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Brussels, 23 April 2007

The European Commission, the EIB and nine Member States launch the Infrastructure Trust Fund for Africa

European Commissioner for Development and Humanitarian Aid Louis Michel, the representatives of Austria, Belgium, Spain, Italy the Netherlands, Luxembourg, France, Germany and Greece, and the President of the European Investment Bank, Philippe Maystadt, today signed a memorandum of understanding setting up a trust fund to finance infrastructure in Africa. The Trust Fund is a financial instrument of the EU-Africa Infrastructure Partnership, one of the pillars of the new EU Strategy for Africa adopted by the European Council in December 2005. In the 2006-2007 start-up phase, the Community and its Member States have mobilised EUR 87 million for the Fund, and the EIB has made available EUR 260 million in the form of loans.

Infrastructure is crucial to sustainable development, economic growth and poverty reduction in Africa. There can be no sustained growth without an effective network of transport, energy, water and information and communication technologies infrastructure.

It is reckoned that current investment in Africa's infrastructure needs to double, with an initial increase of EUR 8 billion a year up to 2010 and EUR 16 billion a year for the five years thereafter. Raising funding in such volumes calls not only for an increase in development aid grants but for the implementation of effective lending strategies by the development financing institutions and the mobilisation of private capital.

Limited access to transport, communications, water, sanitation and energy services is seriously impeding economic growth in Africa. To improve matters, the Commission proposed an EU-Africa Infrastructure Partnership aimed at improving interconnectivity, facilitating regional integration and promoting South-South trade.

The Partnership's operations will be financed by a number of instruments: (i) the Trust Fund for Infrastructure, (ii) the European Development Fund (EDF) allocations for regions and countries and (iii) intra-ACP resources.

The operations comprise investment in physical infrastructure, developing and strengthening institutions and aid for the operation of infrastructure and the development of services. The Trust Fund will target investment in cross-border infrastructure in support of the regional dimension in Africa.

The combination of grants from the Commission and the EU Member States with loans from European Investment Bank and the Member States' development financing institutions should leverage increased funding for infrastructure.

Commissioner Michel said: "The Trust Fund is an innovative instrument which should substantially increase funding for infrastructure. The EU Member States' response to the initiative has been very encouraging." Nine Member States are involved in the Trust Fund at the start-up stage: Austria, Belgium, Spain, Italy, the Netherlands, Luxembourg, France, Germany and Greece. Grants to the Fund stand at EUR 87 million, EUR 60 million of them from the Commission.

Projects will be selected with an eye to the priorities of the African Union and the New Partnership for Africa's Development (NEPAD). The Trust Fund will back such NEPAD projects as the Félou hydropower scheme (Senegal, Mali, Mauritania) and the East Africa Submarine Cable System (EASSy).

The Trust Fund is also intended to raise the EU's profile in a sector crucial to Africa's development. It will be fed by resources provided by the Member States in follow-up to the pledges they made in 2005 to increase official development assistance (ODA). Its management will be founded on coordination, consistency and complementarity with operations by other donors in the sector.

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