EU-CELAC Business Summit heralds new funding for regional development
Commercial ties between the European Union and Latin America and the Caribbean have doubled over the last decade boosting exports and jobs. As leaders from the Community of Latin America and Caribbean States met with European officials in Brussels today, several new projects were forged to elevate our trade ties and grow investment in small-to-medium sized enterprises, road infrastructure, water sanitation and sustainable energy among others, totalling €118 million.
The two regional programmes unveiled for Latin America are:
- AL-INVEST 5.0 - Better Policies for the Growth of Micro, Small and Medium-sized Enterprises in Latin America
The AL-INVEST Programme has been a flagship programme of EU cooperation with Latin America, facilitating the expansion of thousands of Latin American SMEs since 1993. The 5th phase of AL-INVEST 5.0 counts on a budget of €26 million.
The last phase of AL-INVEST (from 2009 to 2013) achieved some impressive results:
- The generation of €84 million exports in the region Mexico, Central America and Cuba alone. Each euro of EU contribution generated five euros of new business;
- The creation of more than 20,000 direct and more than 60,000 indirect jobs in Bolivia, Colombia, Ecuador and Peru;
- More than 6,500 SMEs in the Andean Region increased their exports, of which more than 1,000 became first-time exporters.
- The new ELAN programme: European and Latin American Business services and Innovation network
A new programme of support for EU SMEs and the creation of alliances between EU and Latin American companies has also been launched. It has the objective of supporting EU companies to develop businesses in Argentina, Brazil, Chile, Peru, Colombia, Mexico and Costa Rica. The focus, although not exclusive, is on sustainable businesses (ICTs, biotechnology, new materials, clean technologies and the green economy, nanotechnologies).
The programme is divided into two parts:
1. Part I will provide information on markets of interest to EU companies through a web platform and a team of professionals.
2. Part II organises events in each of the seven Latin American countries to develop technology-based business opportunities among EU and LA companies, with the collaboration of research and technology centres.
The programme will last three years and the budget is €11 million. It is being implemented in close cooperation with other existing EU initiatives such as the European Enterprise Network (EEN) and the IPR Helpdesk.
Programmes within the framework of the Caribbean Investment Facility (CIF)
Another part of the programmes announced today are financed through the regional blending facilities that the EU has set up in both regions: the Caribbean Investment Facility (CIF) and the Latin America Investment Facility (LAIF). Blending is a financing instrument combining EU grants with loans or equity from public and private financiers.
The programmes within the framework of the Caribbean Investment Facility (CIF) are:
- EU - Suriname – Inter-American Development Bank (IDB): Support to Improve Sustainability of the Electricity Service
The CIF investment grant of €5 million (out of a total investment of €42.77 million), expected to be signed with the Government of Suriname, is being provided as part of a programme to improve the sustainability of the local electricity service. The programme is part of a national strategy to design and implement a Sustainable Energy Framework in the country. Specifically, the programme will support the national electricity company Energiebedrijven Suriname (EBS) in improving its operational procedures and the provisioning of rural areas in Suriname. The CIF grant will promote the use of renewable energy technologies for electrification in the rural areas of Suriname by financing the procurement and installation of one small hydro power plant and one solar photovoltaic system in the hinterland.
- EU - Belize – Inter-American Development Bank (IDB): George Price Highway Rehabilitation
The CIF investment grant of €5 million (out of a total investment of €21.5 million), expected to be signed with the Government of Belize, is part of a programme to finance the rehabilitation of the George Price Highway. This programme aims to improve road connectivity between the northern, southern and central regions of Belize, as well as with Central America, including Mexico. Along with rehabilitation and maintenance works, the programme will include an institutional strengthening component to enhance transport planning, road maintenance management and training in related areas. The CIF grant will be used to cover the cost of the Roaring Creek Bridge replacement (€2.6 million) plus approximately 4 km of road rehabilitation. The rehabilitation of the Roaring Creek Bridge is of particular importance because it will guarantee access to the only evacuation route to the West during extreme weather events. Moreover, loss of access to the bridge cuts off a critical evacuation route during severe storm events and severely hampers trade with Guatemala as well as tourism in the country.
- EU - Regional – Caribbean Development Bank (CDB) as lead Finance Institution and Department for International Development (DFID): Sustainable Energy for the Eastern Caribbean (SEEC)
A Contribution Agreement is expected to be signed with the CDB for a CIF contribution of €4.45 million (including a €200,000 management fee for the CDB), including both technical assistance and an investment grant, to support the SEEC Programme. The Programme is designed to channel resources to the six OECS countries (Antigua and Barbuda, Grenada, St. Vincent and the Grenadines, the Commonwealth of Dominica, St. Kitts and Nevis, and St. Lucia) on appropriate terms for technical assistance and investment in energy efficiency and renewable energy. By facilitating investments in renewable energies and energy efficiency, the programme will contribute to reducing electricity costs and prices for business, the administration and consumers alike. The Programme will also contribute to lowering the amount of recurrent foreign exchange committed to fossil fuel imports in the six OECS beneficiary countries, while decreasing greenhouse gas emissions.
- EU - Regional – Agence Française de Développement (AFD) as lead Finance Institution and Caribbean Development Bank (CDB): Credit Facility for Caribbean Development Bank (CDB)
There will be an announcement of the approval by the CIF Board on a CIF contribution of €3 million, in the form of technical assistance, to a credit facility provided by AFD to CDB. The credit facility will promote and finance infrastructure projects in the Caribbean in sectors such as energy, transport, water and sanitation, climate change mitigation and resilience. The technical assistance financed through the CIF will support member countries in the preparation and follow up of new projects.
- EU - Dominican Republic – Agence Française de Développement (AFD): Increasing Efficiency in Water and Sanitation Management
The CIF Board will announce their approval of a CIF contribution of €10 million, including both technical assistance and an investment grant, to a programme aiming to increase efficiency in water and sanitation management in the Dominican Republic. The programme will contribute to the investment programmes of two of the major service providers in the country, namely Instituto Nacional de Aguas Potables y Alcantarillados (INAPA) and Corporación del Acueducto y Alcantarillado de Santiago (CORAASAN), while reinforcing their efficiency and sustainability.
- EU - Dominican Republic – European Investment Bank (EIB): Corporación Dominicana de Empresas Electricas Estatales (CDEEE) Energy distribution loss reduction programme
There is to be an announcement of the approval by the CIF Board on a CIF investment grant of €9.33 million in support of an energy distribution loss reduction programme in Dominican Republic. The programme aims to reduce the commercial losses of the electricity distribution sector in the country, limiting the dependence of the national power sector in the Government's financial support and improving the availability of power supply to consumers.
The following projects have been announced under the Latin America Investment Facility (LAIF):
- Regional – KfW Enwicklungsbank (KfW) as lead Finance Institution, Central American Bank for Economic Integration (CABEI), Inter-American Development Bank (IDB), CAF – Development Bank of Latin America (CAF), European Investment Bank (EIB), Agence Française de Développement (AFD), World Bank Group (WBG), Japan International Cooperation Agency (JICA): Geothermal Development Facility Latin America
There is to be an announcement of a positive opinion of the LAIF Board of the DCI Blending Framework on an investment grant of €15 million for the Geothermal Development Facility Latin America (GDF). The GDF aims to overcome existing barriers for the development of geothermal energy in Latin America by providing:
(i) A tailored Geothermal Risk Mitigation Fund in order to facilitate project preparation and mitigate geothermal resource risk during the exploratory drilling stage of the project;
(ii) Geothermal Investment Financing Windows to provide anchor financing for subsequent investments during the production drilling and construction stages of geothermal projects;
(iii) A Technical Assistance Forum in order to coordinate and potentially execute existing and planned Technical Assistance activities and programs of the GDF members with the respective partner governments in order to ensure the implementation of appropriate regulatory and legal framework conditions. The LAIF investment grant complements a LAIF contribution for technical assistance provided in 2014.
- EU - Regional – Agence Française de Développement (AFD) as lead Finance Institution, CAF – Development Bank of Latin America (CAF): Sustainable Cities and Climate Change
There is to be an announcement of a positive opinion of the Board of the DCI Blending Framework on a LAIF contribution of €4.2 million for technical assistance to a project aiming to promote low-carbon and climate-resilient development in Latin America. EU funds will leverage a credit line of € 100 million, that will be made available by AFD to CAF to finance climate-oriented investments in Latin America municipalities (urban projects targeting climate change mitigation and adaptation) and a technical assistance program will accompany the credit line.
- EU - Regional – KfW Enwicklungsbank (KfW): Eco.business fund for SME-development in Latin America
There is to be an announcement of a positive opinion of the LAIF Board of the DCI Blending Framework on a LAIF contribution of €16 million, including both equity and technical assistance, for the Eco.business Fund. The Eco.business Fund aims at promoting sustainable business practices that contribute to biodiversity conservation and sustainable use of natural resources in Latin America. The Fund's purpose is to promote the development of green enterprises in developing and transition countries, with an initial focus on highly biodiverse countries in Latin America (Peru, Columbia and Ecuador) and Central America, and possibly to extend to other Latin American countries.
- EU - Honduras – European Investment Bank (EIB) / as lead Finance Institution, Central American Bank for Economic Integration (CABEI): Honduras Sustainable Roads
There is to be an announcement of a positive opinion of the LAIF Board of the DCI Blending Framework on a LAIF contribution of €10 million, including both investment grant and technical assistance, for the Sustainable Roads project in Honduras. The project comprises the rehabilitation, upgrading and road safety improvements of two road sections along the Western Corridor, which is part of the country’s main road network and is integrated into the International Mesoamerican Road Network. Development of the entire Western Corridor in the coming years is a national priority for the Honduran government.
In addition to these financing initiatives; the European Commission has signed a Framework Agreement with the Inter-American Development Bank (IDB) to expand cooperation between the two institutions on economic and social development in Latin America and the Caribbean. It establishes the guidelines under which resources from the European Commission are to be administered by the IDB. It is a concrete follow up of the signature of Memorandum of Understanding between the two institutions in 2007. The Memorandum identified several areas of shared priority: social cohesion and poverty reduction; regional integration and trade development; renewable energy and energy efficiency; climate change; and collaboration on statistical information.
1Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela
2Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago. The region also includes 17 territories with direct links to EU member states (four French 'outermost regions'; and 13 'overseas territories'– six British, six Dutch and one French territory).