Study on Engaging the Private Sector in Development and extending the Blending Activities of the EU

The overall objective of this project was to explore concrete possibilities and options for sustainably scaling up of existing blending mechanisms and for enhancing private sector engagement for development as well as developing new approaches to development financing. The study reviewed and reported on the results and achievements of the existing blending mechanisms, provide guidance and recommendations on governance structures and provided guidance on the possibilities of developing risk sharing instruments within blending. Furthermore, proposals and recommendations with regards to possible EU interventions in the area of private sector engagement were made.

The European Commission, with the participation of several EU member states and European development financiers, launched a number of new financing instruments in 2007 for operations outside of the EU aimed at translating these commitments into real action. The instruments are called loan and grant blending facilities (LGBFs), these instruments link EU budget grants, sometimes topped up with member state grants, with loans by European international and bilateral financial institutions.

The main tasks were:

• Review achievements of the existing blending mechanisms. Provide recommendation on how to improve donor/lender coordination governing structures.
• Prepare a report on how the EU can better engage with private sector actors in the area of development cooperation.
• Recommendations on sectoral extension of blending facilities and a private sector window
• Guidance and recommendations on the financing of infrastructure projects and to the promotion of Public-Private Partnerships (PPPs).
• Guidance on the possibilities of developing risk sharing instruments in the context of blending facilities.
• Prepare a report on mainstreaming climate finance into the blending facilities with a special emphasis on NAMAs and potential projects

Type of Services provided:

• Provide recommendations for possible improvements of EU (EC and MS) existing regional investment facilities and other blending initiatives;
• Map and analyse the EU (EC and MS) and non-EU initiatives for promoting development partnership with the private sector and public-private partnerships and provide recommendations for future initiatives;
• Analyse how different types of funders (grant funders, public and private investors) in the EU can be more complementary to each other in catalysing private and public investment that promotes paths of inclusive and sustainable development, while ensuring sovereign debt sustainability and additionally;
• Conduct four ex ante evaluations of the Blending Facilities: Asian Investment Facility (AIF), Investment Facility for Central Asia (IFCA), Latin American Investment Facility (LAIF), and the Neighbourhood Investment Facility (NIF).
• Prepare information packs, guidelines and training modules on how the EU could better engage private sector actors in development, as well as on the existing and possibly expanded blending activities as well as on the implementation of the identified new mechanisms.
• Provide a toolbox with case by case solutions/optimised responses to the challenges of the “Agenda for Change”.

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