European Union

Inclusive Business in Development Cooperation of EU Member States

Institutional Setup

Within the European Commission, the Directorate-General for International Cooperation and Development (DEVCO) is in charge of development policy in a wider framework of international cooperation, adapting to the evolving needs of partner countries. DEVCO plays a leading role in implementing the 2030 Agenda for Sustainable Development, including its 17 Sustainable Development Goals (SDGs), in EU international cooperation and development policy. DEVCO also coordinates actions to implement the new European Consensus on Development which is a shared vision and framework for action for development cooperation for the European Union (EU) and its Member States. Following the Agenda 2030, the Consensus is focused around the themes people, planet, prosperity, peace, and partnership.

DEVCO is responsible as well on the implementation of the European Union’s external financing instruments financed by the general budget of the Union and the European Development Fund. In this context, DEVCO ensures the high quality and impact of development cooperation, the swift implementation of projects and programs and the visibility

Inclusive Business in Private Sector Promotion

Over the last decade, European Commission support for private sector development has averaged EUR 350 million per year and the current Multiannual Financial Framework for 2014-2020 contains approximately EUR 2 billion for private sector development. This, combined with development assistance from Member States, makes the EU a key player in supporting local private sector development in partner countries.

Private sector engagement and the principles that guide the EU’s collaboration and support to the private sector have been introduced as a new dimension into EU development policy with the 2014 Commission Communication on A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries. The Communication highlights 12 concrete actions where the Commission believes it can add value and effectively complement actions by Member States and development partners on private sector cooperation. The actions target better regulatory environments in partner countries, business development and access to finance, especially for job-creating micro, small and medium-sized businesses. Action 11 specifically addresses support to the replication and scaling-up of successful inclusive business models and innovative, market-based solutions to development problems by strengthening action-oriented private sector platforms and networks that facilitate knowledge sharing, partnerships and match-making between businesses and other actors.

Another recent Commission Communication entitled Achieving Prosperity through Trade and Investment was adopted in November 2017 and updates the 2007 Joint EU Strategy on Aid for Trade. The Communication highlights the importance of trade as an instrument to poverty reduction and jobs creation through trade and investment. It puts a strong focus on inclusiveness by targeting the least developed countries, and countries in situations of fragility.

One of the Commission’s recent key private sector priorities is the External Investment Plan (EIP), which sets out a coherent and integrated framework to improve investment in Africa and the European neighborhood in order to promote decent job creation as well as, inclusive and sustainable development. This is done through an integrated approach comprising three pillars: a guarantee, technical assistance and support to promoting a conducive investment climate in Africa and the EU Neighborhood. One of the EIP windows are focused on micro, small and medium enterprises, including underserved segments such as women and youth entrepreneurs, as well as informal businesses and those located in fragile states.

The Commission also places strong emphasis on promoting the enforcement of international social, environmental and human right standards to enhance sustainability aspect within global value chains. Since 2016, EUR 38 million have been committed with the core objective to support decent work, transparency and traceability in the garment sector as well as an additional EUR 37 million have been committed with the core objective to support the implementation on the regulation on conflict minerals.

For the upcoming years, the Commission is considering a potential expansion of the EIP, integrating investment mobilisation with investment climate improvements also in other regions, beyond Africa and the European Neighbourhood. In addition, as part of the EIP, an extended European Fund for Sustainable Development+ (EFSD+) would cover all EU partner countries and an External Action Guarantee, with increased resources of up to EUR 60 billion.

At policy level, the Commission could consider a new Communication in the second half of 2020 to develop a clear vision of the EU’s partnership with the private sector for the ten years left to achieve the SDGs.

Regional Focus

DG DEVCO implements programmes and projects around the world, wherever assistance is needed. Programmes with a global reach allow the EU to provide similar support to countries facing similar problems. DG DEVCO seeks to target funds to countries most in need. This is in support of the EU and its Member States’ commitment to provide 0.15%-0.20% of GNI as Official Development Assistance to Least Developed Countries in the timeframe of the 2030 Agenda. Much of DG DEVCO’s work takes place in Sub-Saharan Africa and the European Neighborhood Region.

In 2018, a new Africa-Europe Alliance for Sustainable Investment and Jobs was announced by President Jean-Claude Juncker, deepening the economic and trade relations between the continents and aiming to boost strategic investment and strengthen the role of the private sector, improve the business environment and investment climate and enhance people’s skills for ultimately tapping the full potential of trade economic integration. Since its inception, more than EUR 750 million have been committed to regional economic integration in Africa, via the Pan-African programme and RIPs.

Publications/Websites

Women and Sustainable Energy in Developing Countries

Budget (mio €)
18.10
Region
Sub-Saharan Africa
Programme description

The program’s objective is to increase the involvement of women in sustainable energy value chains, boosting their active role, entrepreneurship skills and improving their access to energy services. The main focus of the action is on fostering MSMEs and entrepreneurial activities of women in or thanks to the sustainable energy sector in developing countries. It fosters development of private sector and jobs creation in particular for women, leading to the implementation of suitable models, which could be scaled up in the future.

The Consultative Group to Assist the Poor (CGAP) component of the Sustainable Investment Climate and Value Chains Programme II

Implementation
World Bank Group
Budget (mio €)
3.50
Region
Global
Sub-Saharan Africa
Programme description

The overall programme aims at enhancing EU’s participation in various partnerships and actions that improves the role of the private sector as a key developmental actor with emphasis on sustainable value chains, financial inclusion and the role of the financial sector.

The GCAP component aims to promote and scale up the financial inclusion strategies to allow people living in poverty to capture opportunities and build resilience. A particular emphasize will be placed on digital financial inclusion and e-learning facilities.

Mining

Funding
European Union
Budget (mio €)
5.30
Region
Sub-Saharan Africa
Programme description

Objective:

Implementation at the mining areas of the "accompanying measures" to the Conflict Minerals Regulation (EU) 2017/821 to ensure the responsible sourcing of 3TGs minerals from conflict affected and high risk areas (CAHRA). While focusing on the sustainable socio-economic development of the local artisanal mining communities, the activities will help Union importers to meet the due-diligence requirement of the EU Regulation.

ElectriFI (Electrification Financing Initiative)

Funding
European Union
Implementation
Association of European Development Finance Institutions (EDFI)
Budget (mio €)
125.00
Region
East Asia and Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
South Asia
Sub-Saharan Africa
Programme description

Objective:

To grow viable businesses and projects that creates new connections to reliable and sustainable energy in emerging and developing countries.

Activities:

Addressing the energy needs of populations living principally in rural, underserved areas and areas affected by unreliable power supply. Encouraging the adoption of renewable energy, with an emphasis on decentralized energy solutions. Providing funding and support to developers/investors across a range of business models.

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AgriFI (Agriculture Financing Initiative)

Funding
European Union
Implementation
Association of European Development Finance Institutions (EDFI)
Budget (mio €)
39.00
Region
Global
Programme description

Objective:

Respond to the lack of financing mechanisms adapted to smallholders with limited market orientation, vulnerable groups, women and youth, farmers and entrepreneurs.

Activities:

Support the increase of yields at affordable rates. Help raise farmer incomes. Adhere to the highest environmental and social standards. Support sustainable supply chains that create additional employment. Improve food security and enhance environmental and social practices.

Local economic development programme – PRODEL

Funding
European Development Fund (EDF)
Implementation
National Directorate for Rural Development (DNDR/MITADER)
Budget (mio €)
25.00
Region
Sub-Saharan Africa
Programme description

Objective:

To contribute to poverty reduction through income generation and employment opportunities in the rural areas of Mozambique.

Activities:

Strengthening the productive base and the competitiveness of local MSMEs. Promoting complementarities and coordination amongst sectors and between central and local authorities, together with the overall policy dialogue on Local Economic Development for poverty alleviation.

Rural Economic Development Programme (RED2)

Funding
European Development Fund (EDF)
Implementation
United Nations Capital Development Fund (UNCDF)
Budget (mio €)
6.00
Programme description

Objective:

To improve rural infrastructure in the Highlands region; to develop access to financial services for agricultural value chain financing; to develop value chain support services and service delivery capacity of local government in the Highlands region.

Inclusive Business Action Network (iBAN)

Funding
The Federal Ministry for Economic Cooperation and Development (BMZ)
Implementation
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Budget (mio €)
8.50
Region
Global
Programme description

Objective:

To unlock the power of inclusive business for sustainable development. To act as an entry point and facilitator to the global IB community.

Activities:

Capacity development for inclusive businesses, fostering the private-public dialogue, curated knowledge and information sharing.