Europe

The European Commission and AFD Group have forged a long-term relationship based on shared values, and they have been working together since 2008 to improve the effectiveness of their actions. Beyond the common agenda set by the United Nations via the Sustainable Development Goals (SDGs), the two institutions share a common vision revolving around a sustainable, inclusive, green and digitally supported recovery. For example, they pursue similar objectives concerning the climate, in line with the commitments made under the Paris Agreement, and gender equality. 

AFD Group collaborates with the different European Union institutions: primarily, the European Commission and its two Directorates General dedicated to international partnerships (INTPA) and neighborhood and enlargement issues (NEAR), but also the European Parliament, as the Group is engaged in an enhanced dialog with Members of Parliament in order to 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, effective since 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 dialog 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 type of financing consists in accompanying European grants with loans in order to increase their impact. 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.

Between 2014 and 2020, projects co-financed with Europe mainly concerned the following areas:

• Energy (37% of projects supported)
• Social sectors (health, education)
• Private-sector development (micro-businesses and SMEs, support for entrepreneurship).
   

In addition to its close partnership with European institutions, the AFD Group's actions are also consistent with a broader European context. AFD contributes actively to the European cooperation ecosystem by interacting with its bilateral and multilateral counterparts and promoting multilateral co-financing mechanisms.

This approach is all the more important given the current development of a new European cooperation architecture revolving around a “Team Europe”-based approach, at a time when development issues across the world remain unresolved.

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. 

Team Europe initiatives enable European actors to coordinate and jointly finance projects in priority sectors for European aid. These initiatives are being rolled out in the field at national and regional levels. The objective is to “combine what we are doing collectively via the European Union and what the Member States are doing via their bilateral actions [to create] a whole package that is greater than the sum of its parts,” explains Koen Doens, Director General for International Partnerships (INTPA) at the European Commission. 

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. An example of this approach is the CITIIS program, launched with the Indian government in 2012, which promotes green and sustainable urban development for cities in India. The first phase provided EU support for twelve Indian cities. This project is now continuing in line with a Team Europe-based approach, enabling the launch of a second phase in 2021 with EU support in the form of €12 million in delegated funds, and on a co-financing basis with the German state development bank KfW.

This partnership with KfW is important for AFD Group, as it is our main bilateral co-financing partner. Frequent discussions between teams are held at headquarters and at the local level. The annual co-financing target of €2 billion was almost attained in 2021 (€1.6 billion). AFD Group hopes to double this commitment by 2023.

Regular dialog with European bilateral agencies

AFD Group is also in contact with many other European agencies such as ENABEL, SIDA, FCDO, Danida, Lux Dev, AECID, CDP, GIZ, and Irish Aid. These cooperation projects are often governed in the field by framework agreements, which facilitate co-financing and strategic discussions.

In an inclusive and proactive approach to coordination, AFD Group engages in regular dialog with its counterparts and organizes meetings to identify future joint projects and activities. "The long-term challenge is to ensure that all actors in the "European family", from the oldest institutions like AFD, which has just celebrated its 80th anniversary, to the more recent or smaller ones, work together to offer our partners an integrated and high-quality support service," says Anna Lipchitz, AFD Group representative in Brussels.
 

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.

Learn more: European Development Finance Institutions

• For experts, the Practitioners' Network 

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. This network is governed by a rotating presidency, which was assumed by Expertise France in 2020.

Learn more: Expertise France's 2018-2019 Presidency of the Practitioners' Network

• A stronger partnership to encourage collaboration between bilateral European donors

In May 2016, the European Commission, AFD, KfW, the Italian CDP, and the Spanish AECID decided to pool their ideas and compare their loan-grant blending and financial innovation initiatives. This collaboration has become a think tank and has made a major contribution to the thinking on the new European aid architecture.

In 2021, this enhanced partnership also adopted more ambitious operational objectives in order to meet the new requirements of the Global Europe European programming priorities and the Team Europe approach. The four bilateral institutions met in Rome to sign a strategic partnership agreement in October 2021. The aim was simple: to create a four-way co-financing platform, which will eventually include other European partners. This platform is expected to be launched in 2020 with the first pilot projects. 
 

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 initiatives with the EIB date back to 1976. The EIB is currently associated with AFD and the KfW in a co-financing mechanism: the Mutual Reliance Initiative (MRI). Over the 2015-2019 period, 34% of co-financing activities with the EIB were carried out through this scheme for a total of 32 projects. Ninety-three percent of them are located in Africa (61%) and in the East (32%).

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.

More about the Clean Oceans Initiative
 

Joint European Financiers for International Cooperation (JEFIC) is a network of European bilateral banks and financial institutions that work with public sector partners in developing countries and emerging economies.

The current members are AECID (Spain), AFD (France), CDP (Italy) and KfW (Germany). Sharing a common vision for a truly joined-up European development financing system, they decided to pool their resources and mobilize public and private capital for increased investments towards the Sustainable Development Goals (SDGs).