1. EU Investment Facility for Central Asia – IFCA
WECOOP2 Regional Workshop
23-24 November 2017
Almaty

2. Blending is defined as …..
THE STRATEGIC USE OF A LIMITED
AMOUNT OF GRANTS TO MOBILISE
FINANCING FROM PARTNER FIs
AND THE PRIVATE SECTOR TO ENHANCE THE
DEVELOPMENT IMPACT OF INVESTMENT PROJECTS
Robert
LEVERAGE
Partner FI financing
Grant

3. INVESTMENT FACILITIES
Robert
July 2015
Africa Investment Facility (AfIF)
DG DEVCO: 6 facilities (AfIF/ITF, LAIF, CIF, IFCA, AIF, IFP)
DG NEAR: 2 facilities (NIF & WBIF)

4. So far, IFCA provides 5 types of support
SUPPORT TYPE
… WHICH CAN ELIMINATE
A KEY PROBLEM
Direct Investment Grant
Reduce cost to end users or beneficiary country by partly financing the total investment cost
Technical Assistance Grant
To boost management, speed, project design, feasibility/preparation and quality i.e. address risks
Interest Rate Subsidy Grant
Reduce cost to end users or beneficiary country by reducing interest cost and/or avoiding IMF debt-ceilings (not a favoured tool for EU)
Risk Capital
To address perceived high risk by providing funding which absorbs some of this risk and thereby lowers investors' risk perception (often with the objective of mobilising private capital)
Guarantee
To address perceived high risk by partly guaranteeing certain types of investments (often with the objective of mobilising private capital)
Robert
EU approach not in favour of interest rate subsidy and explain why
Explain well the difference between risk capital and a guarantee

5. Distribution of funds by types of support
Global
IFCA
Robert

6. IFCA comes into play when ...
Projects have issues:
Affordability problems
Poor financial performance
Perceived risk/market failure
Pricing issues
Multi-component
And/or
Countries are:
Too ‘rich’ for all-grant (LMICs, MICs)
Too poor for all-commercial loan (DSF concessionality & limits)
Actors:
Financiers have constraints and specific policy objectives
Beneficiaries ‘shop’ for best deal
Capital intensity
New technology
Pioneering new approach
Issues beyond sponsor
Public goods
Robert

7. The grant is part of a financing package
Project financing mix
Equity/Own funds (beneficiary)
Government Financing
Finance institutions (IFIs) Loans ++
Other (Grant donors and/or Private)
EU grant resources
Robert
Average EU grant size €5-10 million

8. Submission and evaluation of projects
BLENDING FACILITY
BLENDED PROJECTS
Replenishment: mostly once a year (Commission Decision and for IFP that is the current decision of 20 MEURO – end date of contracting 31/12/2018)
Projects : during the year (2 to 3 TAM and Board)
Highlight the importance of pipeline discussion, the timeline involved and the necessity to have a complementary decision
In short : introduction of concept note by IFI (by preference a pillar assessed E-FI) – pipeline discussion in the TAM (technical assessment meeting ~ QSG) on go or no-go for further formulation – submission of full application by lead FI to TAM review – positive opinion TAM further refining for board approval (board ~ EDF committee) – positive opinion – complementary Commission Decision – contracting (by default all contracts need to be signed by Director (FR))
From CN to contract average (optimistic) timeline is 9 to 12 months – Maturity of applications is very important otherwise it will need to come back to a second TAM

9. This may grow to 10%, depending on the use of blending in the NIP's
LAIF
AIF
IFCA
NIF
Indicative
allocation
€ 320 million
€ 140 million
€ 2.1 billion (incl. NIP)
AfIF
CIF
IFP
WBIF
Indicative (RIP)
allocation
c. € 1 billion
€ 135 million
€ 20 million
€ 1,0 billion
(plus €100 m for TA)
Robert

10. The Facilities’ project cycle has 7 steps
The Blending Facilities project cycle
Identification
Preparation
Peer review & screening (Technical meeting)
Board Opinion (Board meeting) & Com Decision
Contracting
Monitoring
Evaluation
Generating the pipeline’– ideally so there is a chance to select from multiple projects
Ensuring that the project meets criteria and info is complete
Testing the project to see if it meets all the standards
Recommend whether to approve the grant – and on which conditions, followed by formal COM decision
Getting going and implementing in compliance with regulations
Obtaining the right information to ‘steer’ and manage
Checking to see if the objectives were met and feeding findings into future designs

11. EC has a key role in developing and guiding the pipeline
IFCA
IFCA contribution / sector

12. EC has a key role in developing and guiding the pipeline
IFCA
IFCA contribution / country

13. EC has a key role in developing and guiding the pipeline
IFCA
IFCAcontribution / financial institution

14. 3 ‘types’ of partners, always a LEAD FI
Multilateral European Finance Institutions (e.g. EIB,…).
European National development finance institutions from Member States (e.g. AFD, KfW, AECID, CDP, …)
Regional and other multilateral banks: can act as lead (e.g. AfDB in AfIF; IaDB, CDB in CIF), as co-financiers in others.
‘Lead’ FI
(entrusted
with budget implementation tasks)
Supporting FIs

15. 4 main partner FIs, potentially many
IFCA
Robert

16. Thank you for your attention
Snejana Popova, Project Officer
EU Delegation to Kazakhstan