Public-private partnerships for the European External Investment Plan in Africa: insights from the experience of the French cooperation in the West African energy sector
The European Commission values “blending” mechanisms, i.e. the combination of EU grants with loans or equity from public and private financiers which typically are implemented as public-private partnerships (PPPs), as one of the most innovative financial instrument to increase the impact of the EU external action. This study aims thus to analyze specific case-studies of blended Public-Private Partnerships promoted by the European Union in the frame of the External Investment Plan, launched in 2016.
Case studies have been selected among those blending initiatives implemented by the Agence Française de Développement (AFD) in West Africa, under the Europe-Africa Infrastructure Trust Fund (EU-AITF). They are large-scale projects having a regional relevance and a focus on the energy sector, a priority in the EU external action which to date makes up 41% of the total blending funding through EC instruments.
The analyzed case studies are: i) the “ECOWAS Electricity Regulation” project (ERERA Project) for the constitution of the ECOWAS Electricity Regulation Authority; ii) the “Financing energy efficiency and renewable energy investments of private companies in West Africa” project, which is aimed at engaging local banks in the financing of green investments through the AFD’s credit line known as SUNREF program (Sustainable Use of Natural Resources and Energy Financing).
By means of a desk review and of interviews with key informants, our objective is to shed some light on good practices to explore the potentialities and the challenges of blending finance. In particular, the analysis focuses on some crucial aspects for the success of blended PPPs: the leverage effect, the respect of the principle of additionality in blending finance, the development impact, the levels of participation and ownership of local partners, the support to micro, small and medium enterprises and the occupational impact.