete areas for investment (investment windows).

The NIP and AIP each have an Operational Board. This is composed of representatives of:

‣ EU Member States ‣ The European Commission ‣ The European External Action Service

(EEAS)

Financial institutions participate as observers.

Blending facilities AIP and NIP€2.6 billion

New EFSD Guarantee€1.5 billion

* Plus a €0.75 billion contingent liabitliy

New Partnership Framework - External Investment Plan

European Fund for Sustainable Development (EFSD)

MS contributions

Other contributions

EFSD GuaranteeValue > €0.75 billion*

BlendingValue > €2.6 billion

Total extra investment through the AIP and NIPat least €44billion

x11

Sub-Saharan AficaNumber of projects supported: 6

The projects targeting Sub-Saharan Africa are global, financed through the 2014–2020 Thematic Programme 'Global Public Goods and Challenges' or target Africa, Caribbean and the Pacific and are financed through 11th EDF Intra-ACP resources for access to finance for enterprises, in particular SMEs. This report singles out the estimated amounts for Sub-Saharan Africa.

One of these projects is the EDFI-AgriFI facility aiming to promote investments in the agricultural sector in low and lower-middle income countries. Another, the Transferability and Convertibility Facility, provides for a dedicated instrument to cover the convertibility and transferability risks attached to utility

scale renewable energy projects. In addition, four "ElectriFI country windows" were approved and financed through the 11th EDF National Indicative Programmes. A fourth project, the Climate Investor One finance facility aims to contribute to each of the respective development, construction, and operational phases of project companies’ lifecycles. The other two are the EURIZ guarantee facility for unserved or underserved MSMEs and the Boost Africa platform composed of an investment facility targeting the venture segment, a technical assistance pool, and an Entrepreneurship Lab.

West AfricaNumber of projects supported: 13

In West Africa the EU contributed to projects mainly in the energy and transport sectors:

EFSD BLENDING IN SUB-SAHARAN AFRICA IN 2017

14

Overall

More than 80% of the projects the EU has approved in Sub-Saharan Africa in 2017 are in least developed countries.

Allocations by sector and financing type

Of total EU funds: ‣ 47.9% went to transport infrastructure ‣ 36.2% to energy ‣ 9% to private sector development ‣ 6.6% to agriculture ‣ 0.3% to urban development

Of the total assistance provided: ‣ 61% was as investment grants ‣ 23% as financial instruments (loans, equity

and guarantees) ‣ 15% as technical assistance ‣ 1% as interest rates subsidies

Allocations by region

30 €900million

€5.6billion

Projects approved

Total EU contribution

Total funding leveraged


‣ In the energy sector, an 880-km electricity interconnector will be constructed linking Nigeria, Niger, Benin, and Burkina Faso, and the Ghana-Côte d’Ivoire Interconnection will be reinforced. In Mali, the 225 kV interconnector linking Manantali and Bamako will be doubled. Network reinforcement projects were financed in Togo and Senegal. In addition, four energy generation projects, including the construction of a hybrid plant in Niger, as well as solar plants in Niger, Côte d’Ivoire and Benin, received financing in 2017.

‣ In the transport sector, projects aiming to upgrade and rehabilitate sections on major corridors such as the Trans Saharan (section in Mali) and the Dakar-Lagos (sections in Guinea and Guinea Bissau and well as in Senegal) corridors have been financed.

‣ One project has been supported in the agricultural sector targeting the Ties Sud region in Senegal.

Central Africa Number of projects supported: 3

One of the projects supported in Central Africa targets the construction of a bridge between Cameroon and Chad. Another concerns the

expansion of the Port Autonome de Pointe Noire (PAPN) in Congo. In addition, the complementary studies for the hydro-power plant Ruzizi IV were financed.

Eastern and Southern Africa and Indian Ocean Number of projects supported: 8

In Eastern and Southern Africa the EU contributed to projects mainly in the energy and transport sectors:

‣ In the transport sector, road rehabilitation and upgrade was supported in Malawi, Zambia and Madagascar. In addition, the rehabilitation and extension of Port Victoria in Seychelles was financed.

‣ In the energy sector, the construction of the Muzizi hydro-power plant and of a transmission line between Malawi and Mozambique were supported.

‣ One project was financed in the agricultural sector promoting access to finance for agriculture enterprises promoting the integration of smallholder farmers into the value chain in Kenya.

‣ Another targeted urban development and Sanitation in the Malagasy capital Antananarivo.

15EFSD BLENDING IN SUB-SAHARAN AFRICA 2017

16

Breakdown by region

Central Africa9%

€79.23M

Eastern and Southern Africa

and Indian Ocean36%

€333.12M

West Africa37%

€337.91M

Sub-Saharan Africa18%

€162.32M

Breakdown by support

Investment grant61%

€557.7M

Technical assistance

15%€133.55M

Interest rate subsidy

1%€8.8M

Financial instruments

23%€212.52M


17EFSD BLENDING IN SUB-SAHARAN AFRICA 2017

Financing long-term investments is a challenge for many governments in the region because a lack of private investors means interest rates are high. Technical expertise to manage projects is often limited, too. The NIP has offered support to investment and investment advisory services for operations funded by European financial institutions and other public and private partners, which were unlikely to materialise without NIP support. NIP-funded TA improves project implementation and builds institutional capacity to manage both infrastructure and investment projects.

Southern Neighbourhood Number of projects supported: 11

Regional programmes

The Southern Neighbourhood’s two regional programmes focused on the private sector in response to the economic downturn since the Arab Spring:

EBRD Small Business Initiative – the Bank extended this to Lebanon and Palestine*, to address structural weaknesses faced by micro and small businesses in the area.

EU Trade and Competitiveness Programme Europe (EIB component) – this will help Egypt and Jordan boost growth and create jobs by targeting support to small businesses.

Allocations by sector and financing type

EFSD BLENDING IN THE EU NEIGHBOURHOOD IN 2017

18

Overall

22 €400million

€5billion

Of total EU funds: ‣ 29% went to private sector financing ‣ 21% to water and sanitation ‣ 17% to protecting the environment ‣ 12% to energy

Of the total assistance provided: ‣ 56% was as investment grants ‣ 22% was as technical assistance ‣ 17% was used as equity ‣ 5% was used as guarantees

Allocations by region

Geographical allocationsEastern Neighbourhood €177 millionSouthern Neighbourhood €220 million

Investment leveraged by NIP compared to AIP is higher due to the higher level of development of the NIP region.

In the end of 2017, Germany and Estonia each pledged €1 million in cash to the NIP Trust Fund, in order to support a broad range of blended finance investments.

Projects approved

Total EU contribution

Additional investment leveraged


19EFSD BLENDING IN THE EU NEIGHBOURHOOD IN 2017

Bilateral programmes

A broad range of other sectors received support on a bilateral basis, including:

‣ Water and sanitation ‣ Energy ‣ Agriculture and the environment ‣ Social and educational programmes

Two examples of projects that showcase the versatility of the NIP instrument are:

Proville 2 in Tunisia – here the EU aims to improve regional equality through public administration reforms and improved housing.

The Université Euro-méditerranéenne de Fès in Morocco – through this project the EU is targeting gaps in the provision of industrial and engineering education and training.

Eastern Neighbourhood Number of projects supported: 11

The EU contributed to projects in sectors crucial for a region that is still recovering from the war in Ukraine, economic recession and domestic challenges

Private sector Three region-wide programmes concentrated primarily on the private sector of the Eastern Partnership, aiming to boost economic competitiveness and reform.

Two of them – the 2nd Phase of the Deep and Comprehensive Free Trade Agreement (DCFTA) Facility with EBRD and the Green for Growth Fund top-up – were continuations of successful already supported initiatives.

TransportAnother key sector supported in the Eastern Neighbourhood was transport, with five projects in three different countries; Armenia, Ukraine and Georgia aim to improve connectivity as well as road safety. These programmes aim to build new highways, improve the road networks and road safety conditions, as set out in the transport agenda of the EU.

The NIP has sought to promote projects that encourage all innovative aspects, be that in terms of energy efficient solutions and renewable energy utilisation, smarter transport networks or financing the private sector, particularly MSMEs, which are often drivers of innovation.

20


0.3%

Technical Assistance22%

€88.3M

Investment Grant56%

€220.7M

Guarantees5%

€20.5M

Equity into funds17%

€65.62M

Breakdown by country

0.3%

Armenia2%€6M Belarus

3%€10.2M

Egypt24%

€93.3M

Georgia5%

€20.8MJordan

8%€30.8M

Moldova10%

€40.75MMorocco

3%€13.5M

Morocco3%

Palestine2%

8.35M

Regional East23%

€92.85M

Regional South8%

€30.8M

Tunisia10%€41M

Ukraine2%

€6.5M


21EFSD BLENDING IN THE EU 'S NE IGHBOURHOOD IN 2017

OVERVIEW OF EFSDPREDECESSOR BLENDING OPERATIONS

22

Neighbourhood Investment Facility (NIF)

Between 2008 and 2016, a grand total of 145 projects received final approval for support of the NIF, the predecessor of NIP. Funding came mainly from the EU budget with €1,678 million, enabling a further investment volume of approximately €15 billion. Additional €84 million came as direct contributions from EU Member States to the NIP Trust Fund managed by the EIB.

The private and energy sectors received the bulk of the support – €438 and €526 million, respectively. This is in line with the NIF/NIP strategic orientations to improve energy security, combat environmental threats, and boost SMEs. Over 50% of the funds were provided in the form of investment grants. A third of the funding was awarded to regional projects, highlighting the EU’s ambition to promote regional solutions, helping with regional integration and cooperation.

Breakdown by country

0.3%

Regional East15%

€247.51M

Armenia7%

€113.69MAzerbaijan

0.01%€3.55MGeorgia

5%€86.52MMoldova

7%€116.78M

Ukraine3%

€42.42MEgypt 19%

€229.28M

Lebanon 0.99%

€14.52M

Jordan 4%

€55.5M

Morocco 14%

€221.35M

Tunisia 7%

€110.16M

Regional South 18%

€289.64M

Breakdown by sector

2008-2016

0.3%

Transport14%

€228.4MSocial5%

€82.1M

Energy33%

€526.5M

Agriculture / Private Sector 1%

€10.4M

Water / Sanitation

15%€237M

Environment3%

€45.8M

Multisector 2%

€27.9M

Private Sector27%

€438.8M

Breakdown by support 2008-2016

0.3%

Investment Grants54%

€858.03M

Guarantees15%

€246.88M

Equity4%

€60.5M

Technical Assistance

27%€435.4M

Germany€34M

France€27M

Austria€3M

Bulgaria€1M

Czech Republic€2M

Estonia€3M

Finland€3M

Greece€1M

Italy€1M

Luxembourg€1M

Poland€3M

Portugal€1M

Romania€1M

Spain€3M

Sweden€1M

Funds provided to the NIF Trust Fund

E IP / EFSD OPERAT IONAL REPORT 2017 - CHAPTER 6

Africa Investment Facility (AfIF) From its launch in November 2015 until the end of 2016, AfIF contributed over €295 million to 16 projects, leveraging a total investment of over €2.3 billion.

AfIF provided both investment grants and TA, 77% and 23%, respectively. A substantial part, over €187 million or 64%, funded projects in the transport sector. Almost 30% of the funds went to five energy projects, totalling over €85 million, followed by the ICT, water and sanitation sectors.

Geographically, two-thirds of the contributions funded projects in West Africa, for almost €225 million. Three projects benefitted from the EU contribution of over €27 million or 9% in Eastern and Southern Africa and Indian Ocean. There was one regional project backed by the EU with €17.9 million in Central Africa, and 9% of the funds were allocated to a cross-regional programme.

Breakdown by sector

2016

Water / Sanitation

1%€3M

Energy29%

€86.5M

ICT6%

€17.9M

Transport64%

€187.7M

Breakdown by region

2016

Central Africa6%

€17.9M


and Indian Ocean9%

€27.6M

Cross-regional9%

€25M

West Africa76%

€224.6M


2016

Investment grant77%

€226.5M

Technical assistance

23%€68.6M

23OVERVIEW OF EFSD PREDECESSOR BLENDING OPERATIONS

West Africa

Modernisation and reinforcement of the network of SENELEC to support the development of renewable energies and the access to energyEnergy - Senegal, West Africa Total cost: €52mEU contribution: €7m Lead Financial Institution: AFD with €45m

The electricity connection rate at the national level in Senegal is 60% and coverage rates differ across the country. Electricity is mainly produced by burning imported petroleum products. The Senegalese authorities have embarked on a policy of diversification of the electricity mix. It is therefore essential for Senegal to have an electricity network capable of absorbing additional capacity and managing the growing share of renewables.

The program aims to reinforce power transport and distribution networks with a view to integrating renewable energy sources and increasing densify of the network in underserved areas. It consists of studies, investments, trainings and project management assistance. The project will be implemented throughout the Senegalese territory.

The program will contribute to improving the competitiveness of the economy by increasing the efficiency and reliability of the transmission and distribution network and reducing the country's electricity production costs and dependence, made possible by an increased

share of renewable energies. It will also contribute to improving the living conditions of the population by providing energy services of a better quality. Thanks to the reduction of the electricity production costs, electricity tariffs can be maintained at a sustainable level for the population and for public finances.

The program includes technical trainings for the employees of the Société nationale d'électricité du Sénégal (SENELEC), the national electricity company. Lastly, the program contributes to the fight against climate change by allowing a larger share of renewable energies in the network.

The EU contribution will finance both the TA and the investments to maximise the impact on energy access to the least served areas.

Rehabilitation of the Trans Gambian Road Sénoba-Ziguinchor (phase 2)Transport - Senegal, West Africa

Total cost: €97.60mEU contribution: €25.60mLead Financial Institution: AfDB with €58mOther investors: EIB with €10m and Government of Senegal with €4m

In its Transport Sector Policy Letter for 2016-2020, the Government of Senegal, aware of the issues and the importance of the transport sector, embarked on a programme to carry out major (backbone) projects that will promote the development and modernisation of transport infrastructure. The main actions undertaken by the Government concern the rehabilitation of

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the asphalted and unpaved network as well as the elimination of critical points on the entire network.

The rehabilitation of sections of the corridors Madrid-Tanger-Nouakchott-Dakar and Dakar-Lagos, including the National Road 4 between Sénoba and Ziguinchor, are in line with this strategy.

The project includes the rehabilitation of 144 km of the National Road 4 between Sénoba and Ziguinchor (including 15 km of paved roads in Bignona and Ziguinchor); the rehabilitation of 177 km of access roads; the construction of a by-pass in Ziguinchor; the construction of control stations in Mpack at the border between Senegal and Guinea Bissau; the rehabilitation of infrastructure related to health and education; as well as urban infrastructure, support for youth, women and vulnerable people.

This road is, by its strategic location, a vital axis for the accessibility of the Casamance region. It can also play an important role in the collection and distribution of agricultural products to major shopping centres. Other expected results of the project are increased traffic flow capacity, improved security conditions and a significant reduction of the travel times towards The Gambia.

The EU contribution will cover transport facilitation measures and activities aimed at inclusiveness.

Agriculture development and food security in the rural areas of the Tiers Sud region in Senegal (Tiers Sud «Beydaare» project)Agriculture - Senegal, West Africa

Total cost: €47.53mEU contribution: €20.53mLead Financial Institution: AFD with €27m

The development of agriculture and agro-industry has been a national priority in Senegal since 2000. Several initiatives to promote the sector have been launched. In addition, the Plan Sénégal Emergent considers agriculture as the third engine of growth for Senegal, after infrastructure and energy.

The Tiers Sud region (areas of Tambacounda, Kédougou and Kolda) suffers from infrastructure deficit and soil degradation, and remains dependent on irregular rainfall. Farmers have recurrent difficulties in marketing their products because of low productivity levels, insufficient processing capacity and difficult transport and storage conditions. The region, together with the eastern part of the country, has the highest malnutrition rates, and it is characterized by strong migration pressure, especially towards Europe. In 2016, the State entrusted the 'Société de Développement Agricole et Industriel du Sénégal' with the responsibility for the rural development of the Tiers Sud region.

The "Beydaare" project aims to boost structured sectors (rice and banana), as well as sectors in the process of being structured (corn and milk) through investments in agricultural and irrigation infrastructure, rural roads and community equipment. In addition, several community-level actions are foreseen to promote household resilience and nutrition.

The project has three main specific objectives. First, it aims to increase the production and commercialisation of products through the rehabilitation of an irrigated area of 1,186 ha in the Anambé basin for rice production; the development of approximately 1,600 ha of lowlands or irrigable land over the whole region for the production of rice, corn or banana, as well as the improvement of nearly 100 km of rural feeder roads. Second, it targets boosting investments through grants to promote sustainable access to resources and the development of agricultural products. Third, it aims to increase the resilience of the most vulnerable families through social safety nets and communities, as well as actions to mitigate maternal and child malnutrition.

The project targets 20 communes identified as being highly food insecure. More than 30,000 people are expected to benefit from the improved agricultural production. The resulting territorial development will concern a population of 470,000 people.

The EU contribution is crucial in targeting banana producers in the Gambia River Valley, as well as developing a bio-fortified flour sector, which requires an industrial approach. The EU will also finance part of the feeder roads and TA.

Construction and asphalting of the road between Boké (Guinea) and Quebo (Guinea-Bissau)Transport - Guinea and Guinea-Bissau, West Africa

Total cost: €114.74mEU contribution: €30.71mLead Financial Institution: AfDB with €82.54mOther investors: Governments of Guinea and Guinea-Bissau with €1.49m

The Dakar-Lagos Trans-African coastal corridor

links a number of economic hubs in West Africa. It also connects these hubs to poorer areas, providing them with vital access to important trade routes.

The project consists of the rehabilitation of degraded links on the Dakar-Lagos coastal corridor between Guinea-Bissau and Guinea (21 km in Guinea-Bissau and 86 km in Guinea) to improve the coastal connection between the two capital cities of Conakry and Bissau, lower transport costs and improve traffic conditions. Transport facilitation measures, institutional support and raising awareness in the project area are also included.

The project is coherent with activities at regional level undertaken by the New Partnership for Africa's Development. Its general objective is to foster trade between the two countries, thus promoting the further integration in the ECOWAS. Long-term benefits of the project will also be in the areas of education, health and the fight against poverty.

The EU contribution will increase the overall concessionality of the financial package and amplify its impacts, financing crucial TA and three multifunctional platforms for women.



Doubling of the 225kV interconnector Manantali - Bamako / OMVSEnergy - Mali, West Africa

Total cost: €352.16mEU contribution: €26.66mLead Financial Institution: AFD with €80mOther investors: WB with €120m, SOGEM with €0.5m, other financiers with €125m

West African countries have some of the lowest electricity access rates and individual consumption levels in the world. They also have significant energy resources, including a potential for hydro-power. In this context, the regional integration of power systems is key. Mali, Mauritania, Senegal and Guinea created the Senegal River Basin Development Authority (OMVS) in 1972 and the Manantali Energy Management Company (SOGEM) in 1997 to operate the 200 MW Manantali hydroelectric plant and the associated transmission lines. OMVS is to date the main sub-regional organisation in terms of installed power and developed network. The energy produced by the Manantali and Felou plants (60 MW since 2014) is also the cheapest in the sub-region at €6/kWh.

In 2015, OMVS initiated Manantali 2, an extensive programme to rehabilitate and strengthen the energy facilities of SOGEM, in expectation of new hydro-power plants, including the 140 MW Gouina plant in Mali. Manantali 2 consists of the rehabilitation of existing infrastructure, the reinforcement of the transmission lines linked to the Manantali hydroelectric plant (Kayes-Tambacounda in Senegal, Kayes-Kiffa in Mauritania, and Manantali-Bamako in Mali), and the improvement of the communication and remote control (SCADA) system of the Felou plant. Manantali 2 will be financed in phases by various financiers including AFD, the World Bank, and other regional development banks.

The doubling of the existing 225kV transmission line interconnecting Manantali to Bamako and the construction of two associated substations is a priority of the Manantali 2 programme as the line is currently saturated and cannot evacuate the energy produced in Gouina. For Mali, which faces a production deficit, high electricity production costs and significant electricity needs, it is crucial to have energy from own resources produced at a lower cost.

The project will secure and increase the transport of electricity to the agglomeration of Bamako, Mali's economic heart, thus improving the quality of electrical service and stimulating economic growth in the country. Moreover, the project will allow increasing the share of renewable energy (hydraulic and solar) in the electricity mix of Mali, with a reduction of CO2 emissions.

The EU contribution will increase the overall concessionality of the financial package and render a transmission tariff that ensures the bankability of the project. TA for SOGEM will also be provided.

Rehabilitation of the Malian section of the Trans Saharan roadTransport - Mali, West Africa

Total cost: € 542.72m EU contribution: €70.96mLead Financial Institution: AfDB with €155.76mOther investors: Government of Mali with €5m and other financiers with €311m

Mali has a vast territory; significant distances separate its regional economic centres. The development of transport infrastructure is therefore key for developing trade, reducing production costs, strengthening competitiveness and reaching the rural or remote areas where poverty is concentrated. This concerns especially the north of the country and particularly the regions of Gao and Kidal, which are also affected by security threats and trafficking of goods.

The rehabilitation of the road connecting Sévaré, Douentza, Gao, Bourem, Kidal and the Algerian border will foster the economic and social development of these regions by opening them up to southern Mali and to Algeria. The road should also result in safer movements of people and goods.

The road is part of the "Trans-Saharan" project and the road network development plan of the West African Economic and Monetary Union (UEMOA).

The project is also cited as one of the Government's priorities in the Agreement on Peace and Reconciliation in Mali resulting from the Algiers process, signed in Bamako in June 2015.

The project responds to the priorities of Mali's National Indicative Programme 2014-2020 (11th EDF), which provided for the development of the Bourem-Kidal axis as part of the transport concentration sector. The project will

contribute to the strengthening of economic integration and regional cooperation between member countries of the Trans-Saharan Road Liaison Committee through the promotion of commercial exchanges between Arab Maghreb countries and Sub-Saharan countries (Mali, Chad, Niger and Nigeria) and the opening up of the hinterland countries. Specifically, the Road Development Program aims to reduce transport costs and times, improve road safety and to improve transit in the agglomerations of Gao, Bourem, Kidal, Abeibara, and Boureissa.

The EU contribution will co-finance, alongside AfDB resources, the rehabilitation of two sections: 233 km between Hombori and Gao, and 286 km between Bourem and Kidal, for a total of 519 km.

WAPP 330 kV Ghana-Côte d’Ivoire Interconnection Reinforcement ProjectEnergy - Ghana and Côte d’Ivoire, West Africa

Total cost: €181.30mEU contribution: €30.70mLead Financial Institution: KfW with €49.7mOther investors: EIB with €81.2m, Government of Ghana with €8.4m and Government of Côte d’Ivoire with €11.3m

As a contribution to the integration of the national power markets in the ECOWAS region, a high voltage transmission line is to be constructed between Ghana and Côte d’Ivoire, as a regional priority project of the West African Power Pool (WAPP).

The 296 km 330 kV transmission line, with two conductor systems and a capacity of 700 MW, will connect the substations Dunkwa II in Ghana and Akoupé-Zeudji in Côte d’Ivoire. It includes two new substations and grid reinforcement of existing transmission lines in both countries, to allow the evacuation of power to the national grids.



The projects aims to overcome a gap in the West African "coastal backbone" power grid, to facilitate electricity trading far beyond the national borders and to improve the prerequisites for capital expenditure and generation capacity (primarily renewable energy and efficient thermal power plants). This transmission line will provide an electricity supply to the power users in the regions more reliably and at lower cost.

The EU contribution will be dedicated to the Ghanaian transmission line, grid reinforcement components and substations. TA will also be provided.

Sustainable Energy for Côte d’Ivoire: 30 MWp Solar Power Plant in the context of the WAPPEnergy - Côte d’Ivoire, West Africa

Total cost: €42mEU contribution: €10mLead Financial Institution: KfW with €28mOther investors: Government of Côte d’Ivoire with €4m

Due to a robust economic growth, Côte d’Ivoire is confronted with a high energy demand. Moreover, the Government intends to further strengthen the country’s role in the ECOWAS and as an electricity exporter in the context of the West African Power Pool (WAPP).

Energy security and reliability are therefore high priorities for the Ivorian Government. The Government has set the ambitious goal of increasing the national production of electricity from current 1,924 MW to 4,000 MW in 2020. Furthermore, it has pledged in the context of COP21 to increase the share of renewable energy in the energy mix from current 0.1% to 16% in 2030. Up until now, however, the necessary institutional and technical capacities within key institutions have been low.

The project consists of the construction of a solar power plant with a capacity of 30 MWp connected to the existing 90 kV power line in the Northern Region. As one of the first publicly implemented renewable energy projects in Côte d’Ivoire, the construction of the plant will be an example for the further development of renewable energy in the country and the entire WAPP region. Accompanying technical measures will support institutional capacity building within the Ministry of Energy as well as the Société des Energies de Côte d’Ivoire and other relevant institutions to ensure sustainability.

In the long run, the project will support access to energy through increased generation capacity in the North and thus contribute to poverty alleviation and sustainable economic growth in the country. Some 35,000 households and up to 175,000 individual beneficiaries could benefit from the installation of the solar power plant. The additional energy supply does not only benefit the population but also the private sector and social institutions, such as hospitals and schools that are dependent on reliable and cheap energy.

Accompanying technical measures will support institutional capacity building within key institutions in the energy sector to strengthen effective oversight and implementation of further renewable energy projects in Côte d’Ivoire. This in turn will support the long-term strategy of reaching a share of 16% renewable energies in the Ivoirian energy portfolio until 2030. Finally, solar energy also contributes to reducing greenhouse gas emissions, supporting the international community’s endeavour to combat climate change and adapt to its effects.

The EU contribution will simultaneously support the implementation of the desired capacity of 30 MWp (or potentially more) while also limiting the indebtedness of the Ivoirian State. The EU grant will also support capacity building within key institutions.

Extension and rehabilitation of CEET’s electricity network in the Greater Lomé areaEnergy - Togo, West Africa

Total cost: €87mEU contribution: €8m Lead Financial Institution: AFD with €30mOther investors: KfW with €10m, WB with €32m and PASET with €7m

The production mix and electricity purchases of the Compagnie Energie Electrique du Togo (CEET) are insufficient to meet the growing demand, and Togo remains dependent on neighbouring countries for the provision of electricity. In addition, the electricity access rate is low.

The project for the extension and rehabilitation of the electricity network in the Greater Lomé area consists of both the rehabilitation of the existing network and the extension of the network to peripheral areas through 1,800 km of low voltage connections.

The project is part of the Support Program for the Energy Sector in Togo - Phase 1 (PASET 1), financed through the 2014-2020 National Indicative Programme (11th EDF), which aims to promote improved access to modern and sustainable energy services and to contribute to the improvement of the institutional framework to facilitate future investments. The project will be implemented in parallel with a complementary World Bank project.

The electrification of the peripheral area of Lomé will ensure reliable access to electricity for at least 40,000 households. The provision of a modern energy source will have a significant effect on the local economy. In addition, the reconstruction of the network will promote better operations and improve the quality of the service provided. The project will also contribute to improving the performances of

the CEET by reducing technical and commercial losses. The EU contribution will finance network extension investments, thus broadening the scope of the project including all the peripheral districts identified through the feasibility study.

North Core / Interconnector 330 kV Nigeria, Niger, Benin, Burkina FasoEnergy - Burkina Faso, Benin, Niger and Nigeria, West Africa

Total cost: €634.68mEU contribution: €30.68mLead Financial Institution: AFD with €40m and AfDB with €213mOther investors: WB with €145m, SONABEL with €20m and other financiers with €186m

West African countries have significant energy resources, unequally distributed over the territory. The integration of their electricity systems allows for the distribution of the energy produced to all the countries in the region.

Among the priority projects of the WAPP, the North Core consists of the construction of a 880 km-long, 330 kV transmission line connecting Birnin Kébi (Nigeria) to Malanville (Benin), Niamey (Niger) and Ouagadougou (Burkina Faso), including substations.

The objective is to evacuate the energy produced in Nigeria to its neighbouring countries, which suffer from large production deficits and are unable to meet rising energy demand without increasing imports.

The project also includes a rural electrification component targeting localities in a 10-km wide corridor along the interconnector, benefitting around 540,000 people. The EU contribution will mainly finance this rural electrification component.



DEFISSOL project: Construction of a 25 MWp solar power plant and modernisation of the information system of SBEEEnergy - Benin, West Africa

Total cost: €60.85mEU contribution: €10.35mLead Financial Institution: AFD with €50mOther investors: Government of Benin with €0.5m

Benin is highly dependent on the countries of the sub-region and faces difficulties in meeting the increasing demand for power. The national electricity operator, the Société Beninoise d'Energie Electrique (SBEE), suffers from a lack of investment in its networks and shortcomings in its information system.

The Government's strategy, included in the Plan de Redressement durable du sous-secteur de l’Electricité (PRSE), aims to ensure a steady, secure and sustainable electricity supply at a lower cost by strengthening the local production capacity and diversifying the production sources, including through solar energy. The improvement of the performances of SBEE is also a priority objective of the PRSE.

The DEFISSOL project aims to increase Benin's production capacities through the installation of a 25 MWp solar photovoltaic power plant on the Onigbolo site, connected to the grid. It also aims to modernize the SBEE's information system to improve its performance.

Benin is at an early stage of diversifying its energy mix with renewable energy. DEFISSOL is a pilot project that will promote the acquisition of skills, both by the Ministry of Energy and the SBEE, the project owner and future operator of the plant.

With a very competitive production cost, the

Onigbolo power plant will reduce the energy production costs in Benin and the country's dependence on oil products. At the local level, the socio-economic benefits in terms of job creation will be significant. In terms of environmental impact, the project will reduce greenhouse emissions by 23,000 tonnes of CO2-equivalent per year over 25 years. The modernisation of the information system of the SBEE will improve the management and the financial sustainability of the company.

The EU contribution will finance, alongside the loan provided by the AFD, both investment costs and TA with the aim of reducing the energy price though a higher concessional element in the financial package.

Construction of a hybrid power plant in Agadez (Niger)Energy - Niger, West Africa

Total cost: €34.02mEU contribution: €16.42mLead Financial Institution: AFD with €16mOther investors: Government of Niger with €1.6m

Niger has a very low rate of electrification, particularly in rural areas, and a high dependence on Nigeria. Due to insufficient electricity transmission infrastructure, locations in the north of the country can only be electrified through mini-grids currently running on diesel or coal, as it is the case for the cities of Agadez and Arlit.

The Government's strategy aims to ensure a steady, secure and sustainable supply at a lower cost, notably by strengthening local production capacities and diversifying production sources, particularly through renewable energies. Solar energy is one of the Government's priorities.

The project consists of the construction of a hybrid power plant in Agadez. It aims to improve and secure the electricity supply of the city at a lower cost, thus contributing to the economic and social development of a strategic area which currently also represents a centre for the transit and settlement of migrants.

The plant will also enhance the country's significant renewable energy potential by providing a sustainable and modular solution, leading to a reduction in greenhouse gas emissions.

At the local level, the socio-economic benefits, in terms of jobs in particular, will be significant. The main environmental impact of this project is the reduction of greenhouse gas emissions estimated at 23,800 tonnes of CO2-equivalent per year over 25 years, for an estimated total of around 600,000 tonnes.

The EU contribution will co-finance, alongside AFD resources, all the components of the project, thus improving the overall concessionality of the financial package and allowing keeping in check the cost of electricity.

Construction of a solar power plant in Gorou Banda (Niger)Energy - Niger, West Africa

Total cost: €30.30mEU contribution: €5.30mLead Financial Institution: AFD with €23.5m Other investors: Government of Niger with €1.5m

The project consists of the construction of a 20 MWp solar photovoltaic power plant on the Gorou Banda plateau, in the suburbs of Niamey. The power plant will be connected to the national grid at the new 80 MWp thermal power plant of Gorou Banda. The project also includes a TA component aimed at training the engineers and technicians of the Société Nigérienne d'Electricité in photovoltaic technologies to enable them to operate large solar power plants in the short term.

The project aims to improve and secure rapidly the electricity supply of the Niamey region at a lower cost, thus contributing to Niger's economic and social development. It will enhance the country's significant renewable energy potential by providing a sustainable and modular solution leading to limiting greenhouse gas emissions. The power plant represents a pilot project which will allow launching similar projects in the country.

The project is expected to benefit over 17,000 people and to reduce emissions by 23,200 tonnes of CO2-equivalent per year over 25 years.

The EU contribution will cover activities related to both the construction of the power plant and the TA.



Central Africa

Construction of a bridge on the Logone river between Yagoua (Cameroon) and Bongor (Chad) and ancillary works Transport - Cameroun and Chad, Central Africa

Total cost: €105.13mEU contribution: €40.95mLead Financial Institution: AfDB with €25.55m and ADF with €27.47mOther investors: Government of Cameroon with €6.39m and Government of Chad with €4.77m

Chad and Cameroon share a long border, maintain excellent relations, and trade mostly by land. They have identified strategic axes of socio-economic development and projects to be implemented jointly as part of the sub-regional integration process; the development of transport infrastructure is a priority and major projects are being initiated in this area.

The project includes the construction of a bridge over the Logone River between Bongor in Chad and Yagoua in Cameroon, the construction of a connecting road of approximately 14,180 km on both sides between Yagoua and Bongor, as well as related developments (protection of the banks of the river, weighing post, border post, etc.).

The project is the first phase of the wider Regional Project Integrating the Road Network in the Lake Chad Area, which aims to rehabilitate the National Road 2 (Magada-Yagoua) and the National Road 1 (Moutourwa-Maroua), including the bypass of Maroua, and to provide for the maintenance of the road from N'djamena to Bongor.

The project will improve transport conditions and reduce travel time and costs. The crossing

of the river at all times and its safety will be ensured. This will increase the movement of persons and goods between Cameroon and Chad, foster trade and strengthen socio-cultural exchanges between the two countries. More broadly, the project will contribute to regional integration in the fragile lake Chad region. In addition, economic activities are expected to develop along the bridge and road.

The EU contribution will co-finance the bridge and associated socio-economic development.

Port of Pointe Noire (PAPN) extension and upgrading program Energy - Benin, West Africa

Total cost: €198.98mEU contribution: €29.98mLead Financial Institution: AFD with €70mOther investors: Government of Congo with €99m

PAPN is Congo's only maritime outlet, which plays paramount role in the economic development of the country. For several years it has sought not only to best serve the internal market, but also to position itself as a natural gateway to the central region of Africa, which would allow it to serve an estimated hinterland of 50 to 130 million inhabitants in the medium and long term.

The project consists of the improvement of the port's infrastructure for the transport of goods, the construction of a fishing port, accompanying measures for a sustainable exploitation of fisheries, environmental measures, and activities for the improvement of the port's procedures, reducing the time and cost of passage for economic operators.

The project aims to enable the PAPN to

to the increase in traffic by improving its infrastructure and competitiveness, to ensure environmental management in accordance with international standards, to provide Congo with efficient industrial and artisanal fishing infrastructure and to support the implementation of a sustainable management of the country's fisheries resources, essential for the population.

The infrastructure component of the project will be mainly financed by PAPN own resources and a loan from the AFD. The EU contribution will finance the improvements of the fishing port, the accompanying measures for a sustainable fisheries' exploitation, environmental measures and activities for the improvement of the port's procedures.

Complementary studies for the hydro-power plant Ruzizi IVEnergy - Burundi, Democratic Republic of Congo and Rwanda, Central Africa

Total cost: €9.30mEU contribution: €8.30mLead Financial Institution: AfDB with €0.25mOther investors: Government of Burundi, Democratic Republic of Congo and Rwanda with €0.2m and other financiers with €0.55m

Burundi, Democratic Republic of Congo and Rwanda, members of the Economic Community of the Great Lakes Countries (ECGLC), face the consequences of repetitive socio-political conflicts that characterized the sub-region between 1993 and 2000, followed by an economic recovery.

During the conflict period and the years that followed, investment in infrastructure and particularly in energy were insufficient to meet the growing demand. Currently, the need for electricity is pressing and new energy resources need to be developed.

Energie des grands lacs is a tripartite energy cooperation institution of the ECGLC which has, amongst others, a mandate to develop the hydroelectric potential of the Ruzizi River, estimated at around 500 MW. Two plants are currently being operated on Ruzizi (Ruzizi I, constructed in 1959, with an installed capacity of 29.8 MW, and Ruzizi II, commissioned in 1989, with a current installed capacity of 36 MW). A third power plant, Ruzizi III, with a planned capacity of 147 MW, is under development through a public private partnership scheme.

The Ruzizi IV plant, with a capacity of 287 MW, will fully exploit the hydroelectric potential of the river. The project will further reduce the energy deficit, facilitate access to electricity at an affordable cost and contribute to the improvement of the economic and social development framework in the three ECGLC members.

The complementary studies for Ruzizi IV plant will include additional feasibility and detailed design necessary for the construction of the hydro-power plant, which was the subject of a prefeasibility study in 2008-2009. The activities will be undertaken in three phases. The first phase consists of a feasibility study, detailed preliminary design, and preparation of tender documents. A second phase will consist of the study of the institutional framework and bankability of the project. The third phase will support the implementation of the project.




Kenya Agriculture Value Chain FacilityAgriculture - Kenya, Eastern and Southern Africa and Indian Ocean

Total cost: €110mEU contribution: €10mLead Financial Institution: EIB with €50mOther investors: private financiers with €50m

The agriculture sector in Africa faces specific risks such as volatility of the commodity prices and lost production due to weather conditions. Commercial banks tend to be relatively risk averse when it comes to longer term agricultural finance in Africa. As a consequence, high risk premia charged often result in non-affordable interest rates for the private sector. Banks themselves also lack suitable long-term funding for offering longer-term agriculture finance. Moreover, financing in hard currency is in general not the preferred solution for borrowers active in the local market.

The Kenya Agriculture Value Chain Facility consists of a €50 million credit line extended by the EIB to commercial banks in Kenya with the overarching objective to facilitate access to finance for agriculture enterprises promoting integration of smallholder farmers into the value chain. It will enable banks to offer accessible funding in local currency. TA for capacity building will enhance appraisal, monitoring and evaluation of long-term loans to agriculture value chain projects. Projects eligible under the Facility will have to prove their impact on smallholder integration in the value chain.

The main counterparts are commercial banks with exposure to agriculture and agriculture value chain projects and willingness to increase financing for the private sector actors undertaking investment in their value chain.

Smallholder farmers or their associations will benefit indirectly as value chain investments materialise and bring about opportunities for smallholders to enter into business relationships with the private sector.

The Facility will complement and benefit from activities under the wider action programme funded by the EU Kenya (AgriFI) support to productive, adapted and market integrated smallholder agriculture. Kenya AgriFI, financed through the 2014-2020 National Indicative Programme (11th EDF) builds on the 10th EDF Kenya Rural Development programme and the market integration of the Standards and Market Access Programme which have shown that limited access to finance, training and market integration of the smallholder farmers are the main obstacles for moving out of subsistence farming.

Construction of Muzizi Hydro Power ProjectEnergy - Uganda, Eastern and Southern Africa and Indian Ocean

Total cost: €123.30mEU contribution: €20.50mLead Financial Institution: KfW with €45mOther investors: AFD with €45m and Government of Uganda with €12.8m

Energy demand in Uganda is rising due to a steady economic growth and expanding grid connections to private households, commercial and industrial consumers. New generation capacity needs to be added urgently to the grid over the next decade. Uganda is endowed with a significant potential for hydropower generation which can represent a cost-efficient and environmentally friendly alternative to thermal power both in Uganda and in Eastern Africa.

The project consists of the construction of the 45 MW Muzizi hydropower plant in western Uganda with the aim to improve the electricity supply to the growing economy and the households. Muzizi will be developed as a run-of-the-river plant with additional peaking capacity to provide electricity also during daily peak demand. The project includes construction, environmental and social mitigation measures, as well as expert services to support the implementation and monitoring of the project.

The population not connected to the grid as part of the project will benefit indirectly since public institutions such as schools and health centres will be able to provide improved services. The project will also strengthen the Eastern African Power Pool.

The hydropower plant will produce 250 GWh per year from renewable sources. It will help to reduce CO2 emissions and Uganda’s reliance on fuel wood for energy, which leads to massive deforestation. Furthermore, the construction of the plant will create approximately 250-300 jobs.

The EU funding will contribute to a timely completion of works and help reduce pressure for increasing tariffs due to currency devaluation, and will therefore contribute affordability of energy for all consumers, in particular low income households.

Great North Road Upgrade ProjectTransport - Zambia, Eastern and Southern Africa and Indian Ocean

Total cost: €435.85mEU contribution: €73.66m in addition to €1.64m EDF contribution to the feasibility study and detailed designLead Financial Institution: EIB with €114.43m Other investors: AfDB with €227.10m, Government of Zambia with €18.72m and EIB-managed Cotonou Subsidy Envelope with €0.30m

The Great North Road is one of the six international trunk roads in Zambia, connecting the centrally located and landlocked country with neighbouring Tanzania and Zimbabwe. The road carries significant international cargo and bulk commodities. The upgrade of the road is a key national and regional priority, as confirmed by the Zambian Government and the three regional economic communities, the COMESA, the EAC and the SADC.

The project consists of the rehabilitation, widening, and marginal alignment of about 372 km of the road from Mpika to Nakonde in North-Eastern Zambia at the border with Tanzania. It also includes the rehabilitation of about 50 km of feeder roads and complementary initiatives in the project area, as well as TA. Initial project preparation was undertaken by the three regional communities with EU funds from the 10th EDF.

The project is part of the joint Tripartite Aid for Trade initiative which aims to improve the regional transport infrastructure with a view to supporting economic and social development programs along road corridors.

The project aims at fostering regional integration by expanding intra-Africa trade and strengthening growth, reducing the time



and cost of transport along the corridor. This is in line with the joint Africa-EU strategy aiming at boosting sustainable and inclusive development and growth and continental integration. Furthermore, the project intends to contribute to transforming Zambia from a land-locked to a land-linked country. The project will help diversify the economy and unlock the country’s economic potential, and thus make growth more resilient and inclusive, in line with the overall targets of the Seventh National Development Plan and the National Long Term Vision 2030. Moreover, thanks to the project, the road will be more resilient to climate change and safer for road users and local communities living in the vicinity.

The EU contribution will co-finance, alongside the EIB loan, civil works and services relating to the upgrade of the road from Mpika to Chinsali. It will also improve the level of concessionality of the blending package.

Malawi M1 Road RehabilitationTransport - Malawi, Eastern and Southern Africa and Indian Ocean

Total budget: €163.16mEU contribution: €44.16mLead Financial Institution: EIB with €40mOther investors: WB with €59m and Government of Malawi with €20m

The M1 road is an important link in the North South Corridor network of COMESA. It is the backbone of the Malawi road network. The road facilitates regional trade with Mozambique in the South and further beyond to the countries of the SADC. Malawi is a landlocked country, and roads remain the most accessible mode of transport for both freight and passenger traffic. They provide long distance transportation of import goods from and to Dar es Salaam. Through Malawi, the M1 offers the shortest import/export route to Dar es Salaam for Zambia’s agriculturally important Eastern Province.

The M1 road links the major cities in Malawi and carries significant local traffic, servicing key district administrative and trading centres. The economic development of the country depends on a reliable and safe M1 corridor for trade, food security and essential services such as healthcare.

The project is therefore of high priority for the Government as part of the Malawi Growth and Development Strategy. The need for rehabilitation and improvement arises from increased levels of traffic, high presence of pedestrian and bicycle traffic and because the overall condition of the road pavement is either nearing or has reached the end of its serviceable life.

Rehabilitation and improvement of the almost 1,145 km will be undertaken in phases. The project covers the first phase and it aims to rehabilitate 215 km of priority sections of the road, which are in poor or very poor condition.

The main outcomes will be increased mobility and safety, savings in vehicles operating costs and travel time, reduced road accidents, access to trade and economic activities, and improved access to health, education facilities and other essential services.

The rehabilitation of the M1 road is also important for the EU efforts to improve rural roads to allow smallholder farmers access wider markets. This will strengthen food security and links to agro-processors, which in turn contributes to sustainable agriculture and income growth among the predominantly poor rural population.

The EU contribution will co-finance, alongside the EIB loan, civil works and thus increase the concessionality of the financial package.

Mozambique-Malawi InterconnectorEnergy - Mozambique and Malawi, Eastern and Southern Africa and Indian Ocean

Total cost: €88.35mEU contribution: €20.40mLead Financial Institution: KfW with €20mOther investors: WB IDA with €47.95m

Malawi is suffering from a serious electricity deficit. The electricity supply cannot meet the estimated demand and a load-shedding program is ongoing. By contrast, the Tete province of Mozambique is considered as the potential “power house” of the Southern Africa Power Pool (SAPP) because of its vast generation resources. In 2013, the governments of Mozambique and Malawi signed a power interconnection agreement that provides for the construction of an interconnector in two phases to be implemented subsequently.

The Mozambique-Malawi Interconnector represents the first phase and it comprises the construction of a 218 km-long high voltage transmission line between Matambo (in the Tete Province in Mozambique) and Phombeya (in the Balaka District in Malawi) which will connect the electricity grids of Malawi and the Mozambique. The interconnector could be extended in a second phase, thereby connecting the northern and the central grid of Mozambique via Malawi.

By way of the interconnector, Malawi (member of the SAPP) will be connected to the SAPP grid for the first time and will be in the position to trade power with Mozambique, and other SAPP countries in the medium to long term.

The project aims to contribute to the integration of the regional electricity market in the SAPP region so that the electricity deficits and surpluses in the SAPP countries can be balanced through power trading on the network.

Malawi will import power from Mozambique and provide consumers with reliable access to electricity supply.

The EU contribution will finance a share of the investment costs on the Malawian side.

Port Victoria Rehabilitation and ExtensionTransport - Republic of Seychelles, Eastern and Southern Africa and Indian Ocean

Total cost: €36.90mEU contribution: €5.40m Lead Financial Institution: EIB with €15mOther investors: AFD with €16.50m

Seychelles is classified as a high-income country since 2015. Despite this, the Government has agreed in 2014 with the IMF an Extended Fund Facility aimed at reducing high debt levels whereby it agrees annually with the IMF on which projects will be in the debt ceiling. Thus, the country's additional debt capacity is limited. Seychelles is also highly exposed to most of the vulnerabilities inherent to Small Islands Development States and heavily dependent on imports of oil, food and raw materials.

The port of Victoria is the only significantly sized port serving Seychelles and is situated in the capital Mahé, where 90% of the population lives and where most of the tourist facilities are. It is therefore critical to the economic life of the country, particularly given its dependence on imports. The port is in urgent need of quay reconstructions and capacity expansion. It was built in 1970 to handle light commerce and its operations have grown significantly afterwards.

The project consists of the rehabilitation and expansion of one facility within the port known as the Commercial Port. Works will include the construction of a new quay offset from the existing quay, demolition as necessary



existing quay, extension of the port yard area and dredging to accommodate the current generation of shipping. The project will be implemented by the Seychelles Port Authority.

By increasing the port's capacity and efficiency, the expansion is expected to have a substantial impact on the port's competitiveness. The project will align the port with sustainable transport objectives, reducing gas emissions and increasing safety and security of the port’s facilities. The project will also pave the way for future private sector involvement, by providing an adequate and efficient infrastructure. At the national level, this initiative will impact the Seychelles’ economy supporting the diversification of its activities, employment creation and sustainable growth.

The EU contribution will finance part of the civil works and engineering services to contribute to rehabilitation and extension works of the port.

Madagascar Road Network ModernisationTransport - Madagascar, Eastern and Southern Africa and Indian Ocean

Total cost: €236.54mEU contribution: €116m in addition to €0.99m EDF contribution to the feasibility study and detailed designLead Financial Institution: EIB with €114.73mOther investors: Government of Madagascar with €4.82m

The lack and obsolescence of basic infrastructure is a major impediment to the development of Madagascar. The political crisis between 2009 and 2013 contributed to this situation. At the end of 2013, only 10% of the entire road network was in good condition.

The project consists of the upgrade of two sections of national roads, namely the

National Road 6 in the North from the port of Antsiranana (Diego Suarez) to Ambanja and the National Road 13 in the South from the port of Taolagnaro (Fort Dauphin) to Ambovombe. The main outputs of the project will be the upgrade of approximately 348 km of national roads, time and vehicle operating cost savings, reduction in casualties and increased access to infrastructure for users. The feasibility studies and the designs were financed by the EU.

The proposed upgraded roads will improve transport connections in the northern and southern parts of the country, in particular to the ports, which will help to improve the business environment and hence economic development. Modernisation of the network will raise the mobility of people and support the transportation of goods, thereby unlocking growth potential in the areas and ultimately raising living standards.

The project complements two important 11th EDF projects in rural development (AFAFI-Nord and AFAFI-South) which aim at developing agricultural value chains. In addition, the EU is funding through the 11th EDF an institutional support programme on the road and transport sector aiming to ensure the sustainability of the sector and thus the project after its conclusion. There is therefore the potential for the project to leverage policy reforms and reinforce the EU policy dialogue in the road sector.

The EU contribution will mainly cover road upgrading works and services for construction supervision, thus increasing the concessionality of the financial package.

Urban development and sanitation in priority neighbourhoods of Antananarivo - Phase III ("Lalankely III")Infrastructure and urban development - Madagascar, Eastern and Southern Africa and Indian Ocean

Total cost: €26.37mEU contribution: €3mLead Financial Institution: AFD with €19mOther investors: Government of Madagascar with €4.37m

With about 2.5 million inhabitants, the Antananarivo agglomeration has been experiencing one of the fastest population growth in Africa. Almost all new urban dwellers are poor, and as neighbourhoods become denser, living and health conditions deteriorate due to a chronic lack of infrastructure. There is just one fire hydrant for 6,000 inhabitants in the outlying areas of the capital, and in the rainy season some neighbourhoods become inaccessible. The improvement of the living spaces through the construction of alleyways and staircases is a rapid operational response in line with the historical heritage of the city.

The Lalankely III project ("lalankely" means "alley" in Malagasy) is the third phase of a programme, of which the first two phases have been implemented since 2012 in 20 districts in the agglomeration, benefitting 600,000 inhabitants. Lalankely III is expected to improve the living conditions of 950,000 inhabitants of 220 neighbourhoods in 26 districts.

The project will target the construction of paved lanes equipped with drains for the evacuation of rainwater and used water, roadways to connect neighbourhoods to the rest of the agglomeration, sewerage and sanitary facilities, public lightening, and public and sports facilities. A community management component aims to ensure routine maintenance

of the equipment, while an institutional support component will strengthen all the project's stakeholders, especially the municipalities.

The EU contribution will finance the project management component, essential for the implementation of the project, and the community management components aimed at improving the sustainability of the infrastructure.

ElectriFI country windowsEnergy - Benin, Côte d’Ivoire, Nigeria, West Africa, and Zambia, Eastern and Southern Africa and Indian Ocean

Total cost: €285mEU contribution: €85mLead Financial Institution: FMO Other investors: EDFIs, IFIs and other private financiers with €200m

The Electrification Financing Initiative (ElectriFI) elaborated by the industry and development financiers, is a flexible tool for enabling access to modern, affordable and sustainable energy services and/or improving access to safe, reliable, affordable and sustainable energy. It benefits populations living principally in rural, underserved areas as well as areas affected by unreliable power supply.

A major barrier to investment in this sector is the lack of seed, mid- and long-term capital matching business cycles. In immature market conditions, this is aggravated by the reluctance of commercial banks to provide suitable lending conditions that respond to the needs of investors and by the existing capacity limitations in terms of structuring and bringing projects to financial close.

A support scheme that bridges the gap is therefore necessary to stimulate the private sector, mobilise financiers, including the local



banking sector, and have a catalytic impact on economic growth. ElectriFI can play this role and make support available to get investments to successful implementation and scaling u

external investment plan - european commissionduring the first year of the external investment plan:...

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