European Parliament Study: Guarantees and Loans for Inclusive Development

A research project in partnership with the Trans European Policy Studies Association (TEPSA)

The European Parliament has published an ECOPER paper on the implementation of the European Fund for Sustainable Development Plus (EFSD+) operations from an inclusive perspective. By providing guarantees and subsidies for loans, as well as capital investments, the EFSD+ is expected to contribute to inclusive development and related goals such as inclusive growth, poverty eradication, the reduction of socio-economic inequalities, and support to vulnerable groups. This study analyses how this inclusive approach by the EFSD+ is being applied in practice. It examines data on implementation of the European Fund for Sustainable Development (EFSD), EFSD+’s predecessor, to present the challenges and opportunities of using reimbursable aid for promoting inclusive development. Data analysis is further complemented with case studies on concrete investments in three EU partner countries: Ghana, Jordan, and Zambia. Information available on the functioning of the EFSD+ Open Architecture, including a list of Proposed Investment Programmes, is then analysed to shed light on how the EFSD+ inclusive approach improves upon that of the EFSD. This analysis focuses on the allocation of funds across sectors, countries and channels, as well as the definition and measurement of inclusive development outcomes, along with the prevention of unintended negative impacts.

It is deduced that inserting the EFSD+ into EU aid’s overall programming is enhancing its inclusive approach, but actual results still need to be produced and reported. The study concludes with some recommendations for the European Parliament to use its scrutiny capacities to further improve the reporting of the EFSD+ inclusive development outcomes.

The paper is co-authored by ECOPER consultants Aitor Pérez, Noor Albakhit, and Beatriz Ruiz.