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The European Commission has launched an investment plan to boost private investments in Africa as well as European Union (EU) neighbourhood countries. The aim of the plan is to support social and economic infrastructure development and also small and medium scale enterprises.

The Commission, which is the executive arm of the EU, said the European External Investment Plan (EIP) will be funded with €3.35 billion from the EU budget and the European Development Fund. According to a statement released on Wednesday, the EIP will also be funded by innovative guarantees and similar instruments, allowing the mobilization of up to €44 billion in investments. If EU member states and other partners match the EU's contribution, the total amount for the EIP could reach €88 billion.

"If we look at the Middle East and Africa, we see regions with a huge potential that is being held back by war, poverty, the lack of infrastructure, and weak governance,” said Federica Mogherini, the EU’s High Representative of the Union for Foreign Affairs and Security Policy/Vice-President.

“But we also know that public resources cannot be sufficient if we want to tap this huge potential and achieve the sustainable development goals. While creating the conditions for Europeans to expand their business and move into new countries, the new External Investment Plan will support our partners' economies and societies, as well as our strategic foreign policy goals, from security to global development," added Ms. Mogherini.

The EIP consists of three complementary pillars: (1) Mobilizing investment by combining existing investment facilities with a new guarantee within the new European Fund for Sustainable Development (EFSD). The EFSD will be composed of two regional investment platforms for Africa and the EU Neighbourhood. (2) Stepping up technical assistance for broader policy environment to support public authorities and companies in partner countries. The aim is to help partner countries to better prepare and promote projects and attract more investment. (3) Improving the general business environment by fostering good governance, fighting corruption, removing barriers to investment and market distortions.

The Commission said the European Investment Bank’s (EIB) lending operations will form an integral part of the EIP. As a result, the Commission will expand the EU budget guarantee under the EIB External Lending Mandate by €5.3 billion, taking the EIB’s lending to €32.3 billion under the EU guarantee between 2014 and 2020.

“By unlocking investments in partner countries, the EIP will contribute to implementing the 2030 Agenda on Sustainable Development Goals and the Addis Agenda on Financing for Development,” the EU statement said. “It will also provide a key contribution to addressing the root causes of migration, reinforcing our partnerships and looking at the long term drivers behind the large movements of population.”