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The future of EU blended finance and guarantees: An assessment of cooperation strategies with least developed countries in Africa

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  • Lundsgaarde, Erik
Abstract
The European Fund for Sustainable Development Plus (EFSD+) is a core element of EU development cooperation and reflects the EU's strong commitment to deploying blended finance and guarantees as development financing tools. This discussion paper examines the EU's intentions concerning how the EFSD+ will be integrated into geographic programmes, focussing on the least developed countries (LDCs) in Africa. Based on a review of the Multiannual Indicative Programmes (MIPs) for 30 African LDCs as well as the regional MIP for Sub-Saharan Africa covering the period 2021-2027, the paper provides an overview of funding reserved for EFSD+ implementation in geographic programmes, identifies the expected EFSD+ sectoral priorities and summarises references to development finance institutions (DFIs) as EFSD+ implementation partners. This descriptive review highlights issues for the future monitoring and assessment of the EFSD+. The paper points to uncertainty about the magnitude of the management challenge that EU institutions face in EFSD+ implementation given the difficulties of predicting the scale of guarantee-backed operations in individual countries, the lack of information on the expected volume of blended finance operations, and the limited analysis of how EFSD+ tools relate to other EU funding approaches. The paper also notes that EU institutions should be more explicit about the criteria shaping EFSD+ resource commitments to clarify relevant prerequisites for the effective deployment of EFSD+ tools. Finally, the broad thematic scope for EFSD+ use implies that knowledge about how blended finance and guarantees function and how the financing approaches interact with other interventions needs to increase throughout the EU system.

Suggested Citation

  • Lundsgaarde, Erik, 2023. "The future of EU blended finance and guarantees: An assessment of cooperation strategies with least developed countries in Africa," IDOS Discussion Papers 2/2023, German Institute of Development and Sustainability (IDOS).
  • Handle: RePEc:zbw:diedps:22023
    DOI: 10.23661/idp2.2023
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    References listed on IDEAS

    as
    1. Ole Winckler Andersen & Henrik Hansen & John Rand, 2021. "Evaluating financial and development additionality in blended finance operations," OECD Development Co-operation Working Papers 91, OECD Publishing.
    2. Lundsgaarde, Erik, 2017. "The European Fund for Sustainable Development: changing the game?," IDOS Discussion Papers 29/2017, German Institute of Development and Sustainability (IDOS).
    3. Küblböck, Karin & Grohs, Hannes, 2019. "Blended finance and its potential for development cooperation," Briefing Papers 21, Austrian Foundation for Development Research (ÖFSE).
    4. Weronika Garbacz & David Vilalta & Lasse Moller, 2021. "The role of guarantees in blended finance," OECD Development Co-operation Working Papers 97, OECD Publishing.
    5. Gail Hurley & Tancrède Voituriez, 2016. "Financing the SDGs in the Least Developed Countries (LDCs): Diversifying the Financing Tool-box and Managing Vulnerability," Working Papers hal-02567989, HAL.
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    Cited by:

    1. Farahdina Al Anshori & Roy Valiant Salomo & Retno Kusumastuti, 2023. "Understanding Blended Finance: How different definitions of blended finance result in different inputs and outputs and what to expect," Technium Social Sciences Journal, Technium Science, vol. 44(1), pages 15-27, June.

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    More about this item

    Keywords

    Africa; European development policy; development financing;
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