Recommendations on the EU external financing instruments - a BusinessEurope position paper

Key messages

• The EU and its Member States remain the world’s largest donor of development assistance. Yet, despite an increased focus on private sector development in EU development policy, many companies are unaware of the opportunities that EU-financed projects could present to them. The EU needs to increase the visibility and communication of its external financing instruments in order that more companies are aware of the opportunities they offer. Amongst other things, an online tool that helps companies find relevant funding instruments for investments in developing countries should be created.
• Tackling infrastructure gaps is of the upmost importance for promoting economic growth and a thriving private sector in developing countries. However, EU development funding for infrastructure has decreased in the past decade and the EU is falling behind other major economies in this area. To counter this trend, the EU’s financing instruments should put more emphasis on sustainable infrastructure, which is key to achieving the Sustainable Development Goals and the green transition, increases the visibility of EU funding, creates decent jobs in partner countries and provides opportunities for European companies.
• In order to make it easier for businesses to get involved in the External Investment Plan, the Commission should co-develop, in cooperation with the pillar assessed International Financing Institutions as well as private sector representatives, a catalogue of guidelines and best practices for its implementing partners on how to engage with the private sector. These guidelines could include e.g. simplified application procedures, maximum periods for answering to applicants, procedures for cooperating with selected companies during the implementation of projects or best practices on communication and outreach activities.
• European companies lead in providing sustainable long-term solutions, but they face increasing pressure from companies from emerging countries, which often benefit from foreign subsidies, tied-aid and bilateral government-to-government deals. To counter this trend and increase the attractiveness of EU companies for partner countries the EU should adopt a much stronger ‘Team Europe approach’ to its entire development policy. This should include more coordination between the Commission’s different Directorates General and European development finance institutions, as well as the creation of a strong development financing institution at EU level that is capable of combining development and export finance and thus matching the performance of Asian and US institutions. Moreover, EU-funded programmes should not be open to entities from countries that do not grant reciprocal access to their external financing instruments to EU operators.