An Investment Plan for Europe was announced by the European Commission in late 2014 as a priority. The objective is to stimulate additional investment in the European economy to promote growth and job creation by mobilising at least EUR 315 billion additional investment and to change the way public money is spent structurally, opening up new investments.
The Investment Plan is aimed at smart mobilisation of public and private sources of finance - where every euro of public money is used to generate additional private investment, without creating new debt. To provide this additional financing and to target projects of strategic and societal importance, a new European Fund for Strategic Investments (EFSI) is being set up based on a proposal by the European Commission on 13 January 2015.
EFSI will focus its financing on sectors of key importance including:
Strategic infrastructure including digital, transport and energy in particular energy interconnections and urban development
Education, research and innovation
Environmentally sustainable projects, expansion of renewable energy and resource efficiency
Project promoters should follow the usual EIB loan application procedures. SMEs interested in EFSI transactions financed via the European Investment Fund should refer to information on EIF financial intermediaries.
The European Investment Fund supports Europe’s micro, small and medium sized businesses (SMEs) by improving their access to finance through a wide range of selected financial intermediaries across Europe. To this end, the EIF primarily designs, promotes and implements equity and debt financial instruments which specifically target SMEs.
It is intended that EFSI resources will be complementary to the European Structural and Investment Funds (ESIF). There is the possibility of combining the investment resources at the level of individual projects where a part could be financed by ESIF and another part supported by EFSI.
Some EUR 450 billion of ESIF are available for Member States and their regions in the period 2014-2020. Of this, EUR 38 billion is allocated for ‘transition to low carbon economy’, which includes renewable energy and energy efficiency projects.
Member States and regions are encouraged to use financial instruments as an efficient and sustainable way of providing support targeted at the priorities of a programme co-funded by ESIF. Financial instruments are suitable for financially viable projects, i.e. those which are expected to generate enough income or savings to pay back the support received.
Financial instruments have at least four major advantages as compared to traditional grants.
▶ With the same budget much more investment can be triggered (leverage effect).
▶ As financial instruments normally involve businesses (banks or companies) there is an inbuilt incentive for the economic viability of the supported investment.
▶ Through their revolving character financial instruments are
still available after the end of the programming period.
▶ They are also flexible and can provide support in the form best suited for the investment
Learn more about financial instruments for sustainable energy
Before allocating money to a financial instrument, managing authorities have to assess what is needed, why and by whom. For example, a region may have high technology firms that cannot access ordinary bank funding because their projects are too risky. Or, there may be very small firms and entrepreneurs that cannot obtain loans because they have no track record with the bank or no collateral to offer. Based on a thorough assessment of needs, one or more financial instruments may be set up.
Financial instruments are usually managed by nationally or regionally operating financial institutions (such as banks) that are selected and entrusted with running financial instruments on behalf of the managing authority. The financial instruments using ESIF funds are therefore delivered regionally or locally, often by institutions that are already familiar to those who finally will receive the support.
Assistance and advisory services are available for managing authorities and other stakeholders through the new fi-compass initiative, to help them benefit from all the opportunities offered by ESIF financial instruments. fi-compass will also be an important element of the advisory hub of the Investment Plan for Europe.
fi-compass has been set up by the European Commission in partnership with the European Investment Bank. It is a unique service for all European Structural and Investment Funds and for all thematic objectives. It replaces the successful technical assistance initiatives from the 2007-2013 programming period: JEREMIE for enterprises, JESSICA for urban development and JASMINE for microcredit.
fi-compass has a horizontal strand which will progressively develop and disseminate the know-how necessary for the implementation of ESIF-funded financial instruments and which will benefit all ESIF managing authorities. It is designed to meet their needs by providing practical knowledge and learning tools, such as ‘how-to’ manuals, fact- sheets for quick reference, e-learning modules, face-to-face training seminars and networking events.
fi-compass has a multi-region strand which will provide, on the basis of calls for proposals, EU funding to projects from at least two managing authorities covering at least two Member States to assess the possible use of ESIF financial instruments addressing an investment need which the regions share. This will typically include preparatory work such as market analysis and the possible design of financial instruments, in particular in specific thematic areas, such as Roma inclusion or in the context of Macro-Regional Strategies. The projects under the multi-region call will give a unique opportunity to managing authorities from different EU Member States to cooperate with each other, as well as with financial institutions, and benefit from mutual learning.