The European Commission asked EU Member States on Tuesday (8 June) for additional budget of €3.6 billion for African countries with the ultimate goal to tackle the refugee crisis. If the money is granted, it will be matched with another €3.6 billion from the EU budget, which was provided by national governments earlier. Most of the budget will be used as risk guarantees to boost private investment in the businesses in developing countries. On top of the new funding from national governments, financial institutions such as the European Investment Bank, will be also involved in the new scheme.
The idea reflects the basis of the Juncker Investment Plan, which designated €21 billion as risk guarantees to unlock investment in Europe. The EU executive believes that the €6.2 billion budget could leverage up to €62 billion of investment in many Middle Eastern and African countries such as Lebanon, Jordan, Niger, Senegal, Nigeria, Mali, Ethiopia, Tunisia and Libya. However, the intended 10x ratio is less than 15x ratio in the Juncker Plan, which was believed to bring investment worth up to €315 billion over the next three years.
Commission First Vice-President Frans Timmermans commented that the EU “needs to do more to improve opportunities in countries of origin so people do not feel compelled to leave. We need to reconsider our traditional models of development cooperation and give a much greater role to private investors”. Mr Timmermans added that the EU would shortly propose a new external investment fund to encourage private investment in developing countries. “For this, we will mobilize €3.1 billion which will trigger €31 billion. It could even reach €62 billion euros if Member States and other partners match the EU’s contributions,” he added.