Sommaire: Africa: EU Commission and EIB launch Trust Fund to finance infrastructure (9 February 2006: Brussels)
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The European Commissioner for Development and Humanitarian Aid, Louis Michel and the President of the European Investment Bank, Philippe Maystadt, signed today a Memorandum of Understanding for the creation of a Trust Fund in support of infrastructure in Africa. The Trust Fund is a financial instrument of the EU-Africa Partnership on Infrastructure, one of the pillars of the new EU Strategy for Africa proposed by the Commission and approved by the European Council in December 2005. In the start-up phase (2006-2007) the Commission intends to mobilise up to € 60 million in grants and the EIB up to € 260 million in loans for the operation of the Fund. Participation in the Trust Fund is open to EU Member States, their Development agencies and financial institutions.
Infrastructure is key element for sustainable development, economic growth and poverty reduction, in line with the Millennium Development Goals. There can be no stable growth without a strong network of infrastructure for transport, energy, water and Information and Communication Technologies (ICT). Launching this new initiative for Development in Africa, Commissioner Michel said: "This is an innovative tool that can really make the difference and support a long awaited African request. No single donor can face the enormous challenge of financing the basic infrastructure of the Continent. Therefore we must joint our efforts, everyone from his competence. I invite all Member States to channel a substantial amount within their recent commitments to increase aid into this ambitious project."
The Trust Fund addresses the strong African demand for infrastructure to boost trade and growth. Its priorities for intervention are trans-African networks for transport, energy, water, and ICT. "Ownership" by its beneficiaries is a key principle of this initiative and, therefore, African partners and institutions are associated closely to the process.
It is estimated that current investment in infrastructure in Africa needs to be doubled with an initial increase of € 8 billion per year until 2010, rising to € 16 billion for the following five years. Making available these large amounts will require not only an increase of the Official Development Aid grant money, but also the effective application of lending strategies by development financial institutions and mobilisation of private capital.
In October 2005, the Commission's Communication on the new EU Strategy for Africa identified limited access to transport, communication, water, sanitation and energy services as major constraints to economic growth. To improve that situation, the Commission proposed an EU-Africa Partnership on Infrastructure to improve inter-connectivity, to facilitate regional integration and to promote "South-South trade".
The selection of projects will be done in consideration with the priorities listed by the African Union and the New Partnership for Africa's Development (NEPAD).
The Trust Fund will be a European initiative that will attract EU Member States funds and increase the visibility of the European Union in a key sector of the new development agenda. Its management will be based on coordination, coherence and complementarities with other donors in the field, bringing a strong EU voice with a common vision and strategy. This convergence is indeed at the heart of the Development Policy Statement agreed last December by the European Commission, the Council and the Parliament.
The partnership of the European Commission and EU Members States as grant donors, on the one hand, and the EIB and financial development institutions, on the other, will allow the leveraging of funds -preliminary studies point out a factor of four to five times- that will result in substantial increase of finance devoted to infrastructure. That blending of grants and loans will be in a form of interest rate subsidies, risk guarantees or other suitable instruments. The Trust Fund will also allow for project preparation, capacity building activities and co-financing of projects that may receive financial support in the form of grants.