1. EU Blending Framework SWITCH to Green Coordination Meeting
27th September 2016, Brussels
Jose Manuel FERNANDEZ
Directorate General for Development and Cooperation

2. The lead financial institution Examples
What is blending
Forms of blending
Some figures
The lead financial institution
Examples
The grants can address market inefficiencies and can make projects with a high economic and social return possible.
The grant element can set incentives, address factors that hold back investment such as risk and send out positive signals to market actors
For each project, find the right financing project mix needed

3. Blending
The use of a limited amount of grants to mobilise financing from partner FI's and private sector to enhance the development impact of investment projects
LEVERAGE
The grants can address market inefficiencies and can make projects with a high economic and social return possible.
The grant element can set incentives, address factors that hold back investment such as risk and send out positive signals to market actors
For each project, find the right financing project mix needed

4. So far, blending takes one of 5 forms
Investment Grant
Interest Rate Subsidy
Technical Assistance Grant
Risk Capital
Guarantees

5. Technical Assistance Business Development Support
Pre-investment Project Analysis
Feasibility
ESIA
Design
Pre-investment project screening
Investment phase services
Project management
Supervision
Auditing, Verification
EMP
Technical Assistance

6. July 2015
Africa Investment Facility (AfIF)

7. Annual grant approvals (in € million)
Blending operations
Annual grant approvals (in € million)
Approx. € 2 billion, supporting more than 230 projects (EUR 43 billion)

8. Blending operations
Grant approvals by type (in %)

9. Blending operations
Grant approvals by sector (in %)

10. Lead Financial Institution
EIBEBRDAFDKFWIDBCEBAECIDCDPAFDBCDBCOFIDESSOFID CAFBIODEGOeEBIFCADBBCIEFMO …
Projects are submitted by lead FI

11. FIRA (Mexico) Technical Assistance & Investment Grant
Project aims to improve climate change adaptation in the agribusiness sector.
The investment grant will contribute to the improvement of the financing offer to promote sustainable practices in agriculture (EUR 4 million).
The TA will assist FIRA to translate existing strategy to mid-term action programmes (EUR 1 million).
The total project cost is estimated at EUR 100 million, of which EUR 5 million from the Latin American Investment Facility (LAIF).
AFD, Inter-American Development Bank.
FIRA
(Mexico)

12. FIRA (Mexico) Technical Assistance & Investment Grant
The investment grant will reduce the cost of financing for projects leading to:
Reduced energy consumption and C02 emissions
Increased use of renewable energy
Reduced water use by introduction of new practices
Better use of pesticides
Better management of toxic waste
Etc
FIRA
(Mexico)

13. Financial Instruments
Risk capital can help address the lack of equity capital in some countries, particularly for new sectors such as renewable energy (e.g. GEEREF fund)
Guarantees are particularly useful in more liquid markets where the perceived risk of certain activities is high among local investors or banks (e.g. SME Guarantee Facility)
Financial
Instruments

14. SME Finance Facility (NIF)
Financial
Instruments
Guarantees
& Technical Assistance
EU grant resources are used to finance a combination of Technical Assistance to local partner financial intermediaries (PFI) and/or credit enhancement support for PFIs (under the form of guarantee) to leverage new on-lending by PFIs to SMEs. Accompanied by EBRD/KfW credit lines to PFIs.
Up to €10 million for guaranteeing up to 50% of individual loans and up to 10% of the loan portfolio risk.
Total project volume: up to €100 million
Grant contribution: €10m (Guarantee) incl. up to €1m (TA)
Involved EFIs: EBRD, KfW
SME Finance Facility (NIF)

15. Guarantees (for SME lending)
PFI
PFI
PFI
PFI
PFI
PFI
PFI
50% guarantee provided to PFIs for their lending to SMEs (and 10% of SME portfolio)
TA for PFIs and SMEs
SME Borrowers

16. Eco.business fund for SME in Latin America
Financial
Instruments
Equity
& Technical Assistance
The eco.business Fund is an investment fund promoting sustainable business practices contributing to biodiversity conservation and the sustainable use of natural resources.
Eco.business’ purpose is to promote the development of green enterprises in developing and transition countries, with an initial focus on highly biodiverse countries such as Peru, Columbia, Ecuador and Central America.
LAIF: € 13 m equity capital and € 3 m TA grant
Eco.business fund for SME in Latin America

17. Eco.business fund for SME in Latin America
Financial
Instruments
(Equity)
& Technical Assistance
The Fund will offer:
Medium to long term senior loans in USD and in local currency.
Subordinated debt.
In particular cases, other instruments like guarantees, term deposits, equity and quasi equity.
The TA Facility will offer:
Capacity building for PFIs to better reach the target group.
Technical assistance for the target group:
Advice mainly to SME on changing to more biodiverse and resource efficient production processes;
Support with the loan request and support to get access to eco.business financing.
Eco.business fund for SME in Latin America

18. & Technical Assistance
Financial
Instruments
(Equity)
& Technical Assistance
Eco.business fund for SME in Latin Anmerica

19. More information

20. Thank you!