The European Union is a key player in achieving the United Nations Sustainable Development Goals (SDGs). Indeed, the EU and its Member States are collectively the world’s largest donor. In 2022, they accounted for 43% of Official Development Assistance (ODA). Their combined ODA grew to €92.8 billion in 2022, up from €71.6 billion in 2021. Over the last twelve years, AFD Group has been actively engaged with the EU to scale up the impact and effectiveness of its financing.
Since 2008, AFD Group and the European Commission have joined forces to enhance the effectiveness of official development assistance. Over and above the common agenda laid down by the United Nations through the Sustainable Development Goals (SDGs), both institutions share the same vision built around a sustainable, inclusive, green and digitally-driven recovery. For instance, they share similar goals on the climate, in light of the commitments made under the Paris Agreement, and on gender equality.
Between 2014 and 2022, the European Commission delegated grants worth more than €3 billion to the Group to fund over 350 projects in 74 countries. This co-financing ranks AFD as a leading European partner of the Commission.
AFD Group collaborates with the different European Union institutions: primarily, the European Commission and its two Directorates General dedicated to International Partnerships (INTPA) and the D-G for Neighbourhood and Enlargement issues (NEAR). It also works with the European Parliament, as the Group is engaged in an enhanced dialogue with MEPs to help inform the European debate on development.
AFD Group's strategic and financial partnership with the European Union has recently been reinforced by the integration of Expertise France, which took effect on January 1, 2022. Equipped with new financial instruments and bolstered by the arrival of technical expertise, in addition to new sectors of intervention and a broader geographical scope (Expertise France can conduct intra-European projects), AFD Group has established itself as a complete, go-to partner for the European Union.
Varied arrangements and sectors
AFD Group entities are accredited to receive and manage European funds. The Group therefore plays an active role in implementing European cooperation, whether by engaging in political dialogue with countries and local partners, and capacity-building activities, or through the various financial instruments (grants, sovereign and non-sovereign loans, guarantees) and delegations of funds that provide substantial leverage.
As a financial institution, AFD can also implement projects on a blended grant/loan basis. This typeof financing includes accompanying European grants with loans to increase impact. AFD is the only financial institution to be involved in certain mixed facilities in the health, education, and agriculture sectors. In recent years, AFD has been the leading beneficiary of the Commission’s allocations in this regard for Asia and Latin America, the second-largest beneficiary for sub-Saharan Africa, and a key player in the Mediterranean. For the previous European programming period (2014-2020), AFD Group was also the second-largest beneficiary institution for European guarantees.
In addition, AFD has the capacity to manage research programs that are at the forefront of certain fields, such as understanding and combating socioeconomic inequalities. Since 2017, AFD has been coordinating an EU-funded Research Facility specializing in these issues.
AFD Group’s partnership with the European Commission covers a wide variety of sectors. At the top of the list is the energy sector, followed by agriculture, biodiversity, and sustainable development which account for more than 40% of funding. AFD is the only financial institution to be involved in certain mixed facilities in the health, education, and agriculture sectors. Today, AFD Group is mobilizing to meet the challenges of the 2021-2027 European programming and to add a more strategic dimension to its partnership with the European Union.
TEAM EUROPE
The new European programming entitled "NDICI-Global Europe 2021-2027”, adopted in June 2021, plans to increase the amount of official development assistance by 12%, with a total budget of €79.5 billion for 2021-2027. This powerful political signal is based on a new, more inclusive partnership-based strategy: the “Team Europe” approach.
As a key tool for “Working better together”, the Team Europe approach is about pooling our strengths to amplify the impact of our development actions by rolling out Team Europe Initiatives (TEIs). These are ways for European players to coordinate and jointly fund projects in priority sectors for European aid. On the ground, such initiatives are being rolled out on both national and regional scales. Today, there more than 150 TEIs are ongoing worldwide.
The aim is to “combine what we do as a team via the European Union and what the Member States do through their bilateral actions [to create] a bigger and stronger body than the sum of its parts”, as expressed by Koen Doens, Director General of International Partnerships (INTPA) at the European Commission. This coordination of European players should also give greater prominence and clarity to Europe’s efforts for our partners on the ground, by building greater synergies between programs.
Alongside the Ministries for Europe and Foreign Affairs and for the Economy, Finance and Recovery, AFD Group is a highly active participant in this new Team Europe approach, and acts as a driving force by proposing initiatives and contributing to projects and financing. The Group is fully engaged in the European cooperation ecosystem, interacting with its bilateral and multilateral counterparts and promoting joint co-financing mechanisms.
“In addition to cementing mutual trust within the European family, these networks afford us renewed prominence and greater on-the-ground efficiency”, says Rémy Rioux, Chief Executive Officer of AFD Group. Illustrating the success of this approach is the Team Europe initiative “Invest in Young Businesses in Africa (IYBA)”, through which the Group’s three entities support young African entrepreneurs, notably via its Choose Africa 2 program, and the City Investments to Innovate, Integrate and Sustain (CITIIS) program.
CITIIS was launched in 2012 by AFD and the European Commission to support the sustainable development of Indian cities. It is being pursued under the Team Europe model with a second phase launched in 2021 and sponsored to the tune of €12 million in delegated funds from the EU, co-financed with Germany's KfW.
The partnership with KfW, our leading bilateral partner, is particularly important for the Group. There are frequent exchanges between teams at head office and at local level, with a co-financing target of €1.5 billion a year between 2020 and 2022.
In line with its commitment to inclusion and active coordination, AFD Group maintains regular interaction with its counterparts and organizes meetings to identify future joint projects and initiatives. The Group also interacts with many other European agencies such as ENABEL, SIDA, FCDO, Danida, Lux Dev, AECID, CDP, GIZ and Irish Aid. This cooperation is often governed on the ground by framework agreements, which facilitate co-financing and strategic discussions.
“The long-term goal is to ensure that all the European family players, from the oldest institutions such as AFD, which recently celebrated its 80th anniversary, to the most recent or smaller ones, work together to offer our partners integrated, high-quality support”, stresses Anna Lipchitz, AFD Group’s representative in Brussels.
SPECIALIZED NETWORKS
Through its three entities, AFD Group plays a major role in European networks, which are active forums for discussion – both formal and informal – in which development actors from the private and public sectors can share their experiences and financial efforts. The Group is at the heart of three main networks, operating on different scales and with distinct missions :
For the private sector, the EDFI (European Development Finance Institutions) network
Created in 1992 and bringing together sixteen European development finance institutions, the EDFI network is the oldest European network in the development field. It is a platform for consultation and the implementation of joint actions in support of the private sector, particularly in the form of co-financing projects. Proparco, the Group's private-sector subsidiary, is a member of the EDFI network. This collaboration has led to the creation of two funds: European Financing Partners (EFP) for the Africa-Caribbean-Pacific zone, and Interact Climate Change Facility (ICCF), dedicated to the development of renewable energy and energy efficiency in the countries of the Global South.
Created in 2007 under the impetus of AFD and KfW, the Practitioners' Network brings together 17 European development agencies and two associate members. The European Commission is an observer member.
Although informal, this community of European bilateral actors meets regularly and has two main objectives: first, to facilitate mutual knowledge and exchanges of experience between its members and on this basis, to promote joint actions and positions. It also aims to promote dialog and contribute to reinforcing the partnership with the European Commission, while informing it by providing feedback on the implementation of European aid policy by bilateral agencies.
In order to foster partnerships between bilateral European donors, the Jefic is a network of five European bilateral public development institutions and banks: Spain’s AECID, AFD, Italy’s CDP and Germany’s KfW, which were joined in March 2023 by Poland’s BGK. This network was founded in 2021 by AECID, AFD, CDP and KfW to enhance coordination and visibility of its members.
Jefic thereby seeks to be better identified in the landscape of the European aid architecture for development, where it is one of the three major stakeholder networks. Indeed, this network is there to complement that of cooperation agencies (Réseau des Praticiens / Practitioners’ Network) and financial institutions specializing in financing the private sector (European Development Finance Institutions - EDFI).
For instance, the network contributes to the planning process through its advocacy work and production of joint position papers. With a combined financing volume in excess of EUR 21 billion in 2022, the Jefic network provides a sizeable share of global financing for sustainable development. In 2022, nearly a third of the financing generated by the European Union blending and guarantee instruments will be managed by Jefic members.
Jefic is fully in synchrony with the “Team Europe” approach promoted by the European Commission, by jointly contributing to the TEIs and the roll-out of the Global Gateway. In order to respond more efficiently to the needs of partners on the ground, the network has also acquired an operational tool: a co-financing agreement, signed in March 2023 by the four founding members. This framework agreement seeks to delegate the management of all types of resources from the four partner institutions, including resources delegated from EC funds where necessary, under a common lead.
AFD GROUP AND MULTILATERAL ACTORS
AFD Group works closely with the European Union's two development banks. Co-financing initiatives are a prominent feature of these partnerships, along with frequent exchanges of staff and strategic exchanges.
The European Investment Bank (EIB), a long-standing ally
The first co-financing with the EIB dates back to 1976. The EIB is currently partnered with AFD and KfW in a co-financing facility known as the Mutual Reliance Initiative (MRI)*. Over the period 2015-2022, 42% of co-financing with the EIB was done via this facility. 70% of co-financed projects are in Africa and 27% in the Middle East (32%), focusing predominantly on infrastructure and urban development, with 60% of commitments, followed by water and sanitation (34%).
The European Bank for Reconstruction and Development (EBRD)
In addition, AFD Group has stepped up its partnership with the EBRD in 2021 by signing two Memoranda of Understanding (MoUs). The first concerns co-financing projects involving Proparco and the EBRD, while the second seeks to promote operational and strategic cooperation between the EBRD and AFD Group, with a particular focus on supporting the private sector. This five-year agreement covers four priority areas of cooperation: climate and green transition; equal opportunities; sustainable cities and public infrastructure; and digital transition.
Tangible illustrations?
Launched in 2018, the Clean Oceans Initiative brings European bilateral actors (including KfW, AFD, the Italian CDP, and Spain’s Instituto de Crédito Oficial), together with multilateral European actors (the EIB was one of the founding members). The EBRD joined this initiative in February 2022, broadening the range of actions to facilitate the implementation of new projects. Together, these actors are funding projects to reduce the huge amounts of plastic waste that end up in the oceans. This is an example of the diversity and effectiveness of the links between AFD Group and its various European partners.
* In order to facilitate operational cooperation between Agence Française de Développement (AFD), the German development bank KfW and the EIB, the three partners introduced a Mutual Reliance Initiative (MRI) in 2013 to formalize their enhanced partnership. This initiative is designed to delegate tasks to one of the three lead institutions, while recognizing the procedures of each partner, in order to streamline the design and negotiation of jointly financed projects. From 2010 to 2022, 57 MRIs were launched with AFD involvement, with or without delegation of tasks, for an average volume of 1 billion euros per year. It is mainly used for infrastructure projects (infrastructure and urban development 60%, water and sanitation: 34%), mainly in Africa (55%) and the Middle East and Asia (40%).
Global Gateway
The European Global Gateway strategy was launched in 2022 with the aim of tackling the world’s most pressing challenges in climate and energy, health, transport and supply chain security, digital technology and education. In this respect, it will be earmarking up to 300 billion euros by 2027 (half of which will go to Africa) for sustainable projects, in line with the needs of partner countries as well as the interests of the European Union and its Member States.
Global Gateway’s aim is to enable EU partners to grow their businesses and economies, while enabling the private sector in EU Member States to invest and remain competitive, while guaranteeing the highest environmental and labor standards, as well as sound financial management.
Accordingly, the Global Gateway strategy is anchored on:
Regional partnerships, such as those with the African Union, CELAC (Community of Latin America and Caribbean States) and ASEAN (Association of Southeast Asian Nations)
Setting of common priorities
Greater inclusion of private sector players
On the ground, Global Gateway is reflected in a heightened coordination effort and financing of mega infrastructure projects, namely the “Global Gateway flagships”, which are priority projects identified each year by the European Commission, Member States and bilateral and multilateral European financial institutions.
Through its participation in Team Europe initiatives and a number of flagship Global Gateway projects, AFD Group is helping to unite European cooperation forces around projects with a high transformational impact. In 2023, AFD Group was involved in 17 Global Gateway flagships (from a list of 87 priority projects identified). One illustration is the project to build a hydroelectric power plant in Bac Aï in Vietnam, funded by AFD in tandem with the EU, KfW and the EIB to support the energy transition.
AFD and Expertise France are also heavily engaged in the African Regional Teachers’ Facility, as members of a consortium of European players (notably GIZ and ENABEL), the flagship for the education pillar. This facility will encourage teacher mobility and training in sub-Saharan Africa. “Coordination between the Group’s three organizations is crucial, underscored Koen Doens. Drawing on its comprehensive toolbox and multi-sector expertise, AFD Group helps to spur investment and pull in the private sector to our partner countries, while equally offering technical assistance capacity to support these dynamics.”
