Development finance is very much about working together. Collaboration can make a big difference when it comes to the success of development finance operations.

The European Investment Bank (EIB) and the United Nations Industrial Development Organisation (UNIDO) signed a Memorandum of Understanding (MoU) regarding framework cooperation on development finance in African, Caribbean and Pacific (ACP) countries during an “Africa Day” event in Luxemburg-City on 9 July, organised by the EIB and the Luxembourg Presidency of the Council of the EU.

Joining forces

The agreement is designed to have two effects in both the short and medium term. UNIDO will assist the Bank in identifying possible projects, accompanying its promoters and carrying out much of the monitoring activities once the projects are underway, helping to streamline processes. Moreover, having partners on the ground in the areas of operation will allow the EIB to do more blending operations, in which EIB loans will complement other grant funding available for projects. This will facilitate mixing different sources of funding and increase the leverage of financing.

In other words, the benefit is not only mutual between the signatories of the MoU. The ultimate beneficiaries will be the operators of the projects on the ground that will increase their chances of receiving the most appropriate mix of loans and grant funding. The collaboration with UNIDO means that financing can be used even more efficiently for projects in ACP countries.

In practice

The cooperation will concern both headquarters and local offices of both organisations. Both parties also recognised that their collaboration bears significant potential for expanded cooperation in a wide range of fields. Initially, focus will be on some of the key sectors for ACP development, most notably energy and climate action, while attention will also be paid to agro-business. There is no limit to possible areas of collaboration for the future.

The signing of the MoU happened days before the opening of the Addis Ababa conference where development finance are key words on everyone’s lips. Joint activities in the near future will include support for investments, technical assistance, benchmarking good practices and learning lessons through both parties’ networks. Importantly, the collaboration will facilitate and coordinate technical assistance for the preparation, implementation and coordination of industrial development strategies and projects

EIB and UNIDO have high hopes that their intensified cooperation will be a key step in improving best practice in development finance and boost the potential of local capital.

Matteo Maggiore is Director of Communication at the European Investment Bank. He joined the EIB after two years as Deputy Director, Public Affairs and Communications at OECD, prior to which he had been Controller of International Policy and Strategy at the BBC since 2001.