European Parliament improves the External Investment Plan, but significant challenges ahead

The European Parliament has just [6 July] adopted the final regulation setting up the External Investment Plan and its financial pillar – the so-called European Fund for Sustainable Development (EFSD) [1].

The creation of this investment plan was announced by the president of the European Commission Jean-Claude Juncker in September 2016 during his flagship State of the Union speech. Since then, the EU institutions tuned up this initiative aimed at channelling investments worth EUR 44bn to Africa and the European neighbourhood region.

During that process, a coalition of civil society groups raised a set of concerns regarding the sustainability, accountability and transparency of the EFSD [2] and issued recommendations to set the initiative on the right track.

The final regulation adopted today incorporates several of the NGO demands. Xavier Sol, Director of the NGO coalition Counter Balance, said „we welcome the Parliament’s input to the negotiations, which resulted in a set of more stringent safeguards and eligibility criteria. For instance, key references to protection of Human Rights, gender equality and transparency requirements have been added.“

Nevertheless, the External Investment Plan is still described as a long-term response to the so-called „migration crisis“ affecting Europe. Isabelle Brachet from Action Aid went on commenting: „Portraying thisinvestment plan as “tackling the root causes of migration“ is both dangerous and artificial. It is dangerous because the link between development and migration is much more complex than that. Assuming foreign direct investments will mean less poverty and fewer people on the move is not evidence-based. The idea of using development assistance as a border management tool confuses two fundamentally separate things. The objective of development finance must be to contribute to the eradication of poverty and inequality, not achieving migration management for rich countries.“

The official launch of the EFSD will take place during the EU-Africa Summit in Abidjan in November 2017. According to Sol: "Scrutinising the implementation of the EFSD will be crucial to ensure that the highest environmental and human rights standards are respected in all EFSD operations. For example, the European Commission needs to push for a genuine alignment with the Paris Agreement and ensure that support is channeled in priority to domestic companies in partner countries and inclusive business models that have the greatest potential to contribute to sustainable development rather than large European multinationals. The EU also needs to raise the bar on the accountability and transparency of its development finance.“

Notes to editors

[1] This vote in the European Parliament’s plenary follows an agreement reached on June 28 between the European Parliament, Member States and the European Commission.

[2] NGO position paper from November 2016 „CSOs concerns regarding the EU External Investment Plan and recommendations to ensure a pro-poor instrument“